The numbers tell a story that no diplomatic communiqué or United Nations resolution has been able to bend. Israeli defense exports more than doubled over the past five years and hit a record near $15 billion in 2024, with leading manufacturers Elbit Systems and Israel Aerospace Industries both reporting double-digit sales growth as orders flooded in from foreign militaries facing modern threats and short timelines. According to a new Associated Press report, countries that publicly vowed to shun Israeli weapons makers in protest of the Gaza war are nonetheless placing orders quietly through subsidiaries, intermediaries, and direct contracts, because the alternative is going to the battlefield with equipment that has never been tested against the actual threats now defining ground combat in the 2020s.
The Stockholm International Peace Research Institute, in its March report, ranked Israel as the world’s seventh-largest arms supplier for the first time, leapfrogging the United Kingdom. That ranking is a remarkable structural shift in a global defense market that has been dominated for decades by the United States, Russia, France, and a handful of other industrial giants. Israel, a country of roughly nine million people sitting on a sliver of Mediterranean coastline, is now selling more weapons to the rest of the world than the country that built the Spitfire, the Harrier, and the Challenger 2 tank. That is not an accident of accounting. It is the result of a defense ecosystem that has spent the past three years stress-testing every major product line in real combat against the most aggressive non-state and state actors operating today.
What Combat Testing Actually Means in the Israeli Context
Defense buyers, whether they are German procurement officers, Indian air force generals, or Vietnamese coastal defense planners, have a universal problem: most modern weapons systems have never seen real combat. The U.S. Patriot missile system, the Russian S-400, the French Aster missile, the European Eurofighter, and countless drone, sensor, and radar platforms are sold based on test-range performance and contractor brochures. Israeli systems are sold based on what they actually did last Tuesday over Tel Aviv or last month over the Lebanese border.
When Iran launched the largest ballistic missile attack in history against Israel in October 2024 and again during the renewed war in early 2026, Israeli air defenses, layered between Iron Dome, David’s Sling, and Arrow, intercepted hundreds of incoming projectiles in a single coordinated operation. Those interceptions were watched in real time by military attachés from dozens of countries who were placed inside Israeli command centers as observers or partners. Air defense officials in Berlin, Athens, Warsaw, and New Delhi did not need to read a SIPRI report to understand what Israeli systems can do. They watched it happen.
The same principle applies to drone warfare. The October 7 attacks and the subsequent Gaza campaign forced the Israel Defense Forces to develop, field, and iterate small-drone countermeasures faster than any other military on earth. Counter-drone systems that were prototypes in 2023 are now production-ready, deployed in volume, and licensed to allied militaries who have learned the hard way, in Ukraine, in the Red Sea, and in their own training ranges, that loitering munitions and quadcopter-based weapons are now a permanent feature of every battlefield. The system known as Arbel, developed by Israel Weapon Industries and brought to market in 2024, places a computer chip inside a rifle that significantly reduces fatigue-related error when soldiers attempt to shoot down tactical drones. More than two dozen countries are now using it, according to Semion Dukhan, head of Europe for IWI, and some of those buyers have publicly stated they will not deal with Israel. The contradiction is real and IWI is being discreet about names, but the units have shipped.
The Massivit Story Shows How the Sector Is Pivoting
The transformation is not just at the legacy defense primes. It is happening at the edges of the Israeli technology economy, where companies that previously had nothing to do with the military are pivoting because the customer is now the IDF and the market is growing at a triple-digit pace. Massivit, a Lod-based 3D printing company that previously sold large-format printers to Disney, DreamWorks, and Netflix for set pieces and themed-entertainment installations, was approached last year by the Israeli Defense Ministry about producing large drone parts on a compressed timeline.
Chief Executive Yossi Azarzar, quoted in the Associated Press report, said he stopped thinking about Hollywood sets. The entertainment industry, he noted, is a nice customer, but defense is a necessity. Since Israel and the United States struck Iran at the end of February, Massivit has seen a 200% rise in inquiries from buyers around the world, including defense and aeronautical companies in Europe, the United States, Southeast Asia, and India. The company’s printers can produce drone airframe components in days rather than weeks, which matters enormously in a procurement environment where modern conflicts can consume more munitions and platforms in a month than peacetime stockpiles were built to provide in a year.
