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.
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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.
8. Elbit Systems Ltd. (NASDAQ:ESLT)
Number of Hedge Fund Holders: 20
Market Cap: $21.39 billion
Elbit Systems Ltd. (NASDAQ:ESLT) is one of the best military tech stocks to buy now. On July 24, Elbit Systems Ltd. (NASDAQ:ESLT) was initiated with a Buy rating by BofA analyst Ronald Epstein, who set a price target of $500. With shares currently trading at $461.68, the target implies an upside of approximately 8.3%.
Epstein described Elbit as a “leader in defense technology and innovation,” citing its strategic role as a supplier to Western allies during a time of increasing global defense spending. The analyst believes the company is well-positioned to benefit from what he calls a broad-based “global defense re-armament”, driven by geopolitical uncertainty and rising national security budgets.
While Elbit trades at a premium compared to large U.S. defense contractors, BofA views the valuation as reasonable when measured against small- to mid-cap defense peers in the U.S. and Europe. The firm also highlighted Elbit’s expanding international customer base, particularly in NATO-aligned countries, as a key advantage. Elbit’s diversified portfolio, including unmanned systems, advanced optics, and electronic warfare, allows it to stay aligned with modern military priorities while remaining agile in responding to rapid changes in defense needs.
Elbit designs and supplies advanced defense electronics, drones, and surveillance systems for military forces worldwide.
7. Mercury Systems Inc. (NASDAQ:MRCY)
Number of Hedge Fund Holders: 23
Market Cap: $3.17 billion
Mercury Systems Inc. (NASDAQ:MRCY) is one of the best military tech stocks to buy now. Mercury Systems Inc. (NASDAQ:MRCY) announced it has received two new Common Processing Architecture (CPA) production awards, expanding its role in delivering advanced computing solutions to the U.S. defense sector.
While financial details were not disclosed, the awards reinforce Mercury’s position as a key player in modular open systems used in military platforms. CPA technology is designed to streamline mission-critical computing across air, land, and sea systems, making deployments faster and easier to upgrade. These new contracts follow a string of similar wins for Mercury, as the Department of Defense continues to shift toward flexible, software-defined hardware infrastructure. The company’s solutions are frequently embedded in radar systems, electronic warfare platforms, and high-performance sensor processing.
CEO Bill Ballhaus has emphasized a renewed focus on execution and aligning more closely with Department of Defense priorities. These production wins could indicate improved traction under the company’s ongoing transformation efforts. Mercury’s modular designs and secure supply chain practices make it a preferred partner for defense primes seeking trusted, U.S.-based electronics manufacturing.
Mercury Systems builds secure mission computing systems used in radar, electronic warfare, and command-and-control for U.S. defense platforms.
6. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 23
Market Cap: $13.21 billion
AeroVironment, Inc. (NASDAQ:AVAV) is one of the best military tech stocks to buy now. On July 17, RBC Capital raised its price target on AeroVironment, Inc. (NASDAQ:AVAV) to $300 from $275, maintaining an Outperform rating following meetings with company leadership. At the current share price of $267.92, the new target implies an upside of approximately 12%.
According to a research note, RBC came away optimistic after investor discussions with AeroVironment’s management team. The firm highlighted growing confidence in the company’s top-line outlook, pointing to signs of a broader shift in the defense market that could benefit drone and missile system manufacturers.
AeroVironment management emphasized that the defense sector is experiencing a positive inflection point, with increased funding and interest in unmanned systems across the U.S. and allied nations. Notably, the loitering munition segment, often referred to as “kamikaze drones”, continues to attract attention, even as more competitors enter the space. Management believes the total addressable market is expanding fast enough to support multiple suppliers. AeroVironment has seen growing demand for its tactical drone platforms, especially in regions facing heightened conflict or preparing for asymmetric warfare. Its flexible systems are valued for their ease of deployment and precision strike capabilities.
AeroVironment develops tactical drones and precision munitions used in frontline military operations and battlefield intelligence.
5. L3Harris Technologies, Inc. (NYSE:LHX)
Number of Hedge Fund Holders: 42
Market Cap: $51.29 billion
L3Harris Technologies, Inc. (NYSE:LHX) is one of the best military tech stocks to buy now. On July 29, Barclays raised its price target on L3Harris Technologies, Inc. (NYSE:LHX) from $255 to $305, reiterating an Overweight rating after updating its financial model following the company’s latest earnings report. With shares currently trading at $274.14, the new target suggests a potential upside of roughly 11.3%.
The firm’s updated model reflects improved margins and stronger-than-expected bookings reported in the second quarter. While the earnings beat didn’t come as a major surprise, Barclays noted that L3Harris is showing better operational discipline and cash flow generation than previously forecasted.
L3Harris has recently benefited from a rebound in U.S. defense procurement and steady international demand, particularly for its communications systems and space technologies. The company’s integration of Aerojet Rocketdyne is also seen as a longer-term positive, potentially boosting its positioning in propulsion and missile systems.
Barclays said the revised target takes into account better visibility into revenue growth over the next 12 to 18 months, along with the company’s focus on simplifying its business segments and improving execution. Investors are keeping a close eye on defense names as global security spending continues to rise, and L3Harris remains one of the sector’s more technology-driven players.
