Defense Stock Showdown: SpaceX vs. Lockheed Martin -- Which Is the Smarter Long-Term Buy?

There's far more to warfare than guns and missiles. So, when thinking about defense stocks, it's important to look at every angle. On one side are traditional defense contractors, such as Lockheed Martin (NYSE: LMT), which develops and sells various weapons systems, vehicles, and other technologies to the United States government and its allies.

On the other side is Space Exploration Technologies (NASDAQ: SPCX), or SpaceX for short. SpaceX doesn't sell weapons, but artificial intelligence (AI) and rocket launches are paramount to defending the United States moving forward. The federal government accounted for approximately a fifth of SpaceX's total revenue in 2025.

It's hard not to like SpaceX's advantages in space and AI, arguably the greatest opportunities ahead for the defense industry. But which stock is the smarter long-term buy right now?

Image source: Getty Images.

Both companies have tremendous growth opportunities

Space offers several growth opportunities for defense companies, including satellite constellations for communications and surveillance, orbital data centers, and the Golden Dome, a planned multilayered missile defense system featuring thousands of satellites equipped with sensors and interceptors.

SpaceX offers an infrastructure angle on space and AI. It's the world's de facto leader in rocket launch services and provides global connectivity through Starlink. It would likely remain quite busy as the government continues to expand its satellite constellations. According to SpaceX, AI is its greatest opportunity, and there's government traction there, too. Court documents recently revealed that the U.S. military utilized AI technology from SpaceX's xAI to aid in Operation Epic Fury in Iran.

Lockheed Martin also has a long history with the government, including several anti-missile munitions and systems, such as NGI and THAAD interceptors, PAC-3 air defense missiles, and the SBIRS critical missile-warning system. Investors will likely find the company's software, munitions, and sensors throughout the Golden Dome.

SpaceX's ambitious goals are also its biggest risk

Elon Musk is one of the greatest modern entrepreneurs, so it shouldn't come as a surprise that SpaceX is figuratively reaching for the stars. While preparing for its IPO, SpaceX estimated its total addressable market across space, connectivity, and AI at $28.5 trillion, though AI accounted for $26.5 trillion of that. The company's recent IPO raised approximately $85.7 billion in new capital, giving Elon Musk a financial war chest to make SpaceX's goals a reality.

The downside of all this hype and excitement is a stock valuation that raises the stakes for investors. SpaceX currently trades at a market cap of $2.4 trillion, more than 120 times its 2025 revenue. That makes SpaceX perhaps the most expensive stock on Wall Street. The company must deliver eye-popping growth, or the stock will probably struggle.

Lockheed Martin has a lower ceiling, but a much higher floor

Lockheed Martin's growth is directly affected by federal defense spending. America will probably always need to spend to defend itself as long as it's a major world power, and Lockheed Martin will be there with weapons and technology through land, sea, air, and space. But the country's persistent fiscal deficit could undermine that, and each election cycle comes with uncertainty. All told, Lockheed Martin's ceiling just doesn't approach SpaceX's.

Fortunately, it doesn't come with SpaceX's price tag. You can value Lockheed Martin stock on its earnings since the company is profitable. With analysts calling for annualized earnings growth of 7% to 8% over the next three to five years, Lockheed Martin seems very fairly valued at 17 times its 2026 earnings estimates. Plus, investors receive a dividend with a solid 2.7% yield, adding to their total returns.

To be frank, SpaceX is a flashier company and has far greater growth potential than Lockheed Martin. But investing is just as much about the price you pay as it is the stock you buy. SpaceX might go on to do some amazing things. Unfortunately, I don't see investors profiting much with such a high valuation. If SpaceX winds up dropping, it's worth circling back. Right now, Lockheed Martin is likely the better buy, even for the long term.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.