In this article, we will take a look at the 10 Defense & Aerospace Stocks Gaining From Rising Geopolitical Spending.
Defense and aerospace stocks had a big year in 2025, helped by soaring geopolitical tensions and rising defense spending. Nothing seems to have changed with the US disposing Venezuela leader and triggering tensions in Europe over Greenland.
Scott Helfstein, senior vice president of investment strategy at Global X ETFs, expects another stellar year for defense and aerospace stocks given the geopolitical uncertainties. The S&P Aerospace & Defense Select Industry Index is already up by 14% year to date, outperforming the S&P 500, which is up by a partly 1% over the same period.
“We think that there is significant change going on geopolitically right now,” he said. “We just got the latest national security strategy out of the administration, and by and large, we’re moving to a world of decentralized deterrence and probably increased policy uncertainty.”
President Donald Trump’s call for a substantial increase in the US military budget is one tailwind behind defense stocks’ significant year-to-date gains. Trump has called for increasing the military budget to $1.5 billion, up from the $901 billion approved last year.
“This potential budget increase would offset the negative investor sentiment from the potential capital allocation restrictions, but there is significant uncertainty associated with a final defense budget,” RBC Capital Markets analysts led by Ken Herbert said.
Analysts at Morgan Stanley also expect defense stocks to post significant gains as countries across the bloc increase their military spending, rattled by the unending threat. European companies are poised to boost their defense budget to up to 3% of GDP, which is expected to result in 140% to 240% increase in spending on equipment.
Amid the soaring geopolitical uncertainties and an increase in defense spending across the globe, let’s take a look at some of the Defense & Aerospace Stocks Gaining From Rising Geopolitical Spending.
Source: Pexels
Our Methodology
To compile our list of defense & aerospace stocks gaining from rising geopolitical spending, we settled on stocks that have outperformed the S&P 500 Index (up +0.4%) on a year-to-date basis, and have gained at least 5% so far in 2026. Finally, we ranked the stocks in ascending order based on the number of hedge funds that hold stakes in them, as of Q3 2025.
Note: All data was sourced on January 25.
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Defense & Aerospace Stocks Gaining From Rising Geopolitical Spending
10. Textron Inc. (NYSE:TXT)
Year to Date Gain: 10.96%
Number of Hedge Fund Holders: 36
Textron Inc. (NYSE:TXT) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 20, Textron Inc. (NYSE:TXT) secured a $163.4 million contract through the Ukraine Security Assistance Initiative (USAI) via the Foreign Military Sales (FMS) mechanism.
Under the terms of the contract, the company is to provide 65 Mobile Strike Force Vehicle MSFV Commando Select vehicles and one year of spare parts. It also covers the build and delivery of new cars to strengthen Ukraine’s military.
“Textron Systems has delivered hundreds of COMMANDO vehicles to the U.S. Army over the last two decades,” said David Phillips, Senior Vice President, Air, Land and Sea Systems. “The COMMANDO Select has demonstrated support to soldiers, serving as a combat-proven armored personnel carrier performing secure personnel movement, military police and constabulary operations as well as command and control operations to support ground mobility missions.”
Earlier on January 15, analysts at Jefferies raised Textron Inc.’s price target to $115 from $95 and reiterated Buy ratings. The price target underscores the research firm’s confidence that the company will deliver solid financial results and guidance. The research firm expects the company to post fourth-quarter earnings of $1.41 per share. It also expects 2026 guidance of $6.30 to $6.50, in line with the firm’s estimate of $6.30.
Textron Inc. (NYSE:TXT) is a global, multi-industry company that designs, manufactures, and sells aircraft (Bell, Cessna, Beechcraft), defense products (Textron Systems), and industrial products (Jacobsen, E-Z-GO, Arctic Cat). It provides financial services and is known for its powerful brands in the aerospace, defense, specialized vehicles, and industrial sectors.
9. AeroVironment, Inc. (NASDAQ:AVAV)
Year to Date Gain: 21.08%
Number of Hedge Fund Holders: 37
AeroVironment, Inc. (NASDAQ:AVAV) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 21, analysts at Citizens reiterated a Market Outperform Rating on AeroVironment, Inc. (NASDAQ:AVAV) and set a $400 price target.
