A private-equity giant sees 'unlimited' upside in a booming sector that's not AI

Huileng TanThu, May 28, 2026 at 4:54 AM UTC

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Geopolitical tensions are creating "unlimited" opportunities in defense, Carlyle CEO Harvey Schwartz said.

Russia's invasion of Ukraine and the Iran war have intensified the global focus on national security.

Schwartz said Carlyle's defense business has delivered "outrageous" returns over four decades.

Geopolitical tensions are creating massive opportunities in defense and industrial investing, according to Carlyle Group CEO Harvey Schwartz.

"Everywhere you go in the world, the conversation is the same. It's a conversation first and foremost about national security," Schwartz said at the Bernstein Strategic Decisions Conference in New York on Wednesday.

Russia's invasion of Ukraine and the Iran war have sharpened that focus, driving higher defense spending and increasing demand for private capital tied to national security.

Schwartz described the sector's total addressable market as being "unlimited because everywhere you go, everybody's increasing their defense budgets by 1%, 2%, 5%."

The comments offer a window into how one of the world's largest private-equity firms is positioning itself for a more fragmented global order.

Schwartz argued that the post-financial-crisis era of ultra-low interest rates distorted markets and asset pricing. Today's higher-rate environment, he said, is creating more attractive opportunities for investors with expertise in capital-intensive industries.

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That definition of national security now extends beyond military spending, Schwartz said, encompassing energy security, data infrastructure, logistics, and supply-chain resilience.

His comments came the same day Carlyle launched a new aerospace, defense, and industrials middle-market platform.

For Carlyle, which had $475 billion in assets under management as of March 31, the strategy builds on longstanding businesses in aerospace, defense, energy, and industrials — sectors that fell out of favor during the software investing boom of recent years.

Schwartz described Carlyle's defense investments — where the firm has committed roughly $11 billion over four decades — as one of its strongest, with "outrageous" performance.

The aerospace and defense sector already enjoyed a big year in 2025, catapulted higher by geopolitical unrest and rising defense spending by governments around the world.

The S&P Aerospace & Defense Select Index is 16% higher this year after a 48% gain last year.

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Source: “AOL Money”