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Global military spending recently climbed to record levels, led by the United States, Europe and Asia.
Defense stocks, backed by longterm government contracts, can offer relatively stable revenue streams.
Some of the best defense stocks to buy now include Axon, Woodward and ATI.
With geopolitical tensions on the rise and defense budgets growing worldwide, aerospace and defense companies are increasingly on investors’ radars. Global military spending recently climbed to record levels, led by the United States, Europe, and key Asia Pacific nations, as governments modernize capabilities across air, sea, cyber and space. From traditional prime contractors to next-generation space systems developers, the defense sector offers a range of opportunities with different risk-reward profiles.
Below you will find a comprehensive look at the best defense stocks, how they behave across market cycles, and strategies for incorporating them into a portfolio.
Are defense stocks a good investment?
Defense firms often operate in oligopolistic markets, backed by long-term government contracts and multiyear procurement programs. This can translate into relatively stable revenue streams compared with purely commercial businesses, especially during economic slowdowns when federal spending tends to be more predictable than consumer demand.
Examples of leading public defense companies:
Lockheed Martin Corporation (LMT) – A top U.S. prime contractor on fighter jets, missiles, and advanced defense systems.
RTX Corporation (RTX) – Parent of Raytheon Technologies with strong positions in missile defense and avionics.
Northrop Grumman Corporation (NOC) – Major systems integrator known for stealth bombers and space systems.
General Dynamics Corporation (GD) – Builds combat vehicles, submarines, and defense electronics.
Boeing Company (BA) – Aerospace and defense manufacturer with significant military contracts.
Intuitive Machines, Inc. (LUNR) – Emerging space technology and services company working with NASA and U.S. national security space programs.
These names represent different segments — from legacy primes to newer space-oriented contractors.
Do defense stocks outperform the market?
Historically, defense equities have:
Delivered competitive long-term returns versus broad indexes like the S&P 500.
Shown resilience during geopolitical shocks when investors rotate toward “stable” government-linked revenue streams.
Benefited from increased defense appropriations and supplemental spending bills.
Still, performance varies by company and period.
Below, we analyze and rank the best defense stocks using a blend of Zacks Rank signals, Style Scores, and fundamental metrics to identify compelling opportunities in today’s market.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
Axon Enterprise provides connected public-safety and defense technology, spanning TASER devices, body cameras, evidence software and counter-drone systems. Demand could strengthen as Dedrone addresses urgent needs across state, local, federal, international and enterprise markets, while AI-era tools, Fusus, Axon 911, Vision and Guardian may deepen its integrated ecosystem, support land-and-expand selling and broaden mission-critical infrastructure opportunities worldwide over time significantly.
Potential Risks
Execution risk remains elevated as Axon must scale mission-critical hardware amid geopolitical uncertainty, supplier coordination and inventory commitments, while counter-drone margins may stay pressured until volume improves.
Forecast
A Zacks Rank #1 (Strong Buy) signals positive estimate revisions, but F grades for Value, Growth, Momentum temper the setup. The chart shows a volatile price reset after a major run, while consensus estimates keep moving higher into 2026–2028. Recent surprises look mixed, suggesting upside depends on renewed confidence in durable AI-led growth.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
HEICO is an aerospace and defense supplier with Flight Support Group and Electronic Technologies Group segments. Defense exposure should benefit from products spanning missile hardware, parachute systems, antennas, fuel containment, surveillance countermeasures, power equipment and high-reliability electronics, while firm backlog across both segments should support future sales conversion as performance obligations are satisfied, with most later deliveries expected in fiscal 2027.
Potential Risks
Risks include acquisition integration, contingent consideration, debt-funded dealmaking, customer contract timing, and aerospace or defense order delays that could pressure margins and cash flows going forward.
Forecast
A Zacks Rank #1 points to favorable earnings-revision momentum, while the Style Scores are less compelling with the Value F, Growth C and Momentum D. The chart shows price appreciation running ahead of older consensus lines, with estimates stepping higher across 2026–2028 and mostly positive surprise markers. That combination supports the growth case, but also reinforces the need for continued beats to justify the premium.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
ATI supplies high-performance specialty materials and components for aerospace, defense and energy applications. Defense demand should help drive double-digit 2026 growth, while jet engine strength, an airframe recovery expected to ramp in the year’s second half and specialty energy momentum could support core revenue, adjusted EBITDA expansion, margin gains and stronger free-cash-flow generation for shareholders over time across markets globally.
Potential Risks
ATI’s outlook could be materially pressured if forward-looking assumptions miss, including defense growth, jet-engine demand, airframe recovery, specialty-energy traction, capital spending, working-capital usage or cash-flow targets for 2026.