According to Citizens, the company is well-positioned to benefit from tailwinds in the US and from global defense priorities driving rapid funding and procurement in key aerospace domains. A merger with BlueHalo is also expected to create a scaled design-to-production engine across the drone and cyber spaces. In addition, the company can capitalize on its strong international base as a second growth engine.
RBC Capital has also reiterated an Outperform rating and a $375 price target on the stock, despite the company receiving a stop-work order from the US Department of Defense regarding the BADGER phased-array antenna system. The program was expected to generate about $175 million in revenue in fiscal 2026, with a larger share in the second half of the year.
AeroVironment, Inc. (NASDAQ:AVAV) is a defense technology leader that creates intelligent, multi-domain robotic systems, including drones (UAS), loitering munitions (e.g., Switchblade), and counter-UAS (C-UAS) solutions for defense, government, and commercial clients.
8. General Dynamics Corporation (NYSE:GD)
Year to Date Gain: 6.23%
Number of Hedge Fund Holders: 58
General Dynamics Corp (NYSE:GD) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 12, General Dynamics Corp (NYSE:GD) confirmed that its information technology unit has secured a $988 million contract for the Ship and Air Command, Control, Communications, Computers, Combat, Intelligence, Surveillance, and Reconnaissance (C5ISR) Systems Support (SACSS).
The contract is for modernizing the US Navy’s fleet systems, including command, control, and surveillance technologies. It will also cover guided missile ships, aircraft carriers, and coastal guard vessels while integrating C5ISR systems to enhance operational effectiveness.
The contract underlines GDIT’s decades of experience in delivering mission-critical services to the Navy. It already supports the development of advanced electronic warfare technologies and training services.
Meanwhile, on January 8, UBS reiterated a Neutral rating on General Dynamics and a $381 price target, impressed by the company’s strong position in the aerospace and defense industry. The research firm has echoed the 25 G700 and 10 G800 planes that have completed flights but have yet to be delivered to customers. The figure is a few units higher than the same period last year.
General Dynamics Corporation (NYSE:GD) is a global aerospace and defense giant that designs, develops, and manufactures high-tech military equipment like nuclear submarines, combat vehicles, and command systems, while also producing luxury Gulfstream business jets and providing IT/C4ISR solutions for defense and commercial sectors, spanning aerospace, marine, combat systems, and technology.
7. L3Harris Technologies, Inc. (NYSE:LHX)
Year to Date Gain: 15.77%
Number of Hedge Fund Holders: 59
L3Harris Technologies Inc. (NYSE:LHX) is one of the defense & aerospace stocks benefiting from rising geopolitical spending. On January 14, UBS reiterated a Neutral rating on L3Harris Technologies Inc. (NYSE:LHX) and a $323 price target.
The research firm has echoed the company’s announcement of a $1 billion Department of Defense investment in its missile solution business. The investment will allow the company to ramp up solid rocket motor production amid a planned initial public offering. Likewise, the research firm expects the company to benefit as capital expenditure in the industry increases.
Similarly, analysts at Bernstein have reiterated an Outperform rating and a $398 price target on the defense contractor. The positive stance comes from the company reiterating its plans to retain a majority stake in the Missile Solutions business even as it goes public. The analyst also expects the IPO drive at the government stake to add investment in the solid rocket motor business.
L3Harris Technologies, Inc. (NYSE:LHX) is a global aerospace and defense technology company that provides advanced solutions for military, government, and commercial customers, focusing on connecting space, air, land, sea, and cyber domains with technology for national security, defense, and exploration.
6. Northrop Grumman Corporation (NYSE:NOC)
Year to Date Gain: 13.40%
Number of Hedge Fund Holders: 59
Northrop Grumman Corporation (NYSE:NOC) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 12, Northrop Grumman secured a $233 million contract for the manufacture and delivery of a new advanced lightweight torpedo. The contract to the US Navy also features a custom-designed warhead for increased lethality.
