How Rearmament and Disarmament Cycles Shaped Defence Industry Valuations (1945–2025)
Policies of rearmament and disarmament since World War II have driven pronounced cycles in military spending that heavily influenced the financial fortunes of major defence companies. This report traces the period 1945–2025 in the United States and Europe, examining how political decisions on military expenditure translated into market outcomes for key defence firms (e.g. Lockheed Martin, Northrop Grumman, Raytheon, Boeing Defense, BAE Systems, Airbus Defence, Leonardo, Thales, Rheinmetall, Saab). We construct a chronological timeline of arms build-ups and drawdowns, analyze their impact on defence contractors’ valuations and performance, identify recurring patterns (including lags between political shifts and company outcomes), and assess how factors like public opinion, debt and fiscal constraints have moderated these cycles. The goal is to provide a historical framework for investors and decision-makers to understand and anticipate the defence sector’s reaction to political-military cycles.