Star Wars is no longer science fiction.
On Monday, the U.S. Space Force confirmed the existence of space-based weapons, though what is in space is classified. The Pentagon didn't immediately respond to a request for comment.
But the news represents a milestone in military technology. Space is the new strategic high ground.
This isn't just about eyes in the sky. It's about weapons that can do damage, either by hitting or running into something (kinetic) or electronically disabling the enemy (non-kinetic).
"Employing kinetic and non-kinetic means to affect adversary capabilities through disruption, degradation, and even destruction, if necessary," said Secretary of the Air Force Troy Meink at a conference in Washington.
Vertical Research Partners analyst Rob Stallard put the range of capabilities a bit more simply in a Tuesday note: "So anything from electronic warfare to the Death Star."
It's a business opportunity for several stocks. Traditional defense contractors Boeing, Northrop Grumman, L3Harris Technologies, Lockheed Martin, RTX, and BAE Systems all have space-related businesses. Space weapons development represents ongoing growth for their franchises.
Space start-ups such as HawkEye 360, Planet Labs, and Voyager Technologies also have defense-related opportunities.
So do companies that offer access to space, including Rocket Lab Corp. and Firefly Aerospace.
Of course, there is SpaceX, whose pioneering use of reusable rockets essentially created the modern space economy. It is the largest launch player and provides the U.S. military with launch and communications services. The defense business for SpaceX, however, is small relative to the artificial-intelligence opportunity that investors are focused on.
Shares of all the companies mentioned were mixed in early trading and down an average of 0.6% on Tuesday, while the S&P 500 was off 0.4%.
The Space Force news isn't affecting stocks today, but investors can be sure space will impact defense stocks materially down the road.
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