Global defense spending is rising as the Middle East tension escalates, along with the ongoing Russia-Ukraine war and the U.S.–China tensions in the Indo-Pacific. When conflicts rise, governments worldwide are forced to boost military budgets, which is why defense stocks are surging now. In 2025 global military expenditure reached an estimated $2.63 trillion, up from $2.48 trillion the year before. As geopolitical tensions continue rising, defense contractors with large backlogs, combat-proven systems, and strong government ties could benefit.
Let's explore five such defense stocks, most of which have outperformed the overall market and the iShares U.S. Aerospace & Defense ETF (ITA) gain of 12% so far this year.
