From left, Raytheon CEO Tom Kennedy, former Director of National Intelligence Dennis Blair, and Lockheed Martin CEO Marillyn Hewson wait for the arrival of President Donald Trump to an event at the White House on March 22, 2018.
Credit: Evan Vucci/AP

Defense executives from around the country crowded into Goldman Sachs’ glimmering tower in downtown Manhattan in mid-May, eager to present before a conference of bankers and financial analysts.

While much of the world was on edge over simmering tension in the Middle East, as the U.S. and its allies have stoked tensions with Iran, the businessmen at the conference talked of opportunity.

Eric DeMarco, the president of Kratos Defense & Security Solutions, addressed the conference, arguing that his company is “very well-aligned” for the shift in the military budget away from asymmetrical fighting toward nation-state warfare.

The rising threat of war with Iran, Russia, and China, DeMarco continued, could threaten U.S. naval power, which could require ballistic missile threat upgrades, the type of systems Kratos Defense specializes in.

Large arms manufacturers from across the industry have similarly told investors that escalating conflict […]