Boeing was at risk of losing all fighter-jet production altogether. Now the stock is up on a new Navy contract.

Boeing shares rose close to 3% in premarket trading Wednesday after the U.S. Navy selected the company to develop its next-generation fighter jet. The contract marks a notable vote of confidence for Boeing's defense business, which had faced questions about the long-term future of its tactical aircraft production.

For investors, the significance lies less in the immediate revenue — development contracts typically unfold over years — and more in what it signals about Boeing's standing in military aviation. The award gives the company a role in a major Navy modernization program and could help stabilize a defense portfolio that has contended with program delays and cost pressures in recent years.

What to watch: the contract's structure, including initial funding levels and any subsequent phases, as well as how Boeing balances this work against its commercial and other defense commitments. Execution on development milestones will matter, since early-stage programs often carry technical and budgetary risk.