Major U.S. and global defense contractors are set for a cash windfall from a historic number of weapons orders, The Financial Times reported on Monday.

The top 15 defense contractors are projected to generate roughly $52 billion in 2026, nearly double what they made in 2021, according to the Times. The industry is enjoying record numbers as governments around the world place an increasing amount of weapons orders to deal with a rise in global conflicts and tensions. (RELATED: Massive Void Emerges In Pacific As US Shuffles Warships To Middle East)

“It is a cyclical business,” Byron Callan, managing partner at Capital Alpha Partners, told the Times. “As much as people talk about 10-year demand cycles, politics can change and security assessments can change and so too can defense demand.”

A part of the Argentinian delegation discovers one of the F-16 planes that Argentina is buying from Denmark during a press event at Skrydstrup Air Base at Skrydstrup Airport, Denmark, on April 16, 2024, on the occasion of the signing ceremony of the contract for the sale of 24 Danish F-16 combat aircraft to Argentina. (Photo by Bo Amstrup / Ritzau Scanpix / AFP) / Denmark OUT (Photo by BO AMSTRUP/Ritzau Scanpix/AFP via Getty Images)

Five major U.S.-based defense contractors are expected to generate $26 billion by the end of 2026, more than double what they made in 2021, according to the Times. That doesn’t include Boeing, however, as the company has recently been beset with problems and primarily focuses on civil aerospace projects to begin with.

U.S. defense contractors have also benefited from $13 billion in recent government legislation that appropriated the funds for weapons production for Ukraine, Israel and Taiwan, according to the Times. The U.S. has spent more than $70 billion on military aid for Ukraine since 2022.

Europe’s BAE Systems, Rheinmetall and Saab — three of the country’s biggest contractors — are set to jointly see more than a 40% jump in cash flow, according to the Times.

The surge in defense contracts can be explained by a rise in geopolitical tensions, especially with regard to the ongoing Russia-Ukraine war, conflict in the Middle East and rising tensions in Asia, according to the Times.

Defense contractors don’t usually see profits realized for several years, as sales are typically only completed once the project or weapon is delivered to the buyer, but the historic boom in contracts is already raising questions as to how those companies will use their windfall of funds, according to the Times.

UELZEN, GERMANY – FEBRUARY 12: Employees work at a production line as German Chancellor Olaf Scholz and Defence Minister Boris Pistorius attend the groundbreaking ceremony for a new munitions factory of German defence contractor Rheinmetall on February 12, 2024 in Unterluess, Germany. (Photo by Fabian Bimmer – Pool/Getty Images)

“It’s the billion-dollar question for the industry: companies typically don’t like holding large amounts of cash on their balance sheets, so what do they do with all that money if acquisitions are not that straightforward? Share buybacks and dividends are one way,” Robert Stallard, an analyst at Vertical Research, told the Times.

Some defense contractors have already poured billions of dollars into stock share buybacks, according to the Times. 2023 was the most robust year in five years for share buybacks between aerospace and defense contractors, though the move has been criticized by some lawmakers who wonder whether those companies are dedicating enough funding to improving their production capabilities.

Foreign defense companies find that filling contracts for the U.S. is appealing because of the sheer size of the country’s military and need for equipment, even if strict regulations and red tape laws make it somewhat burdensome, according to Armin Papperger, chief executive of Rheinmetall, the Times reported.

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