The company is to handle the integration and initial proof of manufacturing at the Plymouth, Minnesota, facility and at the Allegany Ballistic Laboratory in West Virginia. The advanced weapon was developed as part of a strategic agreement with the Australian Defense Force and the US Navy.
“Northrop Grumman is leveraging over 80 years of innovative torpedo technology, combined with our capacity and speed in delivery, to accelerate the design qualification and manufacturing for the advanced lightweight torpedo,” said Dave Fine, vice president of armament systems at Northrop Grumman.
The $233 million contract comes on the heels of UBS analyst Gavin Parsons raising the stock’s price target to $777 from $770 while reiterating a Buy rating. Citigroup also asserted strong momentum on the stock and raised the price target to $715 from $654 while reiterating a Buy rating.
Northrop Grumman Corporation (NYSE:NOC) is a global aerospace and defense technology company that designs, develops, manufactures, and supports advanced systems and products for space, aeronautics, defense, and cyberspace, focusing on national security and human discovery for the U.S. and its allies.
5. TransDigm Group Incorporated (NYSE:TDG)
Year to Date Gain: 5.89%
Number of Hedge Fund Holders: 68
TransDigm Group Incorporated (NYSE:TDG) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 16, TransDigm Group Incorporated (NYSE:TDG) agreed to acquire Jet Parts Engineering and Victor Sierra Aviation from private equity firm Vance Street Capital.
The $2 billion purchase is poised to strengthen the company’s prospects in the aerospace market as both entities design and manufacture aftermarket solutions for the sector. It focuses on the sales of replacement parts and maintenance products. The company is increasingly capitalizing on the booming demand for aircraft parts as airlines extend the lives of their fleet amid delivery delays.
The aftermarket service sector is one of the most profitable segments of the aerospace industry, thanks to its high margins. Jet Parts and Victor Sierra generated $280 million in revenue in 2025 from their commercial, regional, and cargo aviation operations.
“This is a natural progression for TransDigm. We have had a long-term and sizable Parts Manufacturer Approval effort within our existing operating units,” said Nick Howley, TransDigm’s Chairman.
TransDigm Group Incorporated (NYSE:TDG) designs, produces, and supplies highly engineered, proprietary aircraft components, systems, and subsystems for commercial and military aircraft. It focuses on critical components such as seatbelts, actuators, pumps, and flight controls, with a strong aftermarket for ongoing maintenance and replacements.
4. Howmet Aerospace Inc. (NYSE:HWM)
Year to Date Gain: 2.83%
Number of Hedge Fund Holders: 57
Howmet Aerospace Inc. (NYSE:HWM) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 20, the board of Howmet Aerospace Inc. (NYSE:HWM) approved a quarterly dividend of $0.12 per share.
The dividend is to be paid on February 25, 2026, to shareholders of record as of February 6, 2026. It also highlights the company’s impressive track record of returning value to shareholders, having paid dividends for 5 consecutive years. It also boasts of a 50% dividend growth over the past 12 months.
Meanwhile, on January 9, Jefferies touted Howmet Aerospace as one of the companies poised for growth in the aerospace and defense sector. Likewise, it expects it to capitalize on commercial production ramps and defense spending priorities.
According to Jefferies, Howmet is one of the best ways to play the aerospace up cycle, as the company is poised to sustain high single-digit topline growth through 2028, with EBITDA growing in the mid-teens. The research firm has since reiterated a $245 price target on the stock.
Howmet Aerospace Inc. (NYSE:HWM) manufactures advanced engineered components for the aerospace, defense, and commercial transportation industries, specializing in jet-engine parts (airfoils, rings, disks), aerospace fasteners, titanium structures, and forged aluminum wheels for heavy trucks, enabling lighter, more fuel-efficient, and higher-performance systems.
3. RTX Corporation (NYSE:RTX)
Year to Date Gain: 5.47%
Number of Hedge Fund Holders: 76
RTX Corporation (NYSE:RTX) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 21, RTX Corporation (NYSE:RTX) was awarded a $380.8 million contract for work on Tomahawk missiles. The contract from the US Department of War is a fixed-price incentive and firm-fixed-price modification, totaling $476.5 million.
