Outstanding Performance Amid Structural Challenges

Amid a volatile market environment, two of Israel’s leading defense companies—Elbit Systems and Israel Aerospace Industries (IAI)—have emerged at the forefront of the country’s economic narrative. One is breaking stock market records, while the other prepares for a long-awaited public offering. These developments not only reflect the momentum of Israel’s defense sector but also highlight the strategic importance of these corporations in the broader economic landscape.

Elbit Systems: The Growth Engine of 2025

Elbit Systems, Israel’s largest private defense firm, has become one of the most powerful equities in both local and global markets in 2025. According to data from Business Insider, the company’s market value surged by approximately 116% over the past year—a remarkable trajectory by international standards. The steep rise is largely fueled by growing global demand for advanced warfare and intelligence technologies, particularly amid ongoing regional tensions.

Elbit’s recent financial reports reveal significant revenue growth, increased operating profit, and strong cash flows that are being reinvested in new development programs. The company is also expanding its reach in Europe and Asia, securing new contracts with governments allocating growing budgets to defense spending.

Israel Aerospace Industries: Record Profits Ahead of a Complex IPO

In parallel to Elbit’s surge, state-owned IAI is nearing a strategic turning point with its planned Initial Public Offering (IPO), first approved by the Israeli government in 2020. The proposed IPO would see the state selling up to 49% of the company’s shares. However, according to an exclusive Reuters report, the process is currently stalled due to protracted negotiations with labor unions seeking guarantees on employment and compensation terms.

Despite the organizational deadlock, IAI has posted strong financials: a record net profit of $416 million in 2024 and a multi-billion-dollar order backlog. Its contracts cover satellite technologies, air defense systems, and unmanned aerial platforms. Although still bound by strict regulatory frameworks as a government-owned entity, the company’s operational capacity continues to improve—indicating significant growth potential post-IPO.

Between Market Freedom and Government Oversight: A Comparative Analysis

The primary distinction between the two companies lies in their ownership structure and managerial flexibility. While Elbit operates as a publicly traded, profit-driven enterprise, IAI is subject to government oversight and political considerations, which can hinder agile commercial decision-making. Nevertheless, both companies share similar technological profiles and international market potential.

For analysts, Elbit represents a clear market bet on long-term defense growth, whereas IAI is seen as a “sleeping giant” with latent value that could be unlocked once the IPO is complete.

Implications for Israeli and Global Markets

These two firms exemplify the growing role of the defense sector within Israel’s economic model. Investments in defense, cybersecurity, and dual-use (military-civilian) technologies are expected to grow—driven by sustained geopolitical instability. The strength of the Israeli stock market, as reflected in the performance of the TA-125 Index, is underpinned by the success of companies like Elbit and IAI.

Foreign investor interest is rising, as capital flows increasingly favor Tel Aviv over Wall Street or London, signaling a geo-economic shift toward innovation and security over traditional consumer-driven models.

Looking Ahead: Opportunities and Risks

The key open question is whether IAI will manage to complete its IPO in 2025 or whether internal hurdles will delay it once more. Simultaneously, Elbit will be challenged to maintain its growth trajectory in a post-conflict environment while preserving its technological edge and innovation capacity.

Ultimately, both companies are expected to remain pivotal forces in shaping the Israeli capital market, combining national defense imperatives, industrial innovation, and complex labor dynamics.