U.S. strikes on Iran will likely boost defense stocks. Here’s what will keep the cash flowing even after the conflict ends.

Group 1 - The recent U.S. and Israel strikes on Iran are expected to increase attention on defense stocks, which typically rise during geopolitical tensions and military conflicts [2] - Defense stocks are evolving from one-time weapon sales to long-term service contracts, resembling subscription businesses with recurring revenue [3] - The durability of earnings in the defense sector is becoming more important than short-term war headlines, as weapons systems now involve long-term operational and support costs [4] Group 2 - Operating and support costs can account for approximately 70% of a major weapon system's total life-cycle cost, including maintenance, training, and software updates [5] - Contractors that build defense platforms often remain involved in their upkeep, leading to increased long-term maintenance and logistics revenue as more aircraft are delivered [6] - Lockheed Martin exemplifies this shift, with the F-35 program representing 26% of its consolidated net sales in 2024, highlighting the integration of support and logistics in its revenue model [7]