Stephen Jury

Global Commodity Strategist


Geopolitical and security risks are swiftly reshaping global markets.

After years of post-Cold War peace, international hostilities in Europe and the Middle East have spilled over into armed conflict, adding urgency to high-level discussions around national security and defense spending.

In the midst of this tumult, the United States is fast approaching a presidential election in November. When Americans turn out to cast their ballots, they will be in good company: More than 1.5 billion people in at least 50 countries will go to the polls this year – an unprecedented percentage of the global population.1

So how can investors make sense of these impending changes? 

First, it’s important to understand that geopolitical events generally do not have long-lasting impacts on investment portfolios. While disruptions can create short-term volatility, economic growth, innovation and a diversified portfolio can help investors stick to their plans and achieve their goals over time.

When risks do emerge, however – and in longer periods of heightened uncertainty – investing opportunities are also likely to appear. This time is no different. It’s critical to look at the myriad ways in which governments and corporations around the world are preparing to meet geopolitical challenges by investing in, and enhancing, their own security.

With multipolar threats rising, spending is increasing in a drive toward new, innovative security solutions. We see four areas of thematic focus emerging that will be integral to the future of security: national defense, energy provision, supply chains and cybersecurity.

As an investor, you can look at these security-related trends as new opportunities to consider strategically deploying your capital across both public and private markets. Here, we explore each of these investment themes in turn. 

National security: The power of traditional defense

Hazards abound in today’s geopolitical environment. Armed conflict is now at an 80-year high, with active and ongoing wars in Europe and the Middle East (Exhibit 1A). Tensions between the two great powers, China and the United States, are also rising sharply. And yet federal spending on national defense, as a percentage of U.S. gross domestic product (GDP), has been declining gradually over time (Exhibit 1B).

Global armed conflicts are at an 80-year high


Exhibit 1A: Number of global armed conflicts (1946–2021)

This is a chart depicting the increase in global armed conflicts from 1946 to 2021.


Source: Uppsala Conflict Data Program (UCDP), Uppsala University, Sweden. Data as of December 2022.

Defense spending has been falling amidst historic levels of conflict


Exhibit 1B: Federal outlays on national defense as a percentage of GDP

This is a chart depicting the United States’ defense spending from 1940 to 202


Source: Haver Analytics. Data as of December 2023

That dynamic may soon start to change, which could provide a powerful tailwind for defense firms.

Post-election, U.S. leadership will likely need to assess how best to maintain the country’s military might as China and Russia continue to upgrade their military systems and weaponry. Looking ahead, U.S. defense spending levels may need to be recalibrated with an eye to future threats.

Other countries, especially other members of the North Atlantic Treaty Organization (NATO), are also feeling the pressure to raise their military spending levels to agreed budgets, under U.S. pressure and in response to Russia’s invasion of Ukraine. Only 11 NATO countries are currently meeting their obligations on defense spending; seven more are expected to increase their spending this year.2

The United States, which is still far and away the largest military power in the world as well as the largest exporter of military hardware and weapons, will likely benefit from any additional spending by NATO members.3 Other countries may also start to diversify their supply chains going forward. In national defense – as in any global industry – allocating resources to diverse suppliers can spread risk and increase resilience.

Energy provision: Preparing for a global transition

As the world transitions from fossil fuels to renewable energy sources to combat climate change, policymakers in the United States and beyond are investing enormous amounts of taxpayer capital in the development of more sustainable sources of energy, such as solar and wind power.4

The goal? According to the International Energy Agency (IEA), an intergovernmental organization founded in 1974 to respond to the era’s oil shortages, carbon dioxide (CO2) emissions will need to be balanced, or “net zero,” by 2050 to keep climate change in check.5

Recent spending levels reflect the urgency of this environmental mandate. Global spending on renewables has already reached nearly $2 trillion per year (Exhibit 2). As countries strive to meet their net zero goals, spending on clean energy technology is expected to more than double by 2030, to $4.6 trillion.

The acceleration of the global energy transition will spur a sharp rise in investment dollars for clean technology


Exhibit 2: Global spending on the “net zero” energy transition (USD trillions)

This is a chart showing the anticipated sharp increase in investment in clean energy.


Source: International Energy Agency, World Energy Investment 2023. Data as of 2023. 

As government spending rises, investments in new energy technology and infrastructure are likely to get a boost, potentially creating new opportunities for investors.

Former British Prime Minister Winston Churchill once said, “Safety and certainty in energy lies in variety and variety alone.” Diversifying energy sources can help countries reduce their dependence on imported fossil fuels and strengthen their own economic resilience, which makes the difficult process of adopting new energy sources more palatable.

