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China’s recent release of its next-generation fighter aircraft, coupled with the growing influence of Elon Musk ahead of the incoming Trump administration, has thrown cold water on Lockheed Martin’s long-term outlooks.
Lockheed Martin’s F-35 Lightning II program, which accounts for approximately 25 per cent of the company’s revenue, is facing new pressures following the unveiling of Beijing’s “sixth-generation” fighter aircraft, well ahead of analysts’ expectations, raising significant questions about the future of US and allied air dominance across the Indo-Pacific and the globe more broadly.
Deutsche Bank recently downgraded the company’s stock from a “Buy” to a “Hold”, lowering its price target from US$611 to $523. Analyst Scott Deuschle cited concerns about long-term demand for the F-35, particularly in light of advancements by China in military aviation, including the apparent development of sixth-generation fighter jets.
Further compounding these geopolitical developments, aerospace industry disruptor and Trump confidant Elon Musk has also weighed in on the future of manned fighter aircraft, predicting their decline in favour of autonomous drones.
Speaking at an event earlier this year, Musk said, “The era of the manned fighter jet is over. Fighter drones are the future.”
These comments echo broader industry concerns that platforms like the F-35 may struggle to remain relevant in an era dominated by artificial intelligence (AI) and unmanned systems.
Musk also pointed out the limitations of traditional fighter jets in modern combat scenarios, tweeting, “The F-35 design was broken at the requirements level, because it was required to be too many things to too many people.
“This made it an expensive and complex Jack of all trades, master of none. Success was never in the set of possible outcomes. And manned fighter jets are obsolete in the age of drones anyway. Will just get pilots killed.”
While Lockheed is investing heavily in unmanned systems and next-generation air dominance programs, Musk’s comments underscore a growing consensus in the defence industry about a shift away from traditional platforms like the F-35.
Despite these concerns, Lockheed Martin delivered robust financial results for the third quarter of 2024, with the company reporting earnings per share of US$6.80 and sales of US$17.1 billion, surpassing market expectations. Additionally, Lockheed raised its full-year earnings guidance to US$26.65 per share, a signal of confidence in its operational strength.
However, the stock price has struggled, reflecting market apprehension about the future of the F-35 program and potential pressure on profit margins from government contracts, particularly following the inauguration of incoming US President Donald Trump, who has in the past taken serious issue with the controversial aircraft during his first presidency (2016–20).
Lockheed Martin is taking proactive steps to adapt. The company is deeply involved in the US Air Force’s next-generation air dominance program, aiming to develop advanced systems to replace legacy platforms.
While the US sixth-generation fighter program offers significant opportunities, fierce competition from rival defence contractors, including Boeing and Northrop Grumman, could complicate Lockheed’s ability to secure lucrative contracts.
The geopolitical landscape also remains a critical factor. China’s progress in defence technology, particularly with unmanned and AI-integrated systems, raises questions about the long-term viability of traditional fighter jets like the F-35.