The contract covers Lot Five and Lot Six Recertification and modernization of Tomahawk missiles, depot operations, and Tomahawk spares. RTX is to perform work under the contract across multiple sites and locations nationwide. The most significant portion is to be performed in Tucson, Arizona; Boulder, Colorado; and Pontiac, Michigan.
The $308.8 million award comes after RTX Corporation (NYSE:RTX) secured a $59 million adjustment to an earlier Standard Missiles contract. In addition, the company has secured a significant $1.7 billion contract to supply Spain with four Patriot Air and missile defense systems. The contract covers radars, launchers, and command-and-control stations.
On January 14, NASA’s Pandora mission launched aboard a Saturn‑200 minisatellite built by Blue Canyon Technologies, a subsidiary of RTX Corporation (NYSE:RTX). The mission underscores RTX’s growing role in space innovation, with Blue Canyon delivering its largest telescope payload to date and providing integration and post‑launch support. This marks the company’s 87th spacecraft in orbit, adding to more than 160 active orders, and highlights RTX’s broader strength as a global aerospace and defense leader with divisions including Collins Aerospace, Pratt & Whitney, and Raytheon.
RTX Corporation (NYSE:RTX) is a global aerospace and defense company that designs, manufactures, and services advanced systems, engines, and solutions for defense, commercial, and government customers. It focuses on connecting and protecting the world with innovations in areas like missiles, aircraft engines, sensors, cybersecurity, and space technology.
2. GE Aerospace (NYSE:GE)
Year to Date Gain: 10.56%
Number of Hedge Fund Holders: 102
GE Aerospace (NYSE:GE) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 13, the company received a significant boost after Delta Air Lines selected its GEnx engines to power its 30 new Boeing 787-10 aircraft.
The aerospace giant will also supply spare engines and offer long-term services support as part of the contract. Delta Airlines settled on the GE Aviation GEnx engine, as it has accumulated more than 70 million g-hours since its introduction in 2011. The engine currently powers nearly two-thirds of all 787 aircraft in operation.
“GE Aerospace’s GEnx engines will enable us to connect our passengers to international destinations across the globe with greater efficiency and improved reliability and are foundational to our growth vision,” said Ed Bastian, Delta’s chief executive officer.
The Delta Airlines deal comes on the heels of GE Aerospace and Lockheed Martin completing engine tests for hypersonic missiles in a liquid-fueled rotating detonation ramjet. The two are working on a technology that would enable missiles to fly at hypersonic speeds with improved fuel efficiency and extended range.
GE Aerospace (NYSE:GE) designs, manufactures, and services advanced jet engines, components, and integrated systems for commercial, military, and business aircraft, focusing on propulsion, power, and avionics to make flight safer, more efficient, and sustainable.
1. The Boeing Company (NYSE:BA)
Year to Date Gain: 9.79%
Number of Hedge Fund Holders: 106
The Boeing Company (NYSE:BA) is one of the defense & aerospace stocks gaining from rising geopolitical spending. On January 20, analysts at UBS reiterated a Buy rating on The Boeing Company (NYSE:BA) with a $275 price target. According to the research firm, positive trends are emerging around the aerospace giant with 787 Dreamliner production.
For the 30 days ending January 9, there was a 69% year-over-year increase in Dreamlifter flights, implying a significant increase in components to Boeing’s Charleston assembly facility. The flights imply a production rate of 5.4 aircraft per month. Before a typical slowdown, Dreamlifter flights reached a high of 7.4 per month for the first time since December 2020.
On December 20, Ethiopian Airlines ordered 9 Boeing 787-9 Dreamliners as it looks to expand its international network, which currently serves 145 destinations. Meanwhile, the US Federal Aviation Administration insists it is not the roadblock to Boeing securing certification for two new variants of the Boeing 737 MAX. The agency insists it has devoted resources to ensure the company gets the smaller 737 MAX 7 and larger MAX 10 planes certified.
The Boeing Company (NYSE:BA) designs, manufactures, and sells commercial airplanes, military aircraft, and space/defense systems, while also providing extensive aviation services, support, and training globally, serving airlines and governments in over 150 countries as a leading aerospace manufacturer and U.S. exporter.
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