Israeli defense giant’s profits surge amid Middle East turmoil

A defense company that just unveiled a laser powerful enough to shoot down threats from a fighter jet cockpit also posted a record $32 billion order backlog, and the two facts are not unrelated. Elbit Systems, an Israeli defense technology company that develops everything from night vision goggles to unmanned aircraft, reported second quarter 2026 revenue of $2.3 billion, a 16 percent jump from the same period last year, alongside a backlog of confirmed future orders that grew to its highest level ever.

Bezhalel Machlis, known widely by his nickname Butzi, serves as president and CEO of Elbit Systems and framed the quarter as continuation of a broader growth trend rather than an isolated spike.

“The strong momentum in the second quarter was sustained, delivering double-digit growth in sales, backlog and earnings per share, improved profitability, and strong cash flow generation. Our backlog reached a new record of $32 billion, providing long-term visibility and demonstrating the continued confidence of customers worldwide in Elbit Systems’ technologies and capabilities,” said Machlis.

That backlog figure matters because it represents money the company has already secured through signed contracts but has not yet delivered, giving investors and analysts a window into future revenue rather than just a snapshot of the past three months. Roughly 73 percent of that $32 billion in confirmed future business comes from customers outside Israel, and about 42 percent of it is scheduled to be fulfilled before the end of 2027, meaning Elbit has locked in a substantial pipeline of work stretching well beyond this earnings report.

Machlis used the same statement to highlight what may be the quarter’s most significant technological milestone, a shift toward directed energy weapons that use focused beams of light rather than traditional explosive projectiles to destroy incoming threats.

“Elbit Systems is leading the development of next-generation high power laser and directed energy capabilities. Most recently, we unveiled our airborne high-power laser system, currently under development for helicopters and fighter aircraft. This new capability builds on decades of technological and operational experience and will further expand Elbit Systems’ broad portfolio of systems, supporting customers and helping protect nations and critical assets around the world,” said Machlis.

Mounting a laser weapon on a helicopter or fighter jet represents a meaningful technical leap beyond the ground-based and naval laser systems that have dominated directed energy development so far, since an airborne platform must manage far tighter constraints on weight, power generation and heat dissipation while still delivering enough energy to disable a target like an incoming missile or drone. Elbit’s revenue breakdown for the quarter shows exactly where that kind of investment is paying off, with the company’s ISTAR and Electronic Warfare division, the unit responsible for intelligence, surveillance, target acquisition and reconnaissance systems alongside jamming and countermeasure technology, posting 22 percent revenue growth driven largely by increased sales of airborne and land-based high power laser, electronic warfare and maritime systems across the Asia-Pacific region.

Other segments told a more mixed story. The company’s Land division, which covers ammunition, munitions and ground combat systems, grew 32 percent, driven mainly by ammunition and munitions sales inside Israel, a figure that reflects the sustained demand Elbit has seen from the Israeli Ministry of Defense since the war that began following the October 7, 2023 Hamas attack. The company’s C4I and Cyber division, covering command, control, communications and intelligence systems along with cybersecurity products, grew 11 percent on stronger radio system and command and control sales in Europe, where NATO members have continued ramping up defense spending. Elbit Systems of America, the company’s U.S. subsidiary, grew 17 percent, helped by a one-time favorable mix of contracts and increased sales of night vision systems, maritime systems and electronic systems. The one segment that declined was Aerospace, which fell 8 percent due to weaker training and simulation system sales in Europe, only partially offset by stronger unmanned aircraft sales in Israel.

The war and broader Middle East conflict have left a visible mark on Elbit’s operations well beyond just increased Israeli demand. The company disclosed that its facilities and supply chains have faced disruptions tied to Houthi militant attacks on Red Sea shipping, material shortages, elevated component prices, employees called up for military reserve duty, and restrictions some countries have placed on doing business with Israeli companies. Those pressures intensified earlier this year when the United States and Israel launched a joint military operation against Iran on February 28, called Operation Epic Fury by the U.S. and Operation Roaring Lion by Israel, which was followed by Iranian strikes on U.S. military bases across Bahrain, Qatar, Saudi Arabia, the United Arab Emirates, Kuwait and Jordan, and a subsequent Hezbollah attack on Israel in March. A ceasefire between the U.S. and Iran took effect in April, and the U.S. and Iran signed a memorandum of understanding in June aimed at reopening the Strait of Hormuz, the narrow waterway through which a significant share of the world’s oil supply passes, though that agreement collapsed in early July after Iran attacked merchant ships attempting to transit the strait, prompting renewed U.S. strikes and a resumption of hostilities that remains unresolved as of this earnings report.

Elbit also disclosed two major contracts secured since its last quarterly report. On May 28, the company announced a roughly $350 million contract from an unnamed international customer to upgrade main battle tanks, including new fire control systems, electric gun and turret drive systems, and communication and situational awareness technology, work scheduled to run over four years. On July 20, Elbit Systems of America announced it had received multiple contracts from U.S. Customs and Border Protection worth more than $370 million to strengthen U.S. border security technology, with that work continuing through May 2029.

The company also declared a dividend of $1.00 per share, payable on October 26 to shareholders on record as of October 13, continuing a payout policy that has run alongside the company’s growth even as it pours increasing capital into expanding production capacity and research and development.

What this quarter ultimately captures is a defense contractor whose fortunes have become deeply intertwined with the trajectory of conflicts it did not start and cannot control, from a war in Gaza to strikes on Iran to attacks on Red Sea shipping lanes, and a company using that same volatile environment to fund a technological bet on lasers that, if it pays off, could reshape how militaries defend aircraft and personnel for decades to come. A record backlog is reassuring to shareholders precisely because it promises stability, but the numbers behind that backlog tell a story of a region where nothing about the coming quarters is actually settled.