This article looks at the 11 Best Large Cap Defense Stocks to Buy According to Analysts.
The S&P Composite 1500 Aerospace & Defense Index is rebounding from the tariff-driven lows of April. Much of the surge has been driven by aerospace companies, while several major defense contractors have lagged.
American defense stocks have had a subdued 2025 so far amid concerns about U.S. military spending and tariffs. However, Wall Street analysts recommend buying any dips in shares as they anticipate an improvement in prospects for the sector in the year ahead.
Richard Safran, an analyst at Seaport Research, was quoted as saying the following by Bloomberg last month:
“If you see weakness, use these stocks as a buying opportunity… I think the market is underestimating defense spending growth. It’s just not being priced in.”
There are also hopes that the recent announcement by the U.S. and NATO to rearm Ukraine in its fight against Russia could turn things around. Under the agreement, Washington will supply the weapons to be paid for by NATO allies.
Moreover, NATO leaders have also pledged to increase their defense spending to 5% of the GDP by 2035. This is a significant jump from the current target of 2% of GDP and is being seen as a major positive for the defense sector.
With that said, let’s now discuss the best large-cap defense stocks to buy according to analysts.
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Our Methodology
For this article, we sifted through screeners to identify defense stocks that have a market cap of over $10 billion. From there, we selected 11 stocks with the highest positive share price upside potential and ranked them in ascending order. All data is as of the close of business on Monday, August 4, 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).
11 Best Large Cap Defense Stocks to Buy According to Analysts:
11. Embraer S.A. (NYSE:ERJ)
Share Price on August 4: $57.81
Average Upside Potential: 4.15%
Embraer S.A. (NYSE:ERJ) is among the 11 Best Large Cap Defense Stocks to Buy According to Analysts. On July 31, Wolfe Research upgraded the stock’s rating from Peer Perform to Outperform, citing improved fundamentals and exemption from steep U.S. tariffs.
Late last month, the planemaker came away unscathed when President Trump imposed a 50% tariff on most goods imported from Brazil. Embraer S.A. (NYSE:ERJ) was spared at 10%, avoiding a potential pandemic-like hit to its financials.
Wolfe Research analyst Myles Walton said the effective impact of the tariff was now closer to 5%, considering the high proportion of American-sourced content on Embraer S.A. (NYSE:ERJ)’s aircraft. He wrote the following in a client note on July 30:
“When we downgraded shares of Embraer (ERJ) in March, we were wary of an unpriced tariff risk (and a stock that had doubled in the prior 12 months). That risk has now come and gone, but the stock is at the same level.”
The analyst also noted Embraer S.A. (NYSE:ERJ)’s robust commercial aviation orders, fueled by strong demand at the Paris Air Show. Walton added that recent discussions with the management have further raised expectations that the momentum will continue.
Embraer S.A. (NYSE:ERJ) is a Brazilian jet manufacturer that produces aircraft for commercial, executive, and defense purposes.
10. GE Aerospace (NYSE:GE)
Share Price on August 4: $276.23
Average Upside Potential: 5.71%
GE Aerospace (NYSE:GE) is among the 11 Best Large Cap Defense Stocks to Buy According to Analysts. On August 6, the company announced that Cathay Pacific has signed an agreement to purchase more GE9X engines to power the 777-9 aircraft.
The deal has raised the airline’s total commitment to 35 GE9X-powered 777-9s. It also includes a service agreement for the maintenance, repair, and overhaul of the engines.
Mahendra Nair, Group Vice President for Commercial Programs at GE Aerospace (NYSE:GE), stated the following on the recent deal:
“Cathay Pacific was the first customer in the Asia-Pacific region to select the new GE9X engine and we’re honored they continue to place their confidence in our products and services. Combining the world’s largest twin-engine commercial passenger jet and the most powerful commercial aircraft engine will enable Cathay to reach destinations across the globe.”
The GE9X engine is the most powerful commercial aircraft engine in the world. It is also the most fuel-efficient in its class. Moreover, like all other commercial engines offered by the company, it can operate on Sustainable Aviation Fuel (SAF) blends.
In other related news, the Turkish Aerospace Industries (TAI) recently announced the signing of an agreement with GE Aerospace (NYSE:GE) to strengthen the F404 turbofan engines and any potential future collaborations related to Türkiye’s HURJET jet trainer.
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