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The U.S. Navy is about to make one of its biggest defense calls in yearsand investors should be paying close attention. The F/A-XX program, designed to replace the aging F/A-18E/F Super Hornet fleet, is entering a critical phase. While the initial contract is worth single-digit billions, the long-term value of this next-gen stealth fighter program is expected to stretch into the hundreds of billions. The aircraft will feature advanced stealth, extended range, and seamless coordination with uncrewed combat systemsmarking a major step in the U.S. pivot toward countering China in the Indo-Pacific.
Sources say Boeing (NYSE:BA) and Northrop Grumman (NYSE:NOC) are now the two remaining contenders, with Lockheed Martin reportedly out after struggling to meet radar and carrier landing benchmarks. Boeing, despite recent turbulence from labor strikes and technical hiccups, just landed the Air Force's F-47 contract and already leads the MQ-25 drone program. Analysts note that managing both programs could unlock economies of scale if Boeing can share tech and streamline procurementpotentially giving it a cost advantage over its rivals.
Northrop Grumman isn't going quietly, though. With its deep stealth expertisethink B-2 and B-21Northrop remains a serious force in the race. The Navy hasn't commented yet, but an announcement could drop any day. The winner of this contract won't just take home billionsit'll also gain a strategic foothold in the future of naval air combat. For investors, that could mean long-term upside in whichever name gets the nod.
This article first appeared on GuruFocus.