Space

1. Top-line defense budgets are structurally rising

United States

FY2019: ~$686B
FY2024: ~$886B
FY2025–26 trajectory: ~$900B+ baseline (before supplemental bills)

That’s ~30% growth in ~6 years, despite already being at historic highs.

Drivers:

China military modernization
Russia / Ukraine war
Middle East instability
Taiwan contingency planning

But the important part is where the incremental dollars go.

2. Space is one of the FASTEST-growing defense sub-budgets

Space Force & Defense Space Spending

The U.S. Space Force budget has grown ~2× since inception (2019)
Space-related programs are growing faster than overall DoD spend

Why?

Space is now considered a warfighting domain, like air or sea
Satellites are no longer “support assets” — they are targets

3. Shift from “few exquisite satellites” → “many cheap satellites”

This is the key structural change.

Old model (legacy primes)

5–10 very expensive satellites
GEO or MEO orbits
Long build times (5–10 years)
Single points of failure

New model (SDA / Space Force)

Hundreds of LEO satellites
Proliferated constellations
Shorter lifetimes (3–5 years)
Rapid replenishment

This model:

Raises annual spending
Creates repeat manufacturing demand
Favors commercial-style production

4. Specific programs driving growth (very important)

Space Development Agency (SDA)

The SDA is the budget engine behind RKLB-style companies.

Focus:

Missile warning
Missile tracking
Transport layer (data relay)
Custody layer (tracking hypersonics)

Characteristics:

Multi-year block buys
Fixed-price contracts
Production scale, not R&D science projects

This shifts money away from:

Lockheed Martin
Northrop Grumman

Toward:

Faster, cheaper, vertically integrated suppliers like RKLB

5. Global defense budgets are rising too (not just the US)

NATO & Allies

NATO mandate: 2% of GDP defense spend
Germany, Japan, Australia all accelerating budgets
Japan is targeting ~2% of GDP by 2027 (nearly double prior levels)

Many of these allies:

Lack domestic space primes
Prefer US-aligned commercial suppliers
Buy smaller, cheaper, faster satellite systems

RKLB benefits as a non-ITAR-hostile, allied supplier

6. Why this matters specifically for Rocket Lab’s growth

Revenue quality upgrade

Defense space spending:

Is multi-year
Is contracted
Has budget protection even in recessions

This is not cyclical commercial demand.

Business model fit

Defense wants:

Predictable delivery
Vertical integration
Repeatable manufacturing
Rapid cadence

Rocket Lab offers:

Satellite buses
Subsystems
Integration
(Eventually) launch

They sell solutions, not components.

7. Why this growth is more durable than typical “defense cycles”

Unlike aircraft or ships:

Satellites depreciate faster
Orbits are contested
Assets are expected to be lost

That means:

Continuous replacement
Continuous ordering
Permanent baseline demand

This creates something defense rarely has:

A recurring-revenue-like profile

Bottom line (investor framing)

What’s growing is not just defense budgets — it’s:

Space Force allocations
SDA constellation programs
Proliferated LEO architectures
Replacement & replenishment spending

Why RKLB benefits:

Right price point
Right scale
Right speed
Right customers

What still needs to happen (per your framework):

Convert this demand into operating income
Show Space Systems margins hold at scale

If you want next, we can:

Map specific SDA budget lines → RKLB revenue
Stress-test defense spend if geopolitics cool
Compare RKLB’s exposure vs traditional primes on real growth, not headline budgets