In this article, we will discuss the 8 Best Defense Contractor Stocks to Buy Right Now.
Global defense stocks are on the spot as the dramatic military escalation in the Middle East shows no signs of abating. While the sector has been a rare bright spot, the US and Israel launching widespread attacks and Iran embarking on retaliatory attacks have propelled the sector amid concerns over how long the conflict will drag on.
Whereas the conflict has triggered uncertainty in equity markets, there is renewed focus on companies likely to benefit from it.
“It’s very much one of uncertainty at the moment that investors are grappling with,” said Patrick O’Donnell, Chief Investment Strategist at Omnis Investments. Equity markets are a little bit more uncertain about just how long this is going to drag on, for the implication for both growth and inflation that it will have the longer that it goes on.”
Defense companies are attracting interest from Wall Street Strategists as governments around the globe respond to geopolitical tensions. The prospects of governments hiking defense spending are one factor that underlines the renewed attention on some of the big players in the defense sector.
The war dragging on for a long time would lead to a significant depletion of America’s missile stockpile, which would need to be replenished. In the first four days of the conflict, close to $11 billion was spent, including some $5.7 billion of interceptors to shoot down Iranian missiles and drones.
While the U.S. defense budget for the current fiscal year is a record $1 trillion, it is expected to rise. Likewise, European members that raised their military spending targets to 5% of GDP may also be forced to hike. The expected surge in defense spending would be a boon for companies with products and services in the sector.
As defense budgets soar, let’s take a look at some of the best defense contractor stocks to buy right now to ride the wave.
Photo by Somchai Kongkamsri from Pexels
Our Methodology
To compile a list of the best defense contractor stocks to buy right now, we screened for companies operating in the defense sector. We then narrowed our list to companies with significant business and a record of winning big defense contracts. We trimmed the list further by focusing on stocks with upside potential of more than 5% and that are popular among elite hedge funds in the fourth quarter of 2025. Finally, we ranked the stocks based on their upside potential.
Note: Stock Upside Potential Data is Based on Information as of March 24.
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Best Defense Contractor Stocks to Buy Right Now
8. Lockheed Martin Corporation (NYSE:LMT)
Stock Upside Potential: 9.13%
Number of Hedge Fund Holders: 59
Lockheed Martin Corporation (NYSE:LMT) is one of the best defense contractor stocks to buy right now. On March 25, 2026, Lockheed Martin (NYSE:LMT) and the Department of War announced a framework agreement to accelerate production of Precision Strike Missiles (PrSM). Building on last year’s $4.94 billion Army contract, the new plan will quadruple PrSM capacity, ensuring the U.S. maintains a decisive edge.
Lockheed Martin is leveraging advanced technologies and its industrial base to deliver faster, more efficient production, while also creating thousands of skilled American jobs. The agreement could expand into a multi‑year deal lasting up to seven years, pending congressional approval.
PrSM, designed to replace the Army Tactical Missile System, offers extended range, improved lethality, and versatile deployment. The missile made its combat debut earlier in March during Operation Epic Fury, proving its deep‑strike capability.
Lockheed Martin has invested over $7 billion since 2017 to expand production of priority systems, including $2 billion dedicated to munitions. With more than 115,000 square feet of operations space and 400 employees already supporting PrSM, the company is scaling rapidly. CEO Jim Taiclet emphasized that Lockheed Martin is committed to delivering advanced precision fires to meet operational demand and strengthen U.S. deterrence against emerging threats.
On March 23, Sikorsky, a Lockheed Martin company, announced it had successfully tested and delivered the U.S. Army’s experimental UH-60MX Black Hawk helicopter fitted with its MATRIX autonomy suite.
The testing and delivery mark an important milestone in the pursuit of an open-architecture mission, supporting autonomy and piloted flight. The integration of the MATRIX Suite enhances mission effectiveness and survivability of warfighters. The suite also enables automated landing zone detection and obstacle avoidance to enable safe operations.