Forecast
A Zacks Rank #2 (Buy) is constructive, and the Growth Score of A is the standout, offset by weaker Value D and Momentum F Style Scores. The chart shows a steady price uptrend alongside rising 2026–2028 estimates. Positive surprise markers dominate, while consensus lines have climbed, suggesting investors are rewarding improving visibility but may punish any break in execution.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
Woodward supplies energy-control and motion-control technologies for aerospace and industrial applications. As a defense stock, it should benefit from strong demand for defense products, robust smart-defense order activity and a solid services environment, while FY26 guidance calls for aerospace sales growth and higher aerospace segment earnings margins, supporting sustained profitable growth and long-term shareholder value creation through operational excellence initiatives.
Potential Risks
Potential risks include global economic instability, revenue concentration, government spending shifts, regulatory matters, international operations and cybersecurity exposure that could pressure execution.
Forecast
A Zacks Rank #2 suggests modestly favorable revisions, but the Style Scores are uneven, with D for Value and Momentum, and a C for Growth. The chart shows a powerful longer-term climb, followed by some near-term choppiness as the price consolidates around higher estimate lines. Consensus for 2026–2028 trends upward, and the surprise pattern skews positive.
This is our short term rating system that serves as a timeliness indicator for stocks over the next 1 to 3 months. How good is it? See rankings and related performance below.
The Zacks Industry Rank assigns a rating to each of the 265 X (Expanded) Industries based on their average Zacks Rank.
An industry with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The industry with the best average Zacks Rank would be considered the top industry (1 out of 265), which would place it in the top 1% of Zacks Ranked Industries. The industry with the worst average Zacks Rank (265 out of 265) would place in the bottom 1%.
The Zacks Sector Rank assigns a rating to each of the 16 Sectors based on their average Zacks Rank.
A sector with a larger percentage of Zacks Rank #1's and #2's will have a better average Zacks Rank than one with a larger percentage of Zacks Rank #4's and #5's.
The sector with the best average Zacks Rank would be considered the top sector (1 out of 16), which would place it in the top 1% of Zacks Ranked Sectors. The sector with the worst average Zacks Rank (16 out of 16) would place in the bottom 1%.
The Style Scores are a complementary set of indicators to use alongside the Zacks Rank. It allows the user to better focus on the stocks that are the best fit for his or her personal trading style.
The scores are based on the trading styles of Value, Growth, and Momentum. There's also a VGM Score ('V' for Value, 'G' for Growth and 'M' for Momentum), which combines the weighted average of the individual style scores into one score.
Value ScoreA
Growth ScoreA
Momentum ScoreA
VGM ScoreA
Within each Score, stocks are graded into five groups: A, B, C, D and F. As you might remember from your school days, an A, is better than a B; a B is better than a C; a C is better than a D; and a D is better than an F.
As an investor, you want to buy stocks with the highest probability of success. That means you want to buy stocks with a Zacks Rank #1 or #2, Strong Buy or Buy, which also has a Score of an A or a B in your personal trading style.
Zacks Earnings ESP (Expected Surprise Prediction) looks to find companies that have recently seen positive earnings estimate revision activity. The idea is that more recent information is, generally speaking, more accurate and can be a better predictor of the future, which can give investors an advantage in earnings season.
The technique has proven to be very useful for finding positive surprises. In fact, when combining a Zacks Rank #3 or better and a positive Earnings ESP, stocks produced a positive surprise 70% of the time, while they also saw 28.3% annual returns on average, according to our 10 year backtest.
Howmet Aerospace makes critical components for aerospace and defense markets. Its defense aerospace exposure, engine products, fasteners and engineered structures should benefit from spares growth across all markets and engine products capacity expansions. Management expects 2026 revenue, adjusted EBITDA and adjusted EPS to rise, while completed CAM and Brunner acquisitions broaden the aerospace manufacturing platform further ahead.
Potential Risks
Risks include weaker served markets, customer losses, supplier disruption, manufacturing difficulties, unmet production targets, tariff or energy cost pressure, cyberattacks and government-contract compliance issues ahead.
Forecast
A Zacks Rank #2 is positive, and the Growth Score of B is supportive, though Value F, Momentum C argue for selectivity. The chart shows one of the strongest price trends in the group, with consensus estimates stair-stepping higher through 2028 and mostly favorable surprise signals despite a recent red marker. The setup remains attractive, but expectations are already elevated.
The Zacks Rank is a proprietary stock-rating model that uses trends in earnings estimate revisions and earnings-per-share (EPS) surprises to classify stocks into five groups: #1 (Strong Buy), #2 (Buy), #3 (Hold), #4 (Sell) and #5 (Strong Sell). The Zacks Rank is calculated through four primary factors related to earnings estimates: analysts' consensus on earnings estimate revisions, the magnitude of revision change, the upside potential and estimate surprise (or the degree in which earnings per share deviated from the previous quarter).
Zacks builds the data from 3,000 analysts at over 150 different brokerage firms. The average yearly gain for Zacks Rank #1 (Strong Buy) stocks is +24.00% per year from January 1, 1988, through May 4, 2026.
