The defense industry has transformed from a value trade into a growth play amid rising global conflicts and technological disruptions. Investment in US defense and aerospace ETFs hit a monthly record in March, with a 573% year-on-year increase as of Q3 2025. While most capital flows to established defense primes like Lockheed Martin and General Dynamics, the excitement centers on next-generation firms such as Anduril Industries, which recently doubled its valuation.

Warfare is becoming increasingly digital and decentralized, allowing smaller nations to challenge larger powers through asymmetric tactics using affordable technology. The US government, however, struggles to adapt to these changes. The Navy's new shipbuilding plan emphasizes speed and flexibility, representing a shift from the traditional centralized model. The Trump administration is pushing commercial approaches to military production, citing the "Finnish model" for Arctic icebreakers as a template for the $65.8bn requested shipbuilding financing.

New technologies are enabling hyperlocal production of military supplies. The US Army awarded a $9mn contract to Biosphere for a portable biomanufacturing system that produces protein-based food rations using air, water, and electricity. Former Darpa researcher Molly Jahn believes this represents the beginning of a revolution in defense production, moving from "ordinary" to "extraordinary" capabilities through distributed manufacturing models that enhance resilience and security.