9 Best Defense Stocks to Buy According to Hedge Funds

Defense stocks have lagged the broad market index in 2026, but experts continue to see promise in the sector ahead.

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3. The Boeing Company (NYSE:BA)

Number of Hedge Fund Holders: 90

The Boeing Company (NYSE:BA) remains one of the widely held defense stocks among hedge funds. This is despite the count dropping from 99 at the end of the first quarter to 90 in Q2. Recovery potential and scale remain the main attraction for institutional investors in the stock.

Total backlog grew to a record $745 billion at the end of the third quarter. During the earnings call, the company also announced that the 737-7 and 737-10 variants were now certified. The aircraft maker also said that the 737 program was on track towards stable production of 47 per month.

Revenue at The Boeing Company’s defense unit grew 15% year-over-year to $7.9 billion, driven by higher volume. Operating margin came in at 6.2%, up from 1.7% in the prior year’s period. Segment backlog reached a record $101 billion, with nearly one-fourths of the orders from customers outside the United States.

A major catalyst for the unit was a Navy contract to build the F/A-XX next-generation fighter aircraft. However, that is not included in the backlog yet as the order awaits the source selection and evaluation review process. During the quarter, the company also secured a 7-year deal to increase PAC-3 Seeker production.

That said, caution is still warranted. The company has a lot of work to do on delivering on its backlog and improving fundamentals. Shares are down 6% since October 27 after Boeing reported a net loss of 34 cents per share for Q3, compared to Wall Street’s estimates of a loss of 21 cents.

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2. RTX Corporation (NYSE:RTX)

Number of Hedge Fund Holders: 92

RTX Corporation (NYSE:RTX) continues to be among the top defense picks for hedge funds. As of Q2 2026, 92 hedge funds held a stake in the stock, down slightly from 95 in Q1.

Despite the dip in hedge fund count, the overall appeal remains high due to the company’s dual exposure to commercial aerospace and defense. Third quarter revenue climbed 11% YoY to $25 billion, beating estimates of $24.08 billion. Adjusted EPS came in at $2.26, up 33% from the prior year and above analysts’ expectations of $1.78 per share.

Following the results, RTX Corporation lifted its full-year forecast for revenue and profit, amid a sustained demand for military programs and commercial aerospace services, which have also pushed its backlog to a record $340 billion. You can read the revised guidance here.

The company received $81 billion worth of new orders during Q3, which included standout defense awards, such as a $20.7 billion contract for AMRAAM missiles in late September and a $22.9 billion contract awarded in August for Tomahawk cruise missiles.

That said, some caveats do apply. The adjusted EPS of $2.26 in Q3 included $0.25 of IEEPA recovery and free cash flow declined 47% during the quarter.

Don’t Miss: RTX (RTX): How Much of its Cash Recovery Comes From Selling Receivables?

1. GE Aerospace (NYSE:GE)

Number of Hedge Fund Holders: 113

GE Aerospace (NYSE:GE) is a global aerospace propulsion, services, and systems company with an installed base of around 30,000 military and 50,000 commercial aircraft engines. Investors are drawn towards the company’s installed base of engines, which are a source of long-running service revenue.

According to Insider Monkey’s database for Q2, 113 hedge funds held a stake in the company. While this a slight decline from 119 in Q1, GE is the most popular aerospace and defense name among institutional investors. It was also recently listed among the best dividend stocks in the sector.

Total adjusted revenue in Q3 came in at $13.3 billion, up 18% from the prior year. Total orders during the quarter grew 49% to $19 billion. Adjusted EPS stood at $2.25 per share, beating Wall Street’s estimates by 24 cents and increasing 36% YoY.

Following the results, GE Aerospace lifted its full-year guidance across the board. This was the second such instance this year of the company raising profit forecasts, amid a surge in demand for aircraft engine repairs and spare parts.

The defense angle further adds durability for the stock. Revenue at the Defense & Propulsion Technologies (DPT) segment grew 7% from last year to $3.5 billion, while orders were up 18% to $4.3 billion for the quarter. For 2026, DPT’s revenue growth is anticipated in the low double digits, with operating profit expected around $1.6-$1.7 billion.

While we acknowledge the risk and potential of GE as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than ACN that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock.

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This article is originally published at Insider Monkey.

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