Selections for Best Defense Stocks are based on the current top ranking stocks on Zacks Indicator Score, Style Scores and fundamentals. All stocks have a daily trading volume of at least 100,000 shares and has a stock price of at least $5. All information is current as of market open, June 24, 2026.
General questions about defense stocks
What are defense stocks?
Defense stocks are shares of companies that develop, manufacture, and maintain military equipment, weapons systems, aircraft, cybersecurity solutions, and space infrastructure. Many balance government contracts with commercial operations.
What are the benefits of investing in defense stocks?
Long government contract visibility: Multi-year deals provide predictable revenue.
High barriers to entry: Regulatory and technical requirements limit competition.
Dividend potential: Some established contractors pay steady dividends.
Strategic importance: Defense spending tends to continue even during economic slowdowns.
Why do defense stocks go up during wars or conflicts?
Periods of heightened conflict often signal future increases in military procurement, which can lead to higher demand for weapons systems, logistics support, and modernization programs.
How does government spending affect defense stocks?
Defense budgets are a primary revenue driver. In the U.S., annual appropriations well above $800 billion in recent years support sustained demand for existing and next-generation systems.
Contract awards, budget extensions, and supplemental funding directly add to order backlogs.
Are defense stocks recession-proof?
Defense equities are often considered defensive because government contracts are less sensitive to consumer demand cycles. During downturns, primes like Lockheed Martin and General Dynamics have often shown smaller drawdowns than highly cyclical groups, benefiting from ongoing military spending. However, they are still equities and can decline during broad market downturns.
Which defense stocks perform best during inflation?
Companies with strong pricing power or contracts with cost-inflation adjustments tend to weather inflation better. Digital solutions, avionics, and advanced systems providers often have more margin resilience than heavy industrial manufacturers.
Can defense stocks be held forever?
Some investors hold major primes indefinitely due to stable cash flows and dividends. However, long-term technological shifts and defense policy priorities should prompt periodic portfolio review.
Are defense stocks ethical investments?
Opinions vary. Some investors avoid defense due to ESG concerns, while others view national security as a necessary public good. Investment suitability depends on personal values.
Defense stocks: Comparative and Risk Evaluation
Defense stocks vs. defense ETFs: Which is better?
Individual stocks offer company-specific upside but carry higher singular risk. Defense-oriented ETFs like the iShares U.S. Aerospace & Defense ETF (ITA) or SPDR S&P Aerospace & Defense ETF (XAR) provide diversified exposure across contractors.
Are defense stocks risky?
Key risks include:
Budget cuts or changes in procurement priorities.
Delays or cancellations of major programs.
Export restrictions and geopolitical policy shifts.
Smaller or niche players often experience greater volatility than large primes.
How dependent are defense companies on government contracts?
Many defense firms derive a significant portion of revenue from government orders. Primes like Lockheed Martin or Northrop Grumman often see more than half of their revenues tied to defense budgets.
Emerging companies like Intuitive Machines also work with NASA and the Department of Defense for space and communications services.
Do defense stocks do well in bear markets?
Defense names sometimes outperform more cyclical sectors because their sales are backed by government spending. But they still may decline in broad market selloffs.
Should defense stocks be part of a diversified portfolio?
Including defense stocks can add diversification benefits — particularly exposure to government-linked revenue streams — but concentration risk should be managed with balance across other industries.
Defense stocks strategies and portfolio
How to select defense stocks
Consider:
Contract backlog and visibility.
Balance-sheet health.
Dividend track record and payout ratio.
Exposure to next-generation technologies (hypersonics, AI, space).
International sales mix.
Which defense stocks perform best during inflation?
Look for firms with adaptable pricing terms in contracts and strong margins, such as avionics and systems integrators.
When should I sell defense stocks?
Consider selling when:
Valuations become extended relative to fundamentals.
Major programs are canceled or reduced.
Strategic focus shifts away from core growth areas.
Can defense stocks be held forever?
Long-term holding can make sense for stable, dividend-paying defense giants, but technological disruption and budget evolutions necessitate regular reassessment.
Defense stocks alternatives
If you want exposure to security themes without individual defense equities, alternatives include:
Broad industrial or technology ETFs with defense allocations.
International aerospace firms.
Cybersecurity companies supporting military and government networks.
Space infrastructure players like Intuitive Machines, which bridge commercial exploration and national security roles.
Bottom line
The best defense stocks combine government-linked demand with innovation and balance-sheet strength. Large primes like Lockheed Martin, RTX, Northrop Grumman, and General Dynamics anchor many portfolios, while emerging space-defense companies such as Intuitive Machines offer higher growth potential.
Balancing diversification, valuation discipline, and strategic themes — from traditional weapons systems to space-enabled defense infrastructure — can help investors navigate this complex sector.
View the Zacks #1 Rank List
Strong Buy 
