In this article, we explore the 10 Best Defense Stocks That Will Skyrocket.
Global defense spending is on the rise as disputes such as the Russia-Ukraine war, Middle East conflicts, and U.S.-China tensions over Taiwan prompt nations to bolster their defenses. The US military spent $11.3 billion in the first six days of hostilities with Iran.
The US alone is poised to spend nearly $1 trillion on defense in 2026, with President Donald Trump requesting $1.5 trillion for defense in fiscal 2027.
“We view this unprecedented funding as a positive catalyst for the entire unmanned ecosystem, as expanding federal investment meaningfully increases the U.S. market opportunity not only for platform providers, but also across the broader value chain of critical subsystems and key components,” Needham analyst Austin Bohlig wrote.
Soaring geopolitical pressures are the latest tailwinds driving defense stocks higher. The stocks have been on a roll as investors look to capitalize on companies winning big defense government contracts. According to Bloomberg, individuals and families with significant stakes in defense arms have added more than $28 billion to their fortunes amid the escalating geopolitical tensions.
On the other hand, the Bloomberg index of global defense companies is up more than 15% in 2026, outperforming the broader stock market, while the S&P 500 Aerospace and defense industry is up by more than 3% year to date, affirming strong interest in defense stocks.
In the tense geopolitical climate, let’s take a look at some of the Best Defense Stocks That Will Skyrocket.
Our Methodology
To compile our list of the Best Defense Stocks That Will Skyrocket, we followed these steps: First, we screened companies operating within the defense sector. Next, we selected those with significant business operations and a track record of winning major defense contracts. We then narrowed the group to stocks with upside potential of more than 10% and favored by elite hedge funds in Q4 2025. Finally, we ranked the final list by each stock’s upside potential.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Best Defense Stocks That Will Skyrocket
10. General Electric Co (NYSE:GE)
Stock Upside Potential: 13.72%
Number of Hedge Fund Holders: 117
General Electric Co (NYSE:GE) is one of the best defense stocks that will skyrocket. On April 13, General Electric Co (NYSE:GE) unit GE Aerospace inked an agreement with the Indian Air Force, paving the way for the establishment of an in-country depot facility.
The facility, tailored for the F404-IN20 engines that power the IAF’s Light Combat Aircraft Tejas fleet, will help enhance in-country repair and overhaul infrastructure. The facility will also help sustain and make available F404-IN20 engines that power the IAF’s Light Combat Aircraft.
Once fully operational, the facility will eliminate the need to depend on overseas repair centers, therefore improving turnaround times. It is to be owned, operated, and maintained by the Indian Air Force, with GE providing training support staff and necessary spares in addition to specialized equipment.
It marks the next step in the company’s four-decade-long term partnership with the Indian Air Force. GE Aerospace has also reiterated its commitment to developing India’s aerospace ecosystem, spanning design, development, and manufacturing.
General Electric Co (NYSE:GE) has transitioned from a conglomerate to specialized entities focused on aerospace and energy. GE Aerospace manufactures and services jet engines that power most commercial flights worldwide.
9. Booz Allen Hamilton Holding Corp (NYSE:BAH)
Stock Upside Potential: 17.13%
Number of Hedge Fund Holders: 38
Booz Allen Hamilton Holding Corp (NYSE:BAH) is one of the best defense stocks poised to skyrocket. On April 9, Booz Allen Hamilton (NYSE:BAH) confirmed that its venture capital arm has invested in Portal Space Systems. The investment in a space technology company developing maneuverable spacecraft for orbital operations is poised to strengthen the company’s prospects in mission integration, data, and cybersecurity.
Portal Space Systems is currently working on Starburst, an orbital maneuvering vehicle for operations within a destination orbit. It’s also working on Supernova, a trans-orbital spacecraft designed to enable movement across orbital regimes.
The investment aligns with Booz Allen’s growing portfolio of space-focused companies. The company is also increasingly advancing automation and operational resilience across various domains. It has already completed investments in Albedo, Quindar, and Starfish Space, affirming its push into growth opportunities in space capabilities.
Additionally, Booz Allen has completed the acquisition of Defy Security, which provides cybersecurity technology products and services to healthcare retail enterprises and financial services entities. Together, the companies plan to offer end-to-end tech-enabled cyber solutions.
Booz Allen Hamilton Holding Corp (NYSE:BAH) provides technology, consulting, and engineering services primarily to U.S. government defense, intelligence, and civil agencies, as well as global commercial clients. It also specializes in advanced AI, cybersecurity, software development, and systems engineering to solve complex mission-critical challenges.
