This article looks at the 10 Best Large Cap Defense Stocks to Buy According to Hedge Funds.
The iShares U.S. Aerospace & Defense ETF, which tracks leading companies in the aerospace and defense industry, has been volatile over the last five months, but is now beginning to stabilize.
The ETF rallied nearly 25% from the December lows to touch the $250 mark in early March, with the Iran war luring investors into the sector amid speculation that the U.S. government would increase military spending.
Then it slumped 16% as investors took profits and efforts to negotiate a ceasefire emerged. The ETF closed at $215.37 on Tuesday, showing signs of stabilizing.
Barron’s, in a recent assessment, stated that the conflict itself has not been a ‘game-changer’, since most analysts have largely maintained their sales and earnings estimates for stocks in the sector despite share price fluctuations.
The financial magazine added that investors should invest prudently in aerospace and defense stocks, while noting that the smarter move would be to buy the dip, given that these stocks are currently fairly expensive.
Experts believe that while stable growth prospects warrant a premium for defense stocks, they are not worth their current multiple. However, the market must prepare for growth given the expected surge in defense spending by the U.S. and its allies in the near- to medium-term.
Barron’s also quoted analysts at Citigroup saying the following:
‘Blue Wave’ or not, we continue to believe that the defense stocks in our coverage that are well-aligned with bipartisan budget priorities can sustain elevated revenue growth rates for some time.
With that said, let’s now head over and see the best large cap defense stocks to buy according to hedge funds.
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Methodology
We used screeners to identify large cap defense stocks that trade on American exchanges. From there, we selected the top 10 companies that had the highest number of hedge fund investors having a stake in them, based on Insider Monkey’s database of prominent hedge funds as of Q4 2025. Finally, we ranked them in ascending order based on the number of hedge funds holding positions. When two or more stocks were tied in hedge fund sentiment, we used market cap as a tiebreaker.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that 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).
10 Best Large Cap Defense Stocks to Buy According to Hedge Funds
10. Curtiss-Wright Corporation (NYSE:CW)
Number of Hedge Fund Holders: 59
Curtiss-Wright Corporation (NYSE:CW) is among the 10 Best Large Cap Defense Stocks to Buy According to Hedge Funds. According to Insider Monkey’s database for Q4 2025, 59 hedge funds held a stake in the company.
The stock has returned 27% so far this year. Wall Street consensus indicates a Moderate Buy rating on CW, with a modest average downside potential of 2%, as of the close of business on May 5.
Recent updates include Stifel analyst Nathan Jones raising the price target on the stock to $723 from $650 while maintaining a Hold rating. The firm believes that increased defense spending, driven by geopolitical conflicts, should spur growth for Curtiss-Wright Corporation (NYSE:CW).
According to TipRanks, Stifel also told investors in a research note that it expects certain surprises or guidance revisions in the first-quarter earnings season, which could act as catalysts.
Earlier on April 2, Citigroup also raised its price target on the stock to $728 from $718 as part of its Q1 preview, while maintaining a Neutral rating.
Curtiss-Wright Corporation (NYSE:CW) is an integrated business that provides engineered products, solutions, and services for the aerospace and defense markets.
9. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 59
Lockheed Martin Corporation (NYSE:LMT) is among the 10 Best Large Cap Defense Stocks to Buy According to Hedge Funds. On May 1, the defense contractor announced that it had received a contract from the U.S. Space Force Space Systems Command to build capabilities to support the Space-Based Interceptor (SBI) program.
The agreement will focus on fast-tracking the development and integration of these capabilities and deliver an early engagement layer for missile defense. According to the company’s press release, the layer will increase coverage, improve survivability, and further bolster deterrence against incoming threats.
In other news, Lockheed Martin Corporation (NYSE:LMT) reported financial results for the first quarter of 2026 on April 23. It posted a revenue of $18 billion, remaining flat year-over-year and missing estimates of $18.24 billion. Net earnings came in at $6.44 per share, shy of expectations by 28 cents, and down from $7.28 in the prior year.
The defense giant said the decrease in earnings was driven by reduced profit and mark-to-market losses from ‘changes in the fair value of investments and liabilities for deferred compensation plans’. The company retained its full-year outlook shared in January.
Lockheed Martin Corporation (NYSE:LMT) is one of the world’s largest defense contractors. It specializes in the research, design, and development of advanced technology systems, products, and services. It is famed for manufacturing notable fighter jets, including the F-35.
8. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Fund Holders: 62
Northrop Grumman Corporation (NYSE:NOC) is among the 10 Best Large Cap Defense Stocks to Buy According to Hedge Funds. On May 1, the company announced that it had been selected by the Australian government for formal engagement as part of the latter’s quest to set up domestic solid rocket motor production.
The two entities will work together to initiate a process aimed at exploring and determining the processes and requirements to establish a sovereign manufacturing base. A key focus of their engagement will be to ensure that local suppliers are integrated into the project to ensure Australia gains from access to the defense contractor’s advanced propulsion technology.
Northrop Grumman Corporation (NYSE:NOC) has more than seven decades of propulsion expertise and has incurred over $2 billion in this domain over the past several years. The success of the program will be vital in providing Australia with a long-range strike capability and bolstering its national defense.
In other news, the defense contractor reported a revenue of $9.88 billion for Q1 2026, up 4.4% from the prior year, amid robust demand for its weapons driven by ongoing conflicts. Net earnings per diluted share came in at $6.14, increasing 85% year-over-year, and beating estimates by 8 cents.
Northrop Grumman Corporation (NYSE:NOC) is one of the world’s largest defense contractors. It is engaged in the design, development, integration, and maintenance of advanced systems across aeronautics, space, defense electronics, and mission solutions.
7. BWX Technologies, Inc. (NYSE:BWXT)
Number of Hedge Fund Holders: 64
BWX Technologies, Inc. (NYSE:BWXT) is among the 10 Best Large Cap Defense Stocks to Buy According to Hedge Funds. On May 4, the company announced robust financial results for Q1 2026, beating Wall Street’s estimates for both revenue and earnings.
Revenue for the quarter was reported at $860.2 million, up 26% from the prior year. Earnings per share came in at $1.12, surpassing estimates by 20 cents, and improving 22% year-over-year. The management credited the results to improved operational performance, which included order backlog execution.
The company raised its guidance for full-year revenue, non-GAAP EPS, adjusted EBITDA, and free cash flow. The new forecast does not account for contributions from the planned acquisition of Precision Components Group, LLC (PCG).
On April 20, BWX Technologies, Inc. (NYSE:BWXT) said that it had reached an agreement to acquire PCG. The move is set to strengthen the company’s heavy manufacturing capabilities and expand its nuclear production capacity for commercial use in the United States. According to the press release, PCG will be included in BWXT’s Commercial Operations segment. The transaction is anticipated to close during the back half of 2026.
In other news, the company is seeking a uranium enrichment license to build a new facility next to Erwin’s Nuclear Fuel Services (NFS) facility. The Nuclear Regulatory Commission was informed about the plan last month.
BWX Technologies, Inc. (NYSE:BWXT) is focused on providing nuclear solutions for global security, environmental protection, clean energy, and space exploration. The stock has returned 13% year-to-date, as of the close on May 5.
6. General Dynamics Corporation (NYSE:GD)
Number of Hedge Fund Holders: 66
General Dynamics Corporation (NYSE:GD) is among the 10 Best Large Cap Defense Stocks to Buy According to Hedge Funds. On April 30, Morgan Stanley analyst Kristine Liwag lifted the price target on the stock to $435 from $410 and reiterated an Overweight rating.
The adjustment came after the company reported results for the first quarter of 2026. The analysts described the financial performance as ‘standout’ compared with other major competitors, according to a report on TipRanks. Morgan Stanley further added that the demand for the Gulfstream remained resilient despite the Middle East crisis, which led to customer hesitation.
On the same day, JPMorgan also raised its price target on General Dynamics Corporation (NYSE:GD) to $400 from $385 and maintained an Overweight rating.
The company beat Wall Street’s expectations for both revenue and profit in the first quarter, amid a strong show by its aerospace and marine segments. The defense contractor also lifted its profit guidance for the full year.
As of the close of business on May 5, the stock is a Moderate Buy based on 16 analysts’ recommendations and has an average share-price upside potential of 12%.
General Dynamics Corporation (NYSE:GD) is a leading global aerospace and defense company, operating through its Aerospace, Marine Systems, Combat Systems, and Technologies segments.
While we acknowledge the potential of GD to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than GD and that has 100x upside potential, check out our report about the cheapest AI stock.
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