U.S. Army orders $53.9 bln in Patriot missiles from Lockheed Martin

By Rich Smith, The Motley Fool Tue, August 11, 2026 at 1:51 AM PDT | 4 min read

The ongoing conflict with Iran has significantly depleted U.S. weapons stockpiles and strained military finances.

According to a Center for Strategic and International Studies report released last week:

• The U.S. possessed 2,330 Patriot missiles before the Iran war began
• Approximately 65% of those missiles have already been expended
• Fewer than 800 Patriots remain in U.S. inventories
• This remaining stock represents four years' worth of production at current rates
• However, that quantity can be expended in less than three months of active fighting

Damage to U.S. bases in the Middle East was last estimated to have cost taxpayers $25 billion through late April, with an additional $25 billion required to replace lost and expended military hardware. U.S. allies in the region are also spending billions to replace Patriot air defense missiles used to defend against Iranian missile attacks.

$54 Billion for Lockheed Martin

Last month, the U.S. Army announced plans to order $53.9 billion worth of new Patriot Advanced Capability-3 Missile Segment Enhancement (PAC-3 MSE) air defense missiles from Lockheed Martin (NYSE: LMT). This amount exceeds the total estimated cost of the rest of the war to date.

Key figures:

• At $4 million per missile, simply replacing the 1,500 Patriots used so far would cost approximately $6.3 billion
• The $53.9 billion contract could fund the purchase of roughly 13,475 missiles
• This would replenish all expended munitions and add approximately 12,000 more Patriots to the stockpile
• The contract covers production over seven years
• This implies an annual production rate roughly nine times faster than the current rate

Better Missiles Cost More

Lockheed Martin announced last month that it plans to introduce a new, cheaper version of the Patriot missile, called the PAC-3 Adapted Capability Effector (PAC-3 ACE), designed for faster production.

Key details about the PAC-3 ACE:

• Would cost as little as $2.5 million per missile
• Designed for mass production at affordable prices
• Can handle a "wide range" of slower, lower-level threats (cruise missiles, short-range ballistic missiles)
• Described as "complementary" to the MSE, not a replacement
• Will free up MSEs to address more serious threats from faster medium- and long-range ballistic missiles

When Lockheed first announced the ACE, investors sold off the stock, possibly fearing cannibalization of MSE sales and reduced profit margins. However, the $54 billion PAC-3 MSE contract indicates that ACE sales will add to Lockheed's revenue and profits rather than subtract from them.

Image source: Getty Images.