The Massivit story is not unique. The Israeli Defense Tech Expo in Tel Aviv this year drew international buyers in record numbers, and dozens of small and mid-cap Israeli companies, many of which would have been unrecognizable to defense procurement officers five years ago, are now signing memoranda of understanding with foreign militaries. ASIO, a company that makes a rugged smartphone unit called the Orion, saw IDF orders surge 400% since the Gaza war began. The Orion uses augmented reality, real-time mapping, and artificial intelligence to help soldiers plan missions and respond to battlefield threats. ASIO co-founder and CEO Tomer Malchi told the AP the company recently signed a deal with a major U.S. defense company and is in talks with roughly 20 other countries.
Why the Boycotts Are Not Working
Public political theater and actual procurement decisions are different things, and the gap between them has rarely been wider than it is right now in European defense ministries. Spain canceled a deal last year for anti-tank missile systems sold by an Israeli company’s subsidiary. Slovenia announced it would ban the import, export, and transit of all weapons to and from Israel. Both moves were celebrated by activist organizations and treated as evidence that international pressure was working. The Israeli defense industry, in private, treated the same moves as press releases that would be quietly contradicted by the next procurement cycle.
That assessment has held up. The reason is structural. European militaries spent two decades drawing down ammunition stockpiles, deferring drone investment, and assuming that the next major war would be a counter-insurgency campaign in a place like Mali. The combination of the Ukraine war, the Red Sea Houthi campaign, the renewed Iran conflict, and the broader return of state-on-state warfare has forced every NATO country and every Indo-Pacific democracy to crash-rebuild its inventory. The systems they need are systems that work today, not in 2031. Israeli inventory is the only inventory on the global market that is simultaneously available, scalable, and combat-validated against the exact threats those buyers are now confronting.
Defense expert Seth J. Frantzman, an adjunct fellow at the Foundation for Defense of Democracies and author of the book “Drone Wars,” put it bluntly in the AP report. Countries have had to dramatically increase their defenses because of the proliferation of global conflicts and they need systems that will work. Most countries, he said, do not have the time right now to build their own defense systems locally and quickly. A lot of countries are looking to Israel because they are seeing in real time that these are munitions and systems that work.
Israel’s defense minister Israel Katz called the export surge a direct result of the successes of the IDF and the country’s defense industries. He noted that the world sees Israeli strength and seeks to be a partner in it. That framing, while politically charged, is supported by the actual ordering patterns. The IDF has been one of the most active conventional military forces on earth over the past 32 months. Every system in its inventory has been observed, tested, and either retained or modified. Foreign buyers want that data and they want the equipment that came out the other side of it.
What This Means for U.S. and Allied Defense Cooperation
For U.S. defense planners, the rise of Israel as a top-seven global arms exporter is both an opportunity and a strategic consideration. American primes including Lockheed Martin, Northrop Grumman, and RTX have long maintained joint ventures and co-production agreements with Israeli firms. ASIO’s recent deal with an unnamed major U.S. defense company fits the pattern. The U.S. industrial base benefits when Israeli innovation, particularly in software-defined systems, counter-drone hardware, and active protection systems for armored vehicles, gets integrated into American platforms.
There are also competitive overlaps. Israeli air defense systems are now being marketed in regions where U.S. systems would have been the default choice five years ago. Germany’s purchase of the Arrow 3 system in 2023 was the largest defense deal in Israeli history at the time and a watershed moment for European air defense procurement. Similar conversations are now underway in other NATO capitals, in the Gulf, and in the Asia-Pacific. The U.S. and Israel coordinate closely on most major export decisions, but the breadth of Israeli systems now in play means more deals will be struck without the Pentagon as the central broker.
For investors, the implications are clear. Elbit Systems trades on the Nasdaq under the ticker ESLT and has been a top performer in the broader defense sector. Israel Aerospace Industries is not publicly traded but its growth trajectory mirrors the broader sector. Smaller-cap Israeli defense names, including Smart Shooter, IWI, and ASIO, are increasingly visible to global allocators looking for pure-play exposure to combat-validated defense technology. The sector also feeds U.S.-listed names through joint ventures and licensing deals, which is one of the reasons U.S. defense ETF performance has remained robust even when individual primes have underperformed.
The broader picture is that Israel has become an indispensable supplier in the modern Western and aligned-Asian defense ecosystem, and the demand profile is durable. The wars Israel has been fighting are the wars every modern military now expects to fight. The buyers know it. The activists who lobby against Israeli arms sales know it too, which is why the gap between public protest and private procurement keeps growing.
For additional context, our previous coverage of Israel’s defense tech boom and its market implications walks through the public-market performance of the leading Israeli defense names. Readers tracking the broader Iran conflict environment may also want to revisit our analysis of Israel preparing for renewed Iran conflict and the IDF operation against Iran, both of which set the strategic context for why combat-tested Israeli systems are now in unprecedented demand.
