Table of Contents
The defense industry seems as integral as ever in 2026, and that means that investing in defense stocks, for some investors, may be top of mind. There are several ongoing conflicts around the world — in the Middle East, South America, and even Europe, as of 2026 — and for that reason, many investors may be watching defense stocks for signs of potential price movements.
But investing in defense stocks has its risks, despite the prospective timeliness of buying shares of companies that produce weapons, military equipment, and defense-oriented software. So, while investors may want to explore what might be the best defense stocks to buy for their own portfolios and circumstances in 2026 and beyond, it’s important to take everything into account before investing in the markets.
Key Points
• Defense stocks gained investor attention in 2026 due to global geopolitical instability, ongoing military conflicts worldwide, and U.S. plans to increase military spending to a record $1.5 trillion.
• Defense sector companies divide into traditional contractors called “Primes” like Lockheed Martin and Boeing, plus innovative technology firms developing cutting-edge defense software and autonomous systems.
• Top defense stocks for 2026 based on market capitalization include GE Aerospace, RTX Corporation, Boeing, Lockheed Martin, and Northrop Grumman.
• Investors seeking broader defense industry exposure might consider exchange-traded funds for diversified holdings.
• Defense stock investments carry unique risks, including dependence on government contracts, political budget decisions, fixed-price contract vulnerabilities, and potential regulatory compliance changes affecting profitability.
Why Defense Stocks Are in Focus for 2026
The primary reason that some investors with a self-directed investing account online may be interested in what might be the best defense stocks to buy, or otherwise investing in the defense industry, is the rise in recent years of global geopolitical tensions and conflicts. There’s also no clear indication as to when on-going hostilities may deescalate. Defense stocks increased 36.8% in 2025, and they have outperformed global equity markets so far in 2026.
In other words, investors may see trading opportunities in emerging trends, such as geopolitical conflicts, and may be exploring the idea of military stocks to buy. However, there are also risks associated with defense stocks, including supply chain disruptions that can impact production and continued geopolitical shifts.
There are numerous ongoing military conflicts occurring around the world, and that includes but is not limited to the Middle East (Iran, Israel, Lebanon), parts of South America (Venezuela), Europe (the war in Ukraine), Africa (Sudan), and others. There’s also the prospect or threat of further destabilization concerning places like Greenland, Taiwan, and other parts of Europe.
On top of that, the United States is looking to ramp up military spending, which could mean increased revenues and profits for defense companies, which could translate to increased value for shareholders and an increase in the defense stock sector performance. President Trump, for instance, called for a $1.5 trillion defense budget in 2027, which would be a 50% increase over the previous year’s defense budget, and a record high.
5 Defense Stocks to Be Aware of in 2026
For investors exploring defense stocks in 2026, or those looking for insight into some of the industry heavyweights, here are five top defense stocks based on market capitalization.
As always, it’s important to do research to make sure that a stock fits with your investing strategy – and remember that there are no guaranteed returns from investing in anything.
| Company | Ticker | Market Cap | Dividend Yield (estimated) | P/E Ratio | 1-Month Return | 1-Year Return |
|---|---|---|---|---|---|---|
| GE Aerospace | GE | $287.5 billion | 0.63% | 33.68 | -19.98% | 36.4% |
| RTX Corp | RTX | $251.3 billion | 1.47% | 37.73 | -7.6% | 42.1% |
| Boeing | BA | $149.5 billion | 0.02% | 100.38 | -16.6% | 9.4% |
| Lockheed Martin | LMT | $138.7 billion | 2.32% | 28.06 | -8.6% | 36.3% |
| Northrop Grumman | NOC | $95.26 billion | 1.45% | 23.00 | -7.4% | 30.9% |
Source: Data from Finviz. Includes U.S. defense stocks listed by market capitalization, as of March 30, 2026. Past performance does not guarantee future results.
1. GE Aerospace (GE)
GE Aerospace is the aircraft-focused successor of General Electric (it trades under the “GE” ticker), and primarily, supplies aircraft engines to governments and commercial companies. GE split into three companies starting in 2021, and GE Aerospace is one of them (the others are health care and energy focused). The company is headquartered in Evendale, Ohio, and previously operated under the name GE Aviation, and before that, General Electric Aircraft Engines.
