In this article, we highlight 14 Best Aerospace and Defense Stocks to Buy According to Wall Street Analysts.

Volatile geopolitical times present some of the best investment opportunities in the aerospace and defense industry. That has been the case in 2025 amid the tensions in the Middle East, compounded by the unending war between Russia and Ukraine. The prospect of the US invading Venezuela has also sparked interest in defense stocks.

Consequently, the S&P Aerospace and Defense Select Industry Index has outperformed, gaining 40% year to date. It is well ahead of the broader S&P 500 index, which is heading into the new year up 16%. Amid the high year-to-date gains, there are already concerns that valuations in the aerospace and defense sector are near the high end. That might not be the case, as data suggests there is still some upside.

Global air traffic data suggest a 5.8% boost in air passenger traffic according to the International Air Transport Association. The growth comes amid robust demand for passenger and defense-linked aircraft, which is expected to support the aerospace industry.

On the other hand, the One Big Beautiful Bill Act is expected to inject $156.2 billion in new funding for national security and defense priorities. With defense and military spending expected to top $849 billion, new opportunities are cropping up that companies should capitalize on.

“The OBBB Act provides over $150 billion in defense funding,” said Michael Martin, vice president of market strategy at Trading Block, a Chicago-based digital brokerage firm. “This covers shipbuilding, aircraft, missile defense, weapons and munitions, and more.” He added, “There’ve been a few non-war times when the defense sector has gotten such a boost.”

According to Tony Bancroft, portfolio manager and aerospace and defense analyst at Gabelli Funds, increased government contracts, rising global defense budgets, and a post-pandemic rebound in commercial air travel create a favorable investment environment.

Our Methodology

To compile our list of Best Aerospace and Defense Stocks to Buy According to Wall Street Analysts, we used Finviz screener and CNN as our sources. We settled on companies with significant exposure to the aerospace and defense sectors. We further trimmed our list, focusing on stocks with upside potential of more than 20% (as of December 17) and that are popular among elite hedge funds in the third quarter of 2025. Finally, we ranked the stocks in ascending order by upside potential.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research shows 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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).

Best Aerospace and Defense Stocks to Buy According to Wall Street Analysts

14. Northrop Grumman Corp. (NYSE:NOC)

Number of Hedge Fund Holders: 59

Analyst Upside Potential: 20.55%

Northrop Grumman Corporation (NYSE:NOC) is one of the best aerospace and defense stocks to buy, according to Wall Street analysts. On December 12, Citi initiated coverage of Northrop Grumman with a Buy rating and a $654 price target. The firm also began coverage on 24 aerospace and defense names, pointing to strong long-term trends across commercial aviation, defense, shipbuilding, and space. Citi said these dynamics could create a trillion-dollar company within five years, highlighting GE Aerospace as a potential contender. RTX was named its top megatrend pick, while Boeing was viewed as a promising turnaround. Analysts expect momentum to build in the fourth quarter and continue into early next year.

On December 9, the company secured a $100 million contract from the US Department of War. The contract is for missile weapon systems development and production for work on the Stand-in Attack Weapon SiAW and Advanced Anti-Radiation Guided Missile (AARGM-ER) systems.

The SiAW is an air-to-surface missile system designed to disrupt the enemy’s anti-access/area denial environment. Northrop is to develop the weapon system with a Weapon Open Systems to enable future upgrades. The $100 million contract will also cover active seeker components test and evaluation support.

Northrop, in partnership with the US Air Force, has already completed a separation test in the Stand-In Attack Weapon system from an F-16 aircraft. The test aimed to validate the missile system’s flight safety and aerodynamic performance.

“The separation test of SiAW from the F-16 is intended to provide the United States Air Force validation of the weapon’s safe separation characteristics and also generate invaluable data for optimizing its performance,” said Col. Gary E. Roos, senior materiel leader, Adaptive Weapons Division, Air Force Life Cycle Management Center.

Northrop Grumman Corp. (NYSE:NOC) is a global technology company specializing in aerospace and defense. It creates advanced systems, products, and services for space, air, cyber, and defense, including military aircraft, satellites, and autonomous systems.

13. The Boeing Company (NYSE:BA)

Number of Hedge Fund Holders: 106

Analyst Upside Potential: 20.72%

The Boeing Company (NYSE:BA) is one of the best aerospace and defense stocks to buy, according to Wall Street analysts. On December 16, Boeing landed a $930.77 million U.S. Navy contract to extend the service life of up to 60 F/A‑18 E/F Super Hornets. The agreement covers upgrades that will push the aircraft’s lifespan from 6,000 to 10,000 flight hours and add Block III avionics capabilities.

Work will be split between San Diego and San Antonio, each handling 44%, with the remaining 12% completed in St. Louis. The program runs through November 2028. No funds were obligated at the time of award; instead, financing will be assigned as individual orders are issued. The Naval Air Systems Command in Patuxent River, Maryland, is overseeing the contract.

On December 12, Moody’s reaffirmed Boeing’s Baa3 senior unsecured rating and revised its outlook to stable after the company completed its acquisition of Spirit AeroSystems. The agency pointed to improvements in quality and safety, strong liquidity of about $29 billion, and Boeing’s solid position in both commercial and defense markets. Boeing’s backlog stood at $636 billion at the end of September, equal to roughly eight to nine years of production.

Moody’s said Boeing is likely to prioritize balance sheet repair, with significant debt coming due in 2026 and 2027. Free cash flow is expected to turn positive in 2026 and improve in the years that follow. The Spirit deal was considered ratings-neutral, aided by Boeing’s repayment of $3 billion of Spirit’s secured debt, while governance scores were raised to reflect better oversight and production discipline.

Separately, on December 12, Citi initiated coverage of Boeing with a Buy rating and a $265 price target, calling the company a compelling large‑cap turnaround play amid long‑term aerospace “megatrends.”

The Boeing Company (NYSE:BA) is a global aerospace leader that designs, manufactures, and supports commercial jetliners, military aircraft, satellites, missile defense systems, and space technologies. The company operates through three divisions: Commercial Airplanes; Defense, Space & Security; and Global Services, which provides maintenance, engineering, supply chain, training, and digital solutions to customers worldwide.