U.S. Military Equipment Sales Surge in 2024

By Mike Stone

(Reuters) – U.S. military equipment sales to foreign governments in 2024 surged 29% to a record $318.7 billion, the State Department reported on Friday. This increase reflects countries’ efforts to replenish stocks sent to Ukraine and to prepare for major conflicts.

The figures from the Biden administration’s final year indicate stronger sales prospects for U.S. weapons manufacturers like Lockheed Martin (NYSE:LMT), General Dynamics (NYSE:GD), and Northrop Grumman (NYSE:NOC), whose shares are expected to rise amid escalating global instability.

During his presidential campaign, Republican Donald Trump emphasized that allies should increase their defense spending. He urged NATO members to allocate 5% of their gross domestic product to defense, up from the current 2% target—which no NATO country, including the U.S., meets currently.

Defense contractors are facing challenges to meet the soaring demand triggered by Russia’s invasion of Ukraine. Global defense ministries are rushing to place orders to enhance their inventories, while the U.S. aims to restock the munitions sent to Kyiv.

Arms sales and transfers are viewed as “important U.S. foreign policy tools with potential long-term implications for regional and global security,” according to a State Department statement.

Sales approved in 2024 included:
– $23 billion worth of F-16 jets and upgrades to Turkey
– $18.8 billion worth of F-15 fighter jets to Israel
– $2.5 billion worth of M1A2 Abrams tanks to Romania

Orders approved this year contribute to the backlog for U.S. weapon manufacturers, who anticipate increasing requests for hundreds of thousands of artillery rounds, numerous Patriot missile interceptors, and a boost in orders for armored vehicles, bolstering their upcoming results.

Foreign governments typically procure arms from U.S. companies through two primary methods: direct commercial sales, which are negotiated directly with the company, and foreign military sales, where a government contacts a U.S. Defense Department official via embassy. Both methods require U.S. government approval.

Direct military sales by U.S. firms rose to $200.8 billion in fiscal 2024 from $157.5 billion the previous year, while sales facilitated by the U.S. government increased to $117.9 billion in 2024 from $80.9 billion in 2023.