Military technology is becoming one of the most critical and fast-growing sectors in today’s global economy. As conflicts evolve and new threats emerge, traditional warfare is being replaced by faster, smarter, and more unpredictable tactics. Drones, AI surveillance, and automated defense systems are no longer futuristic; they’re essential tools on modern battlefields. The war in Ukraine, for example, has made it clear that drone warfare is here to stay, pushing governments to invest heavily in counter-drone technology and battlefield automation.

One company responding to this demand is DroneShield, an Australian defense firm. In a recent interview with CNBC, its CEO, Oleg Vornik, described the current landscape as “a technological race and a cat-and-mouse game,” where hostile forces use commercial drones to carry out attacks and surveillance for just a few thousand dollars. In response, companies are building multi-sensor systems that rely on radar, cameras, and AI to detect and disable these threats, even when drones operate without radio signals.

Vornik also noted a surge in demand from Ukraine and Europe, with a growing global interest in this technology. As military needs shift from brute force to smart defense, the companies leading this transformation are drawing the attention of both governments and investors looking for long-term opportunities.

Our Methodology

To arrive at the 10 best military tech stocks to buy now, we reviewed insights from financial media and examined relevant ETFs to narrow down the list. From there, we focused on the stocks most favored by institutional investors. We used hedge fund sentiment data from Insider Monkey’s Q1 2025 database, which tracks the holdings of 1,000 top-tier hedge funds. Finally, we ranked the 10 selected stocks in ascending order based on how many hedge funds held positions in each as of Q1 2025. In the event of a tie, the company with the larger market capitalization was ranked higher.

Note: All data was recorded on July 30, 2025.

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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

10 Best Military Tech Stocks to Buy Now

10. Kratos Defence & Security Solutions, Inc. (NASDAQ:KTOS)

Number of Hedge Fund Holders: 17

Market Cap: $9.66 billion

Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is one of the best military tech stocks to buy now. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) received a vote of confidence on July 22 as Citizens JMP raised its price target to $70 from $40, while maintaining an Outperform rating. At the current market price of $58, the new target implies a potential upside of around 21%.

In a research note to investors, the firm highlighted several tailwinds expected to drive Kratos’ growth in both the short and long term. These include the upcoming FY26 national defense budget, increased emphasis on commercial-military space alignment, and the growing significance of Operation Spiderweb, which analysts describe as a “watershed moment” for drone-based warfare strategy.

Citizens emphasized that field checks and sector trends suggest Kratos is well-positioned to benefit from shifting U.S. defense priorities. The company, long known for its focus on unmanned aerial systems and autonomous technologies, is viewed as being in the “early innings” of what could be a prolonged growth cycle. With geopolitical tensions and the modernization of military systems accelerating demand for advanced drone platforms, analysts see Kratos as one of the more agile players in the space.

Kratos specializes in tactical drones, directed energy, and autonomous defense systems for U.S. and allied forces.

9. Leonardo DRS, Inc. (NASDAQ:DRS)

Number of Hedge Fund Holders: 20

Market Cap: $11.50 billion

Leonardo DRS, Inc. (NASDAQ:DRS) is one of the best military tech stocks to buy now. Leonardo DRS, Inc. (NASDAQ:DRS) posted strong second-quarter results on July 30, reflecting solid demand for its defense technologies and a sharp rise in profitability. Revenue came in at $829 million, up 10% year-over-year, while net earnings surged 42% to $54 million. The company’s adjusted EBITDA rose 17% to $96 million, and diluted EPS increased 43% to $0.20.

Bookings totaled $853 million, in line with revenue and maintaining a book-to-bill ratio of 1.0x. The company’s backlog grew to $8.6 billion, up 9% from a year ago, signaling continued visibility into future revenue.  The company raised its 2025 guidance across all key financial metrics, citing strong operational momentum and growing global demand for its technologies. CEO Bill Lynn credited the performance to disciplined execution and increasing interest in the company’s advanced systems as nations respond to rising geopolitical tensions.

“Customer demand remains robust as global threats evolve,” Lynn said. “Our focus is on delivering high-performance, differentiated solutions where they matter most.” Leonardo DRS continues to benefit from long-cycle defense spending and strategic programs tied to modernization and readiness initiatives.

Leonardo DRS develops advanced sensors, electronic warfare systems, and power solutions for U.S. and allied military forces.