Additionally, the Lockheed Martin suite enables real-time terrain and obstacle awareness to help pilots and autonomous systems avoid threats. The open architecture on offer will reduce maintenance hours and pilot workload, allowing them to focus on mission-critical decisions.
Lockheed Martin Corporation (NYSE:LMT) is a premier global aerospace, defense, and technology company primarily focused on researching, designing, developing, and manufacturing advanced technology systems, products, and services.
7. Northrop Grumman Corporation (NYSE:NOC)
Stock Upside Potential: 9.91%
Number of Hedge Fund Holders: 62
Northrop Grumman Corporation (NYSE:NOC) is one of the best defense contractor stocks to buy right now. On March 19, Northrop Grumman’s Talon IQ testbed completed its first partner mission autonomy flight using Shield AI’s Hivemind software.
The aircraft successfully carried out combat air patrol and target engagement maneuvers before switching back to Northrop Grumman’s Prism autonomy system. This flight showed how Talon IQ’s open, plug‑and‑play design can host third‑party AI platforms while meeting U.S. Government standards for secure and reliable defense technology. The test also proved that new AI software can move quickly from lab testing to real flight, cutting costs and speeding innovation.
Leaders from both companies said the collaboration highlights how Talon IQ enables rapid scaling of mission autonomy and provides a strong environment for advancing unmanned flight capabilities. Talon IQ, built on Scaled Composites’ Model 437 aircraft, is part of Northrop Grumman’s Project Talon portfolio and is designed to accelerate modular autonomy solutions.
Shield AI’s Hivemind software acts like a human pilot, allowing unmanned systems to sense, decide, and act in complex missions. Together, the demonstration showed how open architectures and advanced AI can bring autonomous flight closer to operational use, supporting future defense needs with speed, flexibility, and reliability.
Northrop Grumman Corporation (NYSE:NOC) is a leading global aerospace and defense technology company that designs, develops, and manufactures advanced systems, including military aircraft (B-21 Raider), autonomous drones, space systems (satellite components, Artemis boosters), cybersecurity tools, and missile defense systems.
6. Honeywell International Inc. (NASDAQ:HON)
Stock Upside Potential: 13.42%
Number of Hedge Fund Holders: 79
Honeywell International Inc. (NASDAQ:HON) is one of the best defense contractor stocks to buy right now. On March 25, Honeywell International Inc. (NASDAQ:HON) announced a supplier framework agreement with the U.S. Department of War to expand production of defense technologies.
The multi‑year deal, valued at $500 million, will boost capacity for navigation systems, Assure actuators, and electronic warfare solutions, critical components used in precision munitions, missiles, and U.S. military aircraft. Honeywell Aerospace is among the first Tier 1 suppliers to sign such an agreement, underscoring its role in strengthening defense readiness. CEO Jim Currier highlighted the company’s ability to scale advanced technologies quickly, delivering lasting benefits to both customers and taxpayers.
On March 20, Honeywell International Inc. raised its debt tender offer to $4.67 billion from $3.75 billion. Honeywell received $7.21 billion in tenders for its dollar securities and €2.60 billion for its euro securities by the deadline. It plans to accept all euro securities tendered within priority levels 1 through 6, with final amounts to be announced after the reference yield date.
The tender covers 17 series of dollar notes maturing between 2029 and 2054, and 7 series of euro notes maturing between 2027 and 2036. The largest submissions included $1.21 billion for 5.250% dollar notes due 2054 and €456.6 million for 3.500% euro notes due 2027. Withdrawal rights expired on March 18, and the tender offers are set to close on April 7, 2026, unless extended.
Honeywell International Inc. (NASDAQ:HON) operates across aerospace technologies, industrial automation, building automation, and energy solutions worldwide. Most importantly, it is a major defense contractor through its Aerospace Technologies division, supplying avionics, navigation systems, radar, propulsion engines, and electronic warfare solutions for U.S. and allied military platforms.
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