RTX and Northrop Grumman offer more direct exposure to the ongoing defense spending boom than Palantir Technologies, according to a Motley Fool analysis. RTX carries a $289 billion backlog and Northrop Grumman a $104.7 billion backlog, both tied to long-term hardware programs rather than Palantir's software contracts.
Palantir Technologies trades on the strength of its software and AI platforms for defense, but the Motley Fool argues investors are paying too much for that exposure relative to what they get from RTX and Northrop Grumman. Palantir's growth is concentrated in the United States, and many of its software contracts provide less revenue visibility than the long-term contracts held by other defense stocks.
RTX leans on a $289 billion backlog
RTX develops air and missile defense systems, radars, and precision weapons through its Raytheon business. In the second quarter of 2026, Raytheon reported sales of $8.3 billion, up 18% year over year, driven by air and space defense systems, naval programs, and land and air defense systems.
The company holds a $289 billion backlog, including $119 billion tied to its defense business. That backlog gives RTX years of contracted demand, unlike Palantir's newer AI platform. These systems require ongoing maintenance, replenishment, and upgrades, which creates follow-on revenue beyond the initial sale.
Northrop Grumman builds on the B-21 and Sentinel programs
Northrop Grumman builds stealth aircraft, intercontinental ballistic missile systems, and advanced sensors. The company is producing the Air Force's next-generation B-21 bomber, and production is already accelerating.
The company is also the prime contractor for the Sentinel intercontinental ballistic missile program, which will replace the Air Force's aging Minuteman III missiles over a multidecade deployment. After the company recorded net awards of $20 billion in the second quarter, its backlog reached $104.7 billion, including awards for the F-35 and Glide Phase Interceptor programs.
Hardware versus software exposure
Unlike Palantir's software-focused approach, Northrop's advantage lies in exposure to physical systems the military has already committed to buying. Building a stealth bomber, nuclear missile system, or advanced radar requires years of close collaboration with the government, and once a contractor joins these programs, it can generate follow-on cash flow for decades.
RTX and Northrop Grumman give stock market investors exposure to the same defense spending boom as Palantir, but through long-term programs and mission-critical hardware rather than software and AI platforms. Palantir may be growing fast, but its lofty valuation leaves it with little margin for error.
Source: The Motley Fool
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