Elbit Systems and Next Vision Stocks Fall Despite Strong Q2 Results Amid New Market Expectations

Elbit Systems and Next Vision, two leading Israeli defense companies listed on the Tel Aviv Stock Exchange, reported strong second-quarter results this week, showing significant growth in orders, revenues, and profits. Elbit Systems, led by CEO Bezalel (Buzi) Malkis, announced a record backlog of $32 billion, up from $28 billion at the end of 2025, with revenues rising 16% to $2.3 billion and net profit increasing 32% to $199 million. Next Vision, headed by Chen Golan, reported revenues of $88.2 million, a 138% increase, and net profit of $53.6 million, up 130%, while raising its 2026 revenue forecast to $355 million, reflecting 111% growth. Despite these impressive figures surpassing analyst expectations, both companies’ shares dropped sharply upon earnings release, with Elbit’s stock falling 8% in one day, erasing about 10 billion shekels in market value, and Next Vision’s shares declining 6.7% before a slight recovery.

Market analysts attribute the selloff not to disappointing results but to a new, higher benchmark for defense stocks, which have seen extraordinary price gains recently, Elbit’s shares surged 240% over three years and Next Vision’s soared over 1,050%. Both companies trade at price-to-earnings multiples roughly double the sector average of 33, with Elbit at 63 and Next Vision at 55, leading investors to take profits amid heightened expectations for continued rapid growth and clear growth drivers. Analysts like Rami Dror of Value Advanced Investments and Ilia Feiner of Leader Capital Markets note that investors now demand not only strong results but also forecasts indicating accelerating business momentum.

Additional factors cited include operational challenges such as a decline in Elbit’s aviation sector activity, increased effective tax rates, and heavy investments in production capacity and R&D. Next Vision’s slight gross margin erosion and a $20 million drop in order backlog compared to the previous quarter also raised caution, though some experts argue these are seasonal or volume-related effects. Bank Hapoalim’s research team maintains a market perform rating on Elbit, suggesting much of the growth potential is already priced in. The Tel Aviv defense index has lost 36% since its peak in March, reflecting a broader shift in investor sentiment toward more skepticism about defense stock valuations.