Supply chains: Manufacturing moves closer to home

For decades, many investors perceived globalization as a one-way trend. But even before COVID–19, the outbreak of a trade-and-tariffs war between China and the United States in 2018–2019 had already begun to put pressure on manufacturing supply chains.6

In the wake of the COVID–19 pandemic, the risks inherent to “offshoring” – the practice of establishing low-cost, geographically distant manufacturing facilities – are now painfully clear. The pandemic highlighted just how vulnerable companies were to supply chain disruptions. The shock of that realization has since prompted many companies to reassess their just-in-time delivery models. 

To redress this situation – and spurred by recent conflicts that have radically altered global shipping routes – some companies are now exploring the logistics of reshoring manufacturing jobs. Since 2021, U.S. reshoring announcements have reached a value of $322 billion.7 Other firms are also “friendshoring,” bringing manufacturing jobs closer to home by hiring workers in geographically adjacent (and politically aligned) countries.

The importance of those efforts to specific industry sectors cannot be understated. In technology, semiconductors are absolutely integral to the functionality of smartphones and household devices, but most of the companies producing these products are overly reliant on advanced chips made in Taiwan (Exhibit 3).

The global supply chain for semiconductor production is heavily weighted toward Taiwan


Exhibit 3: Taiwan’s share of global semiconductor market (production percentages)

This is a chart showing the prominence of global supply chain reliance on Taiwan for semiconductor production.


Source: BP Statistical Review, Supply Chain Brain. Data as of November 2022

Taiwan’s political future is far from assured, however. China is openly seeking “reunification” with the self-ruled island state, which the democratically elected government of Taiwan rejects. The potential for future conflict hangs in the air: Just before Taiwan’s latest elections in January, Chinese warships and fighter jets were spotted conducting maneuvers in the Taiwan Strait.8

The U.S. government is now pushing to build more domestic semiconductor manufacturing facilities and data centers. In March, President Joe Biden announced a preliminary agreement with technology company Intel Corporation to provide $8.5 billion in direct funding and access to $11 billion in loans under the CHIPS and Science Act of 2022.9 The company plans to use the funds to build and expand semiconductor facilities in several states, and create as many as 30,000 new jobs.10

Cybersecurity: Finding new ways to combat digital threats

Hacking is among the most recognized security threats to governments and companies. Cybersecurity breaches now occur almost daily, and the associated damages have risen with the frequency of attacks: The average cost of a single data breach has climbed from $3.62 million in 2017 to $4.45 million in 2023 – a 23% increase (Exhibit 4). 

Governments and corporates need to invest more to secure their data against cyberattacks


Exhibit 4 Total cost of one data breach (USD millions)

This is a chart depicting the increase in cost per data breach from 2017 to 2023.


Source: Uppsala Conflict Data Program (UCDP), Uppsala University, Sweden. Data as of December 2022.

For affected companies, primarily in healthcare and financial services, the loss of consumer confidence in the aftermath of such a breach may be even more profound.

Companies – and, increasingly, governments – are spending more than ever to protect their databases and critical defense systems from cyberattacks. Cybersecurity now constitutes 12% of overall technology budgets, up three percentage points since 2020.11 According to a recent report by consulting group McKinsey & Company, the addressable market for cybersecurity solutions could eventually reach $1.5 trillion to $2 trillion.12

How can investors engage in the future of security?

Most opportunities in this space will require a combination of public and private equity allocations. We think of the themes we’ve highlighted as long-term strategic investment trends, and gaining access to such changes requires patient commitment of capital.

We encourage investors to consider diversifying their equity portfolios by carefully allocating funds to security-related opportunities as part of a 10-to-15-year strategic investment plan. With the guidance of active managers with experience in each of these industry sectors, investors can gain insight into emerging opportunities in both public and private markets.

We can help

To learn more about the opportunities available to invest in the future of security, speak with your J.P. Morgan advisor.



Kings College London, “A guide to who is voting and when in this historic year for democracy,” January 12, 2024.


Sources: U.S. Department of Defense; NATO. Data as of April 2024.


OEC; CEPII. Data as of 2022.


Congress passed the Infrastructure Investment and Jobs Act on November 15, 2021.


“Net zero” refers to the International Energy Agency’s “Net Zero Emissions by 2050” scenario, the investment required to get on track for a 1.5°C stabilization in global average temperatures.


Office of the United States Trade Representative, September 18, 2018.


The White House, the Reshoring Initiative, November 30, 2023.


Staff writers, “Taiwan spots Chinese warships, aircraft near island ahead of elections,” Al Jazeera, December 23, 2023.


The White House, “President Biden announces up to an $8.5 billion preliminary agreement with Intel under the CHIPS and Science Act,” March 20, 2024.




IANS Research Security Budget Benchmark Report. Data as of October 3, 2023.


Bharath Aiyer, Jeffrey Caso, Peter Russell, and Marc Sorel, “New survey reveals $2 trillion market for cybersecurity technology and service providers,” McKinsey & Company, October 27, 2022.

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