A NATO summit is under way in Ankara, Turkey, with leaders from 32 nations, including U.S. President Donald Trump.
The goal of the conference might be mainly political -- to heal rifts between the U.S. and its European allies -- but there will be several things for investors to watch, too.
For starters, Turkey is interested in acquiring Lockheed Martin F-35 jets and GE Aerospace F110 engines for Turkey's fifth-generation Kaan fighter jet, according to Capital Alpha Partners analyst Byron Callan.
Turkey has long been interested in F-35s, but its decision to buy a Russian radar system led to an effective ban on purchases. Any deal that allows Turkey to buy the jet would benefit Lockheed.
The importance of the F-35 to Lockheed can't be overstated. It generates roughly one-quarter of total sales.
Coming into Tuesday trading, Lockheed stock was down about 18% since the start of fighting in Iran. Investors have worried that the unpopular war would lead to Democrats retaking Congress in the midterm elections, which could put pressure on U.S. military spending growth.
European military spending will also be in focus. President Trump has long pushed for Europe to spend more. He's won some concessions with member nations committing to spending 5% of GDP annually on core defense requirements at the 2026 NATO summit.
That level implies European military spending of about $1 trillion annually, essentially matching the current U.S. annual defense budget, though President Trump has proposed spending $1.5 trillion on the military in fiscal year 2027.
In 2025, Europe spent about EUR381 billion ($434 billion) on defense. Spending grew about 11% year over year, and more growth should be on the way.
That growth has been a boon for European defense contractors. Coming into Tuesday trading, shares of Rheinmetall, BAE Systems, and Thales were up an average of 82% over the past two years. Most of that gain, however, came between 2024 and 2025, when spending expectations were rising. Share performance has flattened out since then.
More spending in Europe is good for U.S. contactors, too. "We suspect that the summit will mostly revolve around Europe's drive to develop an autonomous defense capability, how much European governments will spend on it, and how much of that spending may be directed toward US-supplied kits, made by US companies," wrote Thierry Wizman, Global foreign exchange and rates strategist at Macquarie Group, on Tuesday.
Another topic to watch is additional aid for Ukraine, which can benefit shares of drone technology providers, including AeroVironment, AEVEX, Red Cat, and others.
Ukraine has become a drone behemoth, making millions a year, to help defend itself in its four-plus-year battle with Russia.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 07, 2026 13:34 ET (17:34 GMT)
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