Trump’s $100 Billion Arms Deal with Saudi Arabia: A Windfall for Defense Contractors?

The U.S. defense sector is poised for a historic influx of capital as the Trump administration prepares to finalize a $100 billion-plus arms deal with Saudi Arabia—a move that could reshape geopolitical and investment landscapes alike. The agreement, slated for formal announcement during Trump’s May 2025 trip to the kingdom, represents a dramatic revival of U.S.-Saudi defense ties, with major contractors like Lockheed Martin (LMT), Raytheon (RTX), Boeing (BA), and Northrop Grumman (NOC) standing to benefit.

A New Era of Defense Cooperation
The deal, as outlined by Reuters sources, includes advanced systems such as C-130 transport aircraft, radar technology, and General Atomics’ MQ-9B SeaGuardian drones—a system already in negotiations since 2018. . While the F-35 fighter jet—a cornerstone of Saudi ambitions—remains excluded due to U.S. commitments to Israel’s military edge, the package still signals a bold pivot toward transactional diplomacy.

The geopolitical backdrop is critical. After years of strained relations following the Jamal Khashoggi murder and Yemen war, U.S.-Saudi ties warmed under Biden’s 2024 decision to lift a ban on offensive weapons sales. This reversal, driven by shared interests in stabilizing global oil markets and post-Hamas-Gaza reconstruction, has cleared the path for the Trump deal.

Investment Implications: Winners and Watch Points
For investors, the deal’s scale offers a rare opportunity to capitalize on defense-sector growth. Here’s a breakdown of key players and their potential trajectories:

1. Lockheed Martin (LMT):
   As a provider of C-130 transports and radar systems, Lockheed is central to the deal. . Shares have already risen 15% since late 2023 on optimism around Middle East defense contracts, suggesting further upside if the deal solidifies.

2. Raytheon Technologies (RTX):
   The company’s missile and radar systems are likely components of the package. . Analysts anticipate a 20% revenue boost from Saudi contracts alone, given RTX’s role in regional missile defense systems.

3. Boeing (BA):
   Boeing’s C-130 sales and potential upgrades to Saudi air force infrastructure could offset its commercial aviation struggles. . A strong defense contract pipeline could stabilize its stock, which has lagged peers due to 787 production delays.

4. Northrop Grumman (NOC):
   The cybersecurity and radar specialist stands to gain from integrated systems in the deal. . Its 10-year backlog of $65 billion includes significant Saudi partnerships, suggesting this deal could extend that runway.

The F-35 Exclusion: A Strategic Trade-Off
The absence of F-35s underscores the U.S. commitment to Israel’s “Qualitative Military Edge” (QME), a policy that limits advanced jet sales to Arab states. While Saudi Arabia has lobbied for F-35s for years, the exclusion avoids alienating Israel—a key U.S. ally—while still enabling broader sales of non-controversial systems. This compromise could prevent congressional pushback, which derailed $95 billion of Trump’s 2017 $110 billion deal.

Risks and Considerations
Despite the optimism, risks linger. Congressional oversight remains a hurdle, though the 2024 ban reversal has reduced friction. Additionally, the Biden-era conditions—such as Saudi restrictions on Chinese arms deals—may resurface, complicating final terms. Geopolitical volatility, including lingering tensions over Yemen and Gaza, could also delay contract execution.

Conclusion: A Strategic Bet on Defense Resurgence
The $100 billion deal marks a watershed moment for U.S. defense contractors. With geopolitical realignments favoring Saudi Arabia and a U.S. administration prioritizing economic and military ties, firms like Lockheed, Raytheon, and Boeing are positioned to reap multiyear benefits. Historical context suggests caution—only $14.5 billion of Trump’s 2017 $110 billion proposal was finalized—but the current deal’s alignment with White House priorities and congressional pragmatism makes it far more likely to materialize.

For investors, the data is compelling: defense stocks have outperformed the S&P 500 by 12% since 2021, and this deal could add another tailwind. While risks exist, the strategic importance of Saudi-U.S. ties—bolstered by energy and counterterrorism cooperation—makes this a long-term bet worth considering. As the saying goes, “guns and butter” have always been intertwined in diplomacy—and this deal is both.