On August 14, the Pentagon announced framework agreements with The Boeing Company (NYSE:BA) and RTX Corporation (NYSE:RTX) to increase component production for the SM-3 Block IIA and SM-3 Block IB interceptors. Both agreements are intended to increase the output of a group of ship-fired, surface-to-air interceptors that serve as the foundation for the Aegis Ballistic Missile Defense System, the sea-based shield used by the US Navy to intercept ballistic missiles.
The announcement had little impact on the shares of both companies, with The Boeing Company down around 0.4% and RTX Corporation down about 1% during the day.
Part of a Broader Buildup
RTX Corporation alone inked five separate Pentagon deals earlier this year to greatly boost output of Tomahawk cruise missiles, AMRAAM air-to-air missiles, and the Standard Missile family, with Tomahawk production expected to increase sixteenfold, from approximately 60 to 1,000 units per year.
Congress has provided financial support for the effort. The 2026 defense spending bill provided multiyear procurement authority for eight critical munitions and more than $6.3 billion for 13 critical munitions, while the Pentagon’s fiscal 2027 budget request calls for roughly $95 billion in missile procurement.
Rising tensions with Iran have added urgency to rebuild US missile inventories. During the June 2025 12-day Israel-Iran war, US forces reportedly used more than 150 THAAD interceptors. This highlights the pressure that sustained conflict can place on American missile-defense stockpiles.
What This Means For Each Company
The new arrangement expands RTX’s already massive pipeline of missile defense work. The company’s backlog reached a record $289 billion by the second quarter of 2026, driven by rising global demand to rebuild depleted stockpiles, and RTX Corporation is the main system architect and radar provider for the Patriot missile-defense system. Boeing’s role in the missile-defense ecosystem is slightly different, but no less important: the company is a key contractor supporting Aegis-related and other interceptor programs, and the updated agreement adds to a pattern of expanding federal defense operations that has become an increasingly important offset to Boeing’s commercial aviation issues in recent years.
Hedge Fund Sentiment
Hedge fund positioning differed between the two names. The Boeing Company’s ownership fell from 99 funds in the first quarter to 90 in the second quarter, a significant drop even as the company’s defense work increased. RTX Corporation moved in a similar, albeit more modest direction, with hedge fund ownership decreasing from 95 to 92 over the same period, implying that institutional investors were slightly more directly drawn to RTX’s growing missile-defense backlog than Boeing’s broader business, which still has a commercial aviation overhang in addition to its defense growth.
The Opportunity and the Risks
The case for both companies is based on a multiyear government commitment that shows no signs of waning. Multiyear procurement authority for critical munitions, paired with the Pentagon’s $95 billion fiscal 2027 missiles and munitions request, provides a lengthy runway for defense production. RTX’s record $289 billion backlog and active involvement in both the Patriot and Standard Missile programs position it for long-term exposure to this buildup, with maintenance and upgrade income compounding on top of new production. For The Boeing Company, expanding defense operations offer a meaningful balance to its commercial aviation issues.
That said, both stocks were essentially flat to slightly down following the announcement, suggesting that this specific deal adds little upside. The urgency behind this buildup, a 12-day clash with Iran that depleted THAAD stocks, is linked to a specific geopolitical event. If tensions ease, the sense of urgency implied by letters like Feinberg’s August 5 demand may fade, thus lowering the rate of future contract awards.
Insider Monkey’s Bottom Line
Both companies are clear beneficiaries of the government’s efforts to increase munitions inventories, but the market has already factored much of it into current share prices, as evidenced by the flat reaction. RTX Corporation appears to be the more direct way to play the theme, given its prominent role in various missile-defense systems and record backlog, whereas The Boeing Company’s defense expansion is positive but still competing for investor attention against its commercial aircraft issues. Investors in either name should keep an eye on execution on these scaled production targets, since the difference between contracted goals and actual delivered output will determine whether this becomes a long-term earnings driver or just a backlog that takes years to convert into revenue.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years
