Eoin Treacy's view

Boston Dynamics was an aspiring defence contractor when it was acquired by Google. Since Google’s long held mantra is to do no evil that pretty much precluded the company from selling robots that might one day be designed to kill people. The problem is that it’s hard to design robots to displace manual labour outside of strictly controlled environments. The company is making rapid strides in that field but the primary growth avenue is in places where humans would be in danger, not least from other humans. That is at least part of the reason Alphabet is looking for a buyer for the company.   

The US defence sector surged higher following the US presidential election, as investors correctly assumed the new administration would seek to upend the status quo which undeniably raises the geopolitical risk premium. Subsequent tweets seeking to highlight President Trump’s desire to get better value for money have weighed on the same shares. 



Three of the major contractors Northrup Grumman, Raytheon and Lockheed Martin have pulled back to the region of their respective trend means and will need to demonstrate support in the current areas if medium-term potential for additional upside is to be given the benefit of the doubt. 

Here is a link to the defence section of the Chart Library.