The Global Arms Market Sets a Historic Record: Sales Surge to $679 Billion. Analysis of Dynamics, Key Companies, and Investment Trends.
The global defense industry is experiencing an unprecedented rise. According to the Stockholm International Peace Research Institute (SIPRI), the combined revenue of the top 100 arms manufacturers increased by nearly 6% in 2024, reaching a record $679 billion. Over the past decade, the volume of global arms sales has risen by 26%. Armed conflicts, geopolitical tensions, and a new arms race are fueling this spiral of demand and profits for arms manufacturers.
American Market Dominance
The United States maintains uncontested leadership in the global military-industrial complex. Five of the six largest arms corporations in the world are American. Among them are giants such as Lockheed Martin, RTX (Raytheon Technologies), Northrop Grumman, General Dynamics, and Boeing. American companies account for about half of the total global arms sales (in 2024 – $334 billion).
The world's largest manufacturer, Lockheed Martin, increased its military order revenue by 3.2% to $64.7 billion, breaking several years of stagnation. Other U.S. leaders also saw income growth for the first time since 2018.
Of particular note is SpaceX, founded by Elon Musk, which has entered the ranks of the top 100 defense contractors for the first time, doubling its military project revenue over the year (to $1.8 billion). SpaceX's appearance in the ranking underscores that even relatively new players with innovations can quickly carve out a significant niche amidst rising demand.
Europe Accelerates Defense Manufacturing
The European military-industrial complex is demonstrating the highest growth rates. In 2024, the combined revenue of 26 European companies on the SIPRI list (excluding Russia) grew by 13% to $151 billion, accounting for about 22% of the global arms market. European countries are ramping up arms and equipment production in response to the war in Ukraine and increased threats from Russia. Twenty-three out of 26 European companies increased sales, with some achieving impressive results:
- Rheinmetall (Germany) – a 46.6% increase in defense revenue over the year due to demand for tanks, artillery, and ammunition.
- Czechoslovak Group (Czech Republic) – a record growth of 193% (nearly tripling to $3.6 billion) due to the production of approximately 1 million artillery shells for Ukraine under a Czech government initiative.
- JSC Ukrainian Defense Industry (Ukraine) – a 41% increase (to $3 billion) thanks to mass production of arms for the country's needs amid wartime conditions.
Neighboring countries to Russia in Eastern Europe are also ramping up military-industrial capacities. Poland has sharply increased its military budget (to 4.2% of GDP) and is investing in local military equipment and ammunition production. The European defense sector is experiencing a boom, although challenges lie ahead, ranging from supplier overload to shortages of specific materials.
Russia: Growth Amid Sanctions
The Russian defense industry is showing steady growth despite sanctions and restrictions on access to components. Two Russian companies are present in the SIPRI ranking: the state corporation Rostec (7th in the world) and the United Shipbuilding Corporation (41st). By the end of 2024, their combined revenue increased by 23% to $31.2 billion. Notably, Rostec's revenue from arms sales grew by 26.4%, reaching approximately $27 billion.
Western sanctions have not halted production – explosive domestic demand has compensated for the decline in exports. Russian factories significantly increased the output of ammunition and equipment for military needs. For instance, the production of 152 mm artillery shells in Russia was increased fivefold compared to pre-crisis levels in 2024. As a result, the Russian defense industry maintained resilience and hopes to return to global markets following stabilization. The export intermediary Rosoboronexport has already formed a record portfolio of foreign orders exceeding $60 billion, signaling deferred demand for Russian arms.
Asia: New Leaders and China's "Pause"
The Asian arms market is experiencing mixed trends. On one hand, South Korea has emerged as a leader in growth: four South Korean companies from the Top 100 increased their combined revenue by 31% (to $14.1 billion). Seoul is actively developing arms exports, securing multi-billion dollar contracts with European and Middle Eastern clients. For example, the Hanwha Group increased sales by 42% to $8 billion through deliveries of self-propelled artillery and multiple launch rocket systems both domestically and abroad.
Other Asian manufacturers are also gaining weight. India is promoting a policy of import substitution: three Indian companies from the SIPRI ranking increased their combined revenue by 8% to $7.5 billion due to government defense orders. The industry is developing in countries such as Pakistan, Indonesia, and Taiwan, although their performance remains modest.
On the other hand, growth in China has surprisingly slowed – the second-largest arms market after the U.S. According to official SIPRI data, revenue from the eight largest Chinese arms companies decreased by 10% in 2024, to $88 billion. Some giants, such as NORINCO, reported a one-third drop in sales amid anti-corruption investigations and delays in state orders in China. Nonetheless, experts note that this "pause" may be temporary: China continues a large-scale army modernization program, and its actual military spending is rising. The statistical decline may be linked to one-time factors, and in the coming years, the Chinese defense industry may return to growth, strengthening competition in the market.
The Middle East Emerges in the Top Ranks
Countries in the Middle East and surrounding regions are rapidly increasing arms production, displacing traditional suppliers in some markets. For the first time in the SIPRI ranking, there are nine companies from the Middle Eastern region with a total revenue of approximately $31 billion (+14% year-over-year). Notably, Israel stands out: three Israeli defense companies (including Elbit Systems and Israel Aerospace Industries) collectively increased sales by 16% to $16.2 billion. High demand for Israeli drones, missile defense systems, and precision weaponry remains, despite geopolitical risks and criticism of Israel's actions – clients worldwide continue to make purchases.
Turkey has solidified its position as an exporter of drones, armored vehicles, and missiles. Turkish companies (such as drone manufacturer Baykar) have received large orders from Ukraine, Asian, and African countries, increasing the export component to 95% in certain projects. The success of the Turkish defense industry is supported by active government support and a focus on international markets.
The Persian Gulf region is also making its mark on the global stage. The United Arab Emirates has created a multi-functional conglomerate, EDGE Group, which reported arms sales of $4.7 billion in 2024. Saudi Arabia, Qatar, and other oil-rich states are also investing billions in local production of drones, ammunition, and military equipment, aiming to reduce dependence on imports and eventually become net exporters of arms.
Conclusions and Prospects for Investors
The record figures in the arms sector reflect a new reality: the world has entered an era of increased military spending and rearmament. For investors, the defense industry has become one of the fastest-growing segments. Shares of many arms companies have strengthened amid increased orders and government defense budgets. Major corporations are expanding production capacities, acquiring contractors, and preparing for years of rising demand.
In the short term, this trend is likely to continue. Ongoing conflicts and overall geopolitical instability compel states worldwide to spend more on security, ensuring filled order books for arms companies. At the same time, risks are present: shortages of skilled labor, disruptions in supply chains, and political restrictions on exports may impact project profitability. Nevertheless, from an investment perspective, the global military-industrial complex is currently experiencing a surge reminiscent of the Cold War era, and many market players intend to take advantage of this.
