TLDR
- GM stock rose 2.8% Thursday after Lockheed Martin announced the first delivery of Patriot missile components supplied by GM Defense
- The first batch of PAC-3 MSE housing components was delivered just 22 days after the August 6 contract signing
- The U.S. is pushing to increase annual missile production from roughly 2,500 to over 6,000 units per year
- The Defense Department has spent approximately $22 billion on munitions during the current Iran conflict
- Lockheed Martin is investing $8-$9 billion to scale munitions output across more than 20 U.S. sites
GM stock climbed 2.8% on Thursday after Lockheed Martin announced it received its first shipment of Patriot missile components from GM Defense, just 22 days after the two companies signed a manufacturing agreement on August 6.
The parts delivered were housing components for the PAC-3 MSE interceptor, the latest version of the Patriot missile system. Components like these traditionally take months or even years to produce.
Lockheed Martin Missiles and Fire Control President Tim Cahill called the turnaround “extraordinary,” saying it demonstrated how commercial manufacturing expertise could be merged with defense production practices. GM Defense President and CEO Stephen duMont said the automaker’s precision-fabrication capabilities would directly support U.S. defense production.
GM and Lockheed first announced plans to explore a partnership in June, with the formal contract signed in early August. The speed of delivery from contract to first shipment has drawn attention across the defense and auto sectors.
Why the Pentagon Needs More Missiles
The push comes as the U.S. Defense Department has spent around $22 billion on munitions during the current Iran conflict, according to a Pentagon report cited by Bloomberg. Analyst Rob Stallard of Vertical Research Partners noted the conflict has drained strategic munitions stocks, and the Pentagon is working to fix that through shorter lead times and expanded supplier networks.
Citi analyst John Godyn forecasts annual U.S. missile production will exceed 6,000 units, up from roughly 2,500 today. That figure includes Patriot and THAAD interceptors, Tomahawk cruise missiles, and standard military missiles.
Lockheed is backing that expansion with an $8 to $9 billion investment to scale output across more than 20 U.S. sites. The company said its production and warehousing space will grow nearly 50% following planned expansions.
GM’s Defense Push
For GM, the Patriot deal is part of a broader effort to grow revenue outside its core auto business. GM Defense is one arm of that strategy. Another is battery backup power, using EV battery capacity that has gone underutilized due to softer-than-expected electric vehicle demand.
The defense segment is still small relative to GM’s overall business, so it will take time before these contracts move the needle on financials in a material way.
Still, the timing works in GM’s favor. The U.S. car market has been stable, and the company is generating free cash flow, which it has been using for buybacks. GM stock is up 44% over the past 12 months coming into Thursday’s session.
Lockheed Martin stock rose just 0.2% on Thursday. It is up 14% over the past 12 months but has fallen nearly 20% since the Iran conflict began, as investors have questioned whether defense spending growth has peaked.
The S&P 500 gained 1.1% and the Dow Jones Industrial Average finished up 0.6% on Thursday.
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