NATO Secretary General Mark Rutte announced that it would buy up to ten surveillance planes from Sweden's Saab.

NATO leaders have gathered in Ankara, Turkey, already unveiling billions of dollars worth of defense deals - but the big question for investors is whether those commitments can be fulfilled on time.

Mark Rutte, secretary general of the international alliance, unveiled a number of contracts with European defense companies, some of which included machinery that had previously been provided by U.S. corporations, as President Donald Trump has consistently urged member states to raise their defense budgets.

On Tuesday, Rutte said that NATO will purchase up to ten surveillance aircraft from Swedish aerospace and defense company Saab (SE:SAAB.B), which according to Bloomberg could be worth about $5 billion. The former Dutch prime minister also said that four European countries would purchase up to five high-altitude drones from the West Falls Church, Virginia-based Northrop Grumman $(NOC)$.

Whether in the U.S. or Europe, defense companies worldwide are grappling with significant backlogs. Germany's Rheinmetall (XE:RHM) reported that its backlog reached EUR73 billion ($83 billion) in the first quarter of its fiscal year while the U.S.'s Lockheed Martin (LMT) said its backlog reached $194 billion at the end of 2025.

"As an investor, I would be looking into, to what extent they're actually, capable of fulfilling all of these orders on time and the commercial risk that comes with delays," Linus Terhorst, defense industries research fellow at U.K. think tank the Royal United Services Institute, told MarketWatch.

Renée Friedman, global head of research at Exante, told MarketWatch that labor shortages have caused considerable delays for the production process at defense firms.

"It's a question of, you make lots of promises about how we're going to increase our spending, but what's the actual capability to do so? And that's what investors should be looking at and considering, in terms of their time frame of when we'll actually see the cash flows into these companies beyond just promised contracts and the ability to deliver payments," she said.

Terhorst agreed on the issue of labor shortages, whereas the higher defense budget in the U.S. has allowed the industry there to be more active.

"The question now is to what extent is there going to be a strategic investment into new production lines, significantly larger workforces and so on, and, and that's where I see some problems with the demand certainty over that long time frame being a little bit wobbly," he said.

The Select Stoxx Europe Aerospace and Defense exchange-traded fund EUAD, which allows U.S. investors to gain exposure to the European defense sector, declined 2.5% on Tuesday, bringing total gains to about 70% since the ETF first opened in Oct. 2024.

Meanwhile, the iShares U.S. Aerospace and Defense ETF ITA also dropped 2.5% on Tuesday, but is still up 68% in the same period of time.

-Nora Redmond

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July 07, 2026 11:06 ET (15:06 GMT)

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