How Private Defense Contractors Are Winning the Commercial Space Superiority Battle in 2026

The landscape of American space exploration is undergoing a seismic shift. No longer will government agencies like NASA operate space programs exclusively. Instead, private companies are stepping into the spotlight as the federal government embraces a “commercial-first” approach to space development. This fundamental restructuring of procurement models represents a rare market opportunity—one where established defense contractors with proven track records are positioned to achieve unprecedented superiority in capturing these lucrative contracts.

In December 2025, the Trump administration signed an Executive Order that fundamentally reshapes how the U.S. government acquires space services. Rather than owning satellites, reactors, and exploration equipment outright, federal agencies will increasingly purchase space capabilities “as-a-service”—paying for data, transportation, or energy while letting private companies retain ownership and operational control. This model generates predictable, long-term revenue streams that venture capitalists and institutional investors find irresistible. The order also sets ambitious timelines: returning astronauts to the Moon by 2028 and establishing a permanent lunar settlement with nuclear power systems by 2030.

For investors seeking to capitalize on this transformation, two companies have emerged as primary beneficiaries: Lockheed Martin and Leidos Holdings. Both have already positioned themselves as indispensable partners in America’s space ambitions, yet they offer distinct value propositions to different investor profiles.

Lockheed Martin: Entrenched Leadership in Space Systems

Lockheed Martin represents the gold standard in American space capabilities. Based in Bethesda, Maryland, the defense technology giant operates a specialized Space division that designs, manufactures, and tests the vehicles and systems essential for deep space exploration. The company’s portfolio includes the Orion spacecraft for NASA missions, lunar exploration vehicles, deep space probes, commercial and military satellites, and missile defense infrastructure. Beyond space, Lockheed maintains three additional operational divisions covering aeronautics, missile systems, and rotary-wing platforms.

The company’s market dominance is reflected in its financial performance. Stock prices have appreciated more than 18% over the past twelve months, while third-quarter revenues reached $18.6 billion—a 9% annual increase. Earnings per share climbed 2% to $6.95. More impressively, the Space division itself generated $3.36 billion in quarterly revenue, up from $3.08 billion in the prior-year period. This expansion was fueled by $160 million in additional strategic and missile defense contracts, plus $70 million from national security space initiatives. Operating profit within the space segment surged 22% to $331 million.

The true measure of Lockheed’s competitive superiority lies in its order backlog: a staggering $179.1 billion in cumulative contracted work, with $38.4 billion specifically earmarked for space activities. This multi-year visibility into revenue provides confidence to stakeholders and demonstrates the structural moat protecting large, established aerospace firms. Competitors lack the historical relationships, technical expertise, and security clearances necessary to dislodge these incumbents.

For shareholders seeking stable returns, Lockheed sweetened the deal by authorizing an additional $2 billion share repurchase program (bringing total authorization to $9.1 billion) and raising its quarterly dividend by 5% to $3.45 per share—yielding approximately 2.25%. The company has maintained consecutive annual dividend increases for 23 consecutive years, making it attractive for income-focused portfolios.

Leidos: Nasa’s Trusted Partner Expanding Beyond Government

Leidos Holdings, headquartered in Reston, Virginia, takes a different path to space sector dominance. Rather than specializing exclusively in hardware manufacture, Leidos operates as a full-service U.S. government contractor, offering engineering, systems integration, biomedical research, and mission-critical services. The company’s greatest asset is its two-decade partnership with NASA, a relationship that has deepened significantly.

In the third quarter of 2025, Leidos secured a $760 million subcontract with NASA covering critical space exploration work for both low-Earth-orbit missions and the Artemis lunar program. Much of this work involves designing and integrating laser-based atmospheric monitoring systems—equipment that continuously measures oxygen, water vapor, and carbon dioxide levels to ensure astronaut safety during orbital operations. This specialized expertise creates a high barrier to entry for competitors.

Financial metrics underscore Leidos’ growth trajectory. The stock has climbed 29% over the past year, outpacing Lockheed Martin’s appreciation. Third-quarter revenues hit a record $4.5 billion, representing 7% annual growth, while earnings per share reached $2.82—a 5% increase year-over-year. The quarterly dividend of $0.43 per share was boosted 7.5%, though it yields only 0.87% for income investors.

Beyond NASA contracts, Leidos is executing a strategic diversification initiative. The company agreed to acquire ENTRUST Solutions Group from private equity firm Kohlberg for $2.4 billion, expanding its reach as a systems engineering provider to U.S. utility companies. This move reduces dependence on defense-focused revenue while positioning the company in the high-growth infrastructure modernization sector.

Comparing the Two: Different Paths to Space Sector Superiority

Both companies are well-positioned for the commercial space boom, yet they present distinct investment profiles. Lockheed Martin commands superior market capitalization and operates with entrenched government relationships forged over decades. Its space division generates the highest margins and operates a massive backlog of committed work. For income-focused investors, Lockheed’s dividend yield and unbroken 23-year dividend growth history create compelling total return potential.

Leidos, by contrast, appears to be on a faster growth trajectory. Its 29% one-year stock appreciation exceeds Lockheed’s 18% gain. More importantly, Leidos is successfully building diversification away from pure defense contracting through its ENTRUST acquisition, which reduces concentration risk. For investors seeking growth over income, and those attracted to lower valuations, Leidos warrants serious consideration.

The broader market context suggests both companies will benefit substantially from the administration’s shift toward commercial space procurement. The “as-a-service” model aligned with permanent lunar establishment goals creates multi-year revenue visibility that should support sustained appreciation. The structural barriers protecting both companies—technical expertise, security clearances, and government relationships—ensure their competitive superiority will persist even as the space sector expands dramatically.

For investors positioned to capitalize on America’s commercial space ambitions, these two contractors offer proven execution and visible growth catalysts extending well beyond 2026.