Elbit Systems Leads Tel Aviv Stock Exchange Amid Chip Stock Plunge

Tel Aviv's stock market experienced a significant divergence in October, with defense contractor Elbit Systems surging while major chip manufacturers Tower Semiconductor and Camtek saw sharp declines. Elbit Systems' stock jumped 19.3%, leading the TA-35 index, which itself fell 3.5% for the month. In contrast, Tower Semiconductor dropped 22.8% and Camtek lost 21.9%, marking the steepest falls within the index. This split performance highlights the market's contrasting fortunes, with defense stocks benefiting from ongoing demand and new contracts, while tech and chip stocks were dragged down by global weakness.

The disparity was particularly evident on the last trading day of October, when Nova, Camtek, and Tower each lost over 7% amid concerns that overseas tech sector weakness and revised growth expectations for AI and data centers would impact Israeli companies. Elbit Systems, however, is viewed as a different investment story, driven by long defense budget cycles, government orders, and European military rearmament needs. The company announced hundreds of millions of dollars in new contracts last month, attracting investors even in a volatile market.

Despite October's struggles for chip stocks, their performance year-to-date presents a different picture. While Elbit Systems has risen approximately 34% since the start of the year, Tower Semiconductor has gained nearly 49%. This suggests that October's downturn, while severe for chip stocks, may not negate their earlier gains.

Adding to its recent successes, Elbit Systems announced a 15-year agreement with the Ministry of Defense and the IDF to establish a training system for the future "Ro'em" (SIGMA) cannon and "Lahav" (PULS) rocket launchers. This deal, valued in the hundreds of millions of dollars, includes developing training infrastructure, simulators, and logistical support. The new facility aims to shorten training periods, enhance combatant skills, and reduce the need for operational platforms in training.

Zeev Landau, VP and Head of the Defense Procurement Administration, stated the agreement will bolster IDF readiness by integrating advanced training technologies with long-term support. Boaz Cohen, CEO of Elbit's Ground and TAR Division, added that the system will enable high-quality and efficient training for artillery corps soldiers. This domestic contract follows a series of international deals Elbit has secured this year, including contracts for rockets and aerial ISTAR systems in Europe and Asia, intelligence systems, and significant deals in the U.S. and for tank modernization.