2. RTX Corp (RTX)
RTX, which was formerly known as Raytheon Technologies Corporation (often just “Raytheon”), is headquartered in Virginia, right outside of Washington D.C. Its roots date back to the 1920s, and as constituted, is a large conglomerate that produces cybersecurity solutions, guided missiles, air defense systems, aircraft engines, drones, software, and hardware, and myriad other things.
3. Boeing (BA)
Boeing (trading under the “BA” ticker) is perhaps the original defense company. It’s an aircraft manufacturer, which has its roots dating back to 1916 in Seattle, though its current headquarters is in Virginia, just outside of Washington D.C. It employs more than 145,000 people in 65 countries, and serves customers in more than 150 countries.
4. Lockheed Martin (LMT)
Lockheed Martin, which trades under the ticker “LMT,” is a big defense company, headquartered in Maryland, outside of Washington D.C. The company was founded in the mid-1990s, and operates multiple divisions that produce aerospace hardware and technologies, missile tech, and aircraft, including the F-35 fighter jet.
5. Northrop Grumman (NOC)
Another defense company headquartered near Washington D.C., Northrop Grumman (trading under the “NOC” ticker) designs and builds aircraft and defense systems. It was originally two different companies (Northrop and Grumman Corporations, respectively) that merged in 1994. It’s known for creating the B-2 stealth bomber, among other aircraft.
Top Defense ETFs for Broad Exposure
In addition to the aforementioned individual defense stocks, investors can also look at funds that are composed of defense stocks or related assets. These funds can offer broader exposure to the defense industry, which may potentially help smooth out the overall risk compared to investing in individual stocks. But funds have their own risks, so it’s a good idea to carefully research any individual fund that may be of interest to ensure it aligns with your risk tolerance and goals. It’s also wise to be aware of these risks if you’re using an automated investing app, or otherwise passively trading.
There are many defense funds to choose from. Here is a short list of some of the largest U.S. defense exchange-traded funds, or thematic ETFs, in terms of overall market cap that may provide useful examples:
• iShares U.S. Aerospace & Defense ETF (ITA)
• Invesco Aerospace & Defense ETF (PPA)
• Global X Defense Tech ETF (SHLD)
• SPDR S&P Aerospace & Defense ETF (XAR)
• First Trust Indxx Aerospace & Defense ETF (MISL)
Can Defense Stocks Be Sustainable?
Another thing to note is that some Environment, Social, and Governance (ESG) stocks and funds — which traditionally focus on the environment, sustainability, and proper governance — have increased their relative holdings in defense assets in recent years. This is mostly a European change, having to do with “Article 8” funds, which operate under certain sustainable finance regulations in Europe.
Many of those funds have specific policies that exclude defense companies or weapons manufacturers, but some ESG funds have become more invested in defense in recent years, as conflicts, such as the Ukraine war, continue. These ESG funds often exclude more controversial weapons to varying degrees, however.
Types of Defense Stocks: Primes vs. Innovators
The defense sector is large and broad, and for potential investors, it may be beneficial to get a bit more granular within the industry when considering defense stocks to invest in. For example, defense stocks could be broken down into two main groups: Primes and innovators.
The “Primes” (Traditional Contractors)
The “Primes” category as it relates to defense stocks, describes traditional military contractors. These are companies that many investors may have heard of or be familiar with. The Primes can include companies that build or design aircraft or missiles, weapons systems, or other things, such as Lockheed Martin, Boeing, General Dynamics, Northrop Grumman, and RTX, among others.
The “Innovators” (Defense Tech and Cybersecurity)
The “Innovators,” on the other hand, are defense companies that may be up and coming, or that are working on technologies, products, or services that are, as the name suggests, innovative. It can include any number of companies, including some that are among the “Primes” category as well. Examples of innovators may include Rocket Lab, AeroVironment, Kratos Defense, Palantir, Howmet Aerospace, and others.
Understanding the Risks of Investing in Defense Stocks
Investing in any specific type of stock or industry has its risks, and that’s also true when it comes to defense stocks. These stocks, in particular, have investment risks that may be more closely associated with the political sphere than other types of stocks, among other things.
Political and Budgetary Risks
Defense companies often receive a relatively high share of their revenues from government or military contracts. As such, they may be at the whims of the political world — if a president, for instance, has a dovish stance in terms of foreign policy, they may be inclined to cut defense spending, which could hurt defense companies’ bottom line. But if they are hawkish, the inverse may be true.
