Our list today highlights the Top 10 Stocks to Buy according to Goldman Sachs’ Portfolio.

Goldman Sachs Group, among the world’s largest investment banks and financial services companies, utilizes fundamental and quantitative approaches to equity investing. Its Assets Under Supervision, which includes assets under management (AUM) and other client assets, stands at over $720 billion. The firm focuses on long-term investments in quality companies with shareholder-oriented management teams and attractive valuations.

Goldman has notable exposure to the aerospace and defense sector, which has experienced substantial upheaval in recent years due to several geopolitical tensions around the world. At the same time, these conflicts have pushed countries to expand their defense budgets, which underpins the long-term demand for companies in the sector.

A recent example came in early October, when the Government of Canada announced the creation of the Defence Investment Agency (DIA). According to official statements, the DIA is expected to accelerate procurement and investment in advanced defense systems. It should be noted that this development was in line with the June 2025 pledge (Defence Investment Pledge), under which Canada and its NATO allies committed to allocating 5% of annual GDP to build and strengthen national and collective security. Prime Minister Mark Carney noted that “the world is increasingly dangerous and divided”, which emphasized the need for greater defense readiness.

READ ALSO: Goldman Sachs Value Stocks: 10 Stocks to Buy and 14 Best Precious Metals Stocks to Buy Now.

However, investor attention is currently fixed on the U.S. government shutdown, which has now extended beyond 16 days, delaying key budget decisions. Reuters reported on October 16 that the Senate failed to clear the defense funding bill, including a military pay raise, due to disagreement over other funding programs.

Another development that raised investor concerns was U.S. Treasury Secretary Scott Bessent’s remarks on defense companies’ priorities. In an interview at CNBC’s “Invest in America Forum” in Washington, D.C., on October 15, Mr. Bessent said that these companies are lagging on deliveries, and they may be asked to prioritize research spending over buybacks.

With these developments shaping sentiment in the defense sector, let’s explore our list of top 10 stocks to buy according to Goldman Sachs’ portfolio.

Our Methodology

To identify the best defense stocks in Goldman Sachs’ portfolio, we began by reviewing the firm’s Q2 2025 13F filings using Insider Monkey’s 13F database. From these holdings, we focused on defense companies that had the highest value allocation in the portfolio. We then analyzed hedge fund ownership using Q2 2025 data from Insider Monkey’s database and narrowed the list to the 10 most widely held names. Finally, the stocks are ranked in ascending order based on the number of hedge funds holding a position.

We have added the performance of each stock from the end of Q2 2025 to October 16, providing readers with insight into how Goldman Sachs’ defense portfolio picks have played out so far.

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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).

Note: All pricing data is as of market close on October 16, 2025.

Goldman Sachs Defense Stocks: Top 10 Stocks to Buy

10. Northrop Grumman Corp. (NYSE:NOC)

Value in Goldman Sachs’ Portfolio: $384 Million

Number of Hedge Fund Holders: 42

Share Price Return Between July 1 and October 16: 20%

Northrop Grumman Corp. (NYSE:NOC) is one of the best defense stocks in Goldman Sachs’ portfolio. It is a global aerospace and defense technology company that is engaged in the design, development, production, integration, and maintenance of advanced systems across aeronautics, space, defense electronics, and mission solutions.

As a leading U.S. defense contractor, Northrop Grumman Corp. (NYSE:NOC) has a strong portfolio in next-generation defense and space platforms, positioning it as a long-term beneficiary of rising defense budgets.

On October 15, Morgan Stanley’s Aerospace & Defense analyst Kristine Liwag reiterated her Overweight rating for Northrop Grumman Corp. (NYSE:NOC) and raised her price target from $625 to $720. In her note, she gave out a very interesting take on the prime contractors, with NOC remaining one of her top picks. Liwag notes that the ongoing US shutdown and delays in budget decisions will make it difficult for companies to precisely factor in the potential impact into their 2026 guidance. However, she suggested that weaker guidance from these companies presents an opportunity to buy, as there is potential for upward revisions once visibility increases regarding funding decisions.

Meanwhile, the defense space has seen several favorable macro developments. On October 2, the Canadian Government announced the creation of the Defence Investment Agency (DIA), which was seen as a positive development towards demand for defense contractors/ suppliers. As another significant event, on September 29, the Pentagon had reportedly asked its missile suppliers to double or even quadruple production to replenish the low stockpile of weapons, according to The Wall Street Journal. The news agency, which quoted people familiar with the matter, said that this step was taken to prepare for a potential future conflict with China.

With increasing armed conflicts, countries are increasing their budgets on deterrence and modernization of their defense capabilities. This expansion in both domestic and international investments in defense infrastructure and technology is expected to support growth for Northrop Grumman Corp. (NYSE:NOC).

9. Booz Allen Hamilton Holding Corp. (NYSE:BAH)

Value in Goldman Sachs’ Portfolio: $154 Million

Number of Hedge Fund Holders: 47

Share Price Return Between July 1 and October 16: -7%

Booz Allen Hamilton Holding Corp. (NYSE:BAH) is one of the best defense stocks in Goldman Sachs’ portfolio. This advanced technology company generates approximately 50% of its revenue from defense customers, including all branches of the U.S. military, the Office of the Secretary of Defense, NASA, and the Joint Staff.

On October 16, William Blair analyst Louie DiPalma reiterated his Buy rating on Booz Allen Hamilton Holding Corp. (NYSE:BAH) without assigning a price target. The analyst focused on two broad factors to underpin the company’s position within the US defense technology ecosystem. Firstly, he pointed to a recent high-profile White House dinner where the company participated along with the leading technology firms. According to the analyst, this shows that the company is no longer just a consulting firm, but it has grown its influence as a key player in advanced defense systems and software.

Secondly, he found the valuation for Booz Allen Hamilton Holding Corp. (NYSE:BAH) attractive.  While the valuations of Booz Allen’s defense peers have risen substantially, the company’s valuation is currently at a five-year low, presenting an investment opportunity, according to the analyst.

Booz Allen Hamilton Holding Corp. (NYSE:BAH) provides solutions in cybersecurity, artificial intelligence, analytics, digital engineering, and mission-critical IT services for the U.S. government. The company is one of the largest contractors to the Department of Defense, intelligence agencies, and civilian federal sectors.