Firms like Northrop Grumman are struggling on the market despite record military spending. Investors are now watching Congress—and a new generation of startups.

Firms like Northrop Grumman are struggling on the market despite record military spending. Investors are now watching Congress—and a new generation of startups.

Major defense contractors such as Lockheed Martin and BAE Systems have invested a record $4.1 billion into military startups this year to adapt to modern warfare.