פירוש על עבודה זרה 31:3

"To the Persians, who protect us" - It seems that we are also permitted nowadays to sell weapons to gentiles from this reason.

Adda b. Ahavah adds that Jews may not even sell any raw material that would normally be turned into weapons. This refers only to a particular type of iron that would only be used for weapons. Other materials that may be used for other purposes may be sold to them.
Interestingly, the sugya again notes that this prohibition is not observed. Jews were selling material to non-Jews that could be used as a weapon. R. Ashi explains that such material is sold to Persians who protect the Jews.
This sugya has some interesting ramifications for the question as to whether or not it is permitted to sell weapons. One way of reading the sugya is that it is prohibited to sell weapons only to those who might use them against Jews. Jews (Israel) can sell weapons freely to others who fight each other. But the sugya might possibly be read more expansively as prohibiting selling weapons to anyone who would use them offensively.