L3Harris builds secure communications, space sensors, and electronic warfare systems for U.S. and allied defense programs.
4. Teledyne Technologies Incorporated (NYSE:TDY)
Number of Hedge Fund Holders: 47
Market Cap: $25.82 billion
Teledyne Technologies Incorporated (NYSE:TDY) is one of the best military tech stocks to buy now. On July 24, UBS raised its price target on Teledyne Technologies Incorporated (NYSE:TDY) from $585 to $630, while maintaining a Buy rating on the stock. At the current price of $550.25, the new target implies an upside of about 14.5%.
The firm acknowledged that investor expectations were high heading into Teledyne’s recent earnings report, particularly around forward guidance. Some market participants were reportedly unsettled by management’s suggestion that a portion of second-quarter demand may have been pulled forward from later quarters.
However, UBS believes Teledyne’s leadership is being cautious rather than signaling weakness. According to the note, the company is seeing healthy momentum heading into Q3, and underlying demand across key segments remains solid.
Teledyne’s broad portfolio, which spans digital imaging, aerospace, defense electronics, and marine instrumentation, gives it exposure to multiple high-growth areas. UBS emphasized that the company continues to execute well and has strong operational discipline, even amid near-term noise around quarterly timing. The firm expects clearer visibility and steadier results in the second half of the year to help the stock re-rate higher, especially if management tightens guidance on the next call.
Teledyne supplies advanced sensors, imaging systems, and electronics used in aerospace, defense, and classified military programs.
3. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Fund Holders: 54
Market Cap: $82.02 billion
Northrop Grumman Corporation (NYSE:NOC) is one of the best military tech stocks to buy now. On July 29, Barclays has raised its price target on Northrop Grumman Corporation (NYSE:NOC) to $580 from $500, following a reassessment of its model after the company’s latest earnings report. The firm kept its Equal Weight rating, indicating it does not expect the stock to significantly outperform the market in the near term.
At the current market price of $566, the new target implies limited upside potential of around 2.5%. While not dramatic, the increase reflects a more favorable view of the company’s forward-looking metrics. Analysts have generally pointed to improved margins, strong free cash flow, and a robust backlog as reasons for increased confidence. In particular, Northrop’s space and missile defense segments have shown strong order trends, helping offset some of the softness in other areas.
However, Barclays sees these positives as largely priced in, or balanced by broader risks such as potential delays in government defense budgets or cost pressures in legacy programs. There’s also increased competition in certain defense tech segments, which could cap near-term growth. Still, the upward revision in target signals that Northrop’s fundamentals remain sound, and its positioning in high-priority defense areas is a strength.
2. Coherent Corp. (NYSE:COHR)
Number of Hedge Fund Holders: 61
Market Cap: $16.67 billion
Coherent Corp. (NYSE:COHR) is one of the best military tech stocks to buy now. On July 22, Susquehanna has raised its price target on Coherent Corp. (NYSE:COHR) to $120 from $100 while maintaining a Positive rating. At the current market price of $107.31, the new target implies an upside potential of approximately 11.8%. The revision comes ahead of Q2 results for the semiconductor group, with the firm anticipating in-line to slightly better-than-expected performance.
Key drivers cited include tariff-related demand pull-ins, which may have shifted customer purchases earlier in the cycle, and sustained demand from AI-related applications. Coherent’s exposure to AI-driven optical components and semiconductor equipment positions it to benefit from ongoing infrastructure buildouts.
However, Susquehanna notes uncertainty in the second half of the year. This caution reflects potential weakness in consumer electronics, ongoing geopolitical risks, and unpredictability in export policy related to China. While near-term demand looks solid, longer-term visibility remains limited.
The Positive rating indicates Susquehanna sees the risk-reward skewing favorably, but not without caveats. Investors should watch for updates on backlog trends, customer inventory levels, and potential shifts in capital spending across end markets.
Coherent produces laser systems and photonics used in defense and aerospace applications.
1. RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 79
Market Cap: $212.03 billion
RTX Corporation (NYSE:RTX) is one of the best military tech stocks to buy now. On July 23, UBS raised its price target on RTX Corporation (NYSE:RTX) to $177 from $166 and reiterated its Buy rating, citing continued operational improvements and an appealing valuation. At a current market price of $157.32, the new target reflects an upside potential of approximately 12.5%.
The firm’s revised target follows RTX’s recent earnings, which showed progress in execution and cost control. UBS highlighted that RTX has been improving margins across key segments, including defense and commercial aerospace, despite a complex operating environment.
Analysts also view the stock’s current valuation as favorable relative to peers, particularly given RTX’s diversified revenue mix and strong order backlog. Its free cash flow outlook has stabilized after prior concerns related to supply chain pressures and engine recall costs, helping support investor confidence.
The Buy rating indicates UBS expects RTX to outperform the broader market, driven by both internal execution and broader tailwinds in defense spending and commercial travel recovery. Still, potential risks such as geopolitical tensions and contract delays remain in focus for the second half of the year.
RTX produces missiles, radars, and defense avionics for global armed forces.
While we acknowledge the potential of RTX 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 RTX and that has 100x upside potential, check out our report about this cheapest AI stock.
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