Government budgets might also affect the values of defense stocks. A lower military budget (or a higher one) could cause volatility, which is why it may be a good idea to familiarize yourself with strategies for volatile markets. Further, these stocks are also subject to the whims of the market, and they could be affected by new competitors and technologies, as well as additional regulatory or compliance requirements.
Fixed-Price Contracts and Inflation
Defense companies may face potential risks from fixed-price contracts with government agencies. That is, these companies could sign on to long-term contracts to sell their products for specific prices. If costs were to otherwise rise during that period, revenue and profit could shrink as a result, potentially hurting stock market prices.
The Takeaway
Defense industry investments are in the spotlight in 2026. With widespread geopolitical uncertainty, and increasing defense budgets, some investors are wondering what role defense stocks — or certain sectors within the defense market — might play in their portfolio.
Defense stocks have historically offered lower volatility and more stable returns over the long-term, with the chance of providing smaller gains in bull markets. However, it’s impossible to predict how defense stocks will perform in the months and years ahead.
Also, defense stocks have some relatively unique risks — in large part due to the fact that many of them see a large portion of their revenues sourced from government contracts. As always, investors looking to invest in defense stocks should research each option, and consult with a financial professional for guidance.
Invest in what matters most to you with SoFi Active Invest. In a self-directed account provided by SoFi Securities, you can trade stocks, exchange-traded funds (ETFs), mutual funds, alternative funds, options, and more — all while paying $0 commission on every trade. Other fees may apply. Whether you want to trade after-hours or manage your portfolio using real-time stock insights and analyst ratings, you can invest your way in SoFi's easy-to-use mobile app.
Opening and funding an Active Invest account gives you the opportunity to get up to $1,000 in the stock of your choice.Âą
FAQ
Do defense stocks pay good dividends?
Many defense stocks pay dividends, which may be attractive to some investors. The exact dividend will vary from stock to stock, but many older, established defense companies tend to offer relatively attractive dividends.
How does geopolitical tension affect defense stock prices?
Geopolitical tension could potentially drive up defense stock prices, since additional spending on weapons and defense supplies could mean more revenue or profit for defense companies. However, stock prices can vary between different companies and sectors within the defense industry, and there are never guarantees.
What is the difference between aerospace and defense stocks?
In a general sense, both stock types involve science and engineering, applied to developing and manufacturing weapons systems or technologies. But one primary difference is that aerospace stocks are more focused on the development and deployment of technology related to aviation and flight, whereas defense stocks are more concerned with weapons systems and components.
Are there ethical (ESG) defense funds?
There are ESG funds that invest in the defense industry. Specifically, Article 8 funds in Europe have increasingly invested in defense companies in recent years in response to escalating geopolitical tension. Many of those funds have policies excluding defense companies or weapons manufacturers, but some have become more invested in defense in recent years, as geopolitical conflicts arise and continue. However, these ESG funds often exclude more controversial weapons to varying degrees.
Why are cybersecurity stocks often grouped with defense?
Cybersecurity stocks may be viewed as a sort of defensive stock — a digital counterpart to physical defensive measures. Defense organizations also typically use cybersecurity measures to protect their technologies and infrastructure from possible attacks. For these reasons, they may get placed into the defense category.
Photo credit: iStock/Cecilie_Arcurs
INVESTMENTS ARE NOT FDIC INSURED • ARE NOT BANK GUARANTEED • MAY LOSE VALUE
For disclosures on SoFi Invest platforms visit SoFi.com/legal. For a full listing of the fees associated with Sofi Invest please view our fee schedule.
Exchange Traded Funds (ETFs): Before investing in Exchange Traded Funds (ETF), always read the fund's prospectus. It contains important information about the fund’s objectives, risks, and fees. You can get a prospectus from the fund company’s website or by emailing our customer service at [email protected].
Investment Risk: Diversification can help reduce some investment risk, but cannot guarantee profit nor fully protect in a down market.
S&P 500 Index: The S&P 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S. It is not an investment product, but a measure of U.S. equity performance. Historical performance of the S&P 500 Index does not guarantee similar results in the future. The historical return of the S&P 500 Index shown does not include the reinvestment of dividends or account for investment fees, expenses, or taxes, which would reduce actual returns.
¹Probability of member receiving $1,000 is 0.026%. If you don’t make a selection in 45 days, you’ll no longer qualify for the promo. Customer must fund their account with a minimum of $50.00 to qualify. Probability percentage is subject to decrease.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.
SOIN-Q126-021