3 Defense Stocks Poised to Benefit From Rising Global Military Budgets

3 weeks ago 11

Micah Zimmerman, The Motley Fool

Mon, July 20, 2026 astatine 5:20 AM CDT 5 min read

The satellite is arming up astatine a gait not seen successful decades. Global subject spending reached a grounds $2.9 trillion successful 2025, NATO's combined defence budgets topped $1.5 trillion for the archetypal clip successful 2026, and members person committed to a way toward spending 5% of their gross home merchandise (GDP) connected defense. Europe unsocial lifted spending by double-digit percentages, the fastest maturation since the Cold War. That flood of wealth flows to the companies that physique the ships, planes, and systems, and the ones champion positioned to seizure it are those with the fiscal spot to expand. Here are 3 defence contractors with coagulated equilibrium sheets and wide momentum.

Two individuals are dressed successful subject garb.

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1. General Dynamics

General Dynamics (NYSE: GD) is the astir diversified of the group, spanning atomic submarines, combat vehicles, authorities IT, and Gulfstream concern jets. That premix matters due to the fact that it gives the institution aggregate ways to turn arsenic budgets emergence astatine location and abroad.

The equilibrium expanse is heading successful the close direction. General Dynamics finished its astir caller 4th with astir $3.7 cardinal successful cash, and nett indebtedness fell to astir $4.4 cardinal from $5.7 cardinal astatine the extremity of 2025, meaning the institution is paying down borrowings portion inactive investing. Its full bid backlog deed a grounds adjacent $131 billion, with full imaginable declaration worth person to $188 billion, and gross for its Marine Systems unit, which builds submarines, roseate 21% arsenic the U.S. races to grow its undersea fleet. With a genuine currency motor and shrinking debt, General Dynamics tin money shipyard enlargement portion rewarding shareholders.

2. Northrop Grumman

Northrop Grumman (NYSE: NOC) sits astatine the halfway of the highest-priority programs successful defense, including the B-21 Raider stealth bomber, abstraction systems, and rocket defense, each areas that swell erstwhile threats rise. Its bid backlog stands astatine a grounds of astir $96 billion, giving it years of disposable work.

The fiscal representation present comes with a nuance worthy understanding. Northrop generated beardown escaped currency travel of astir $3.3 cardinal successful 2025, but it is present plowing wealth into expanding B-21 production, committing to a multiyear superior concern program of astir $2.5 cardinal aft agreeing to boost bomber capableness by 25%. That dense spending tin marque near-term currency travel uneven, yet it is the benignant of concern that builds aboriginal earnings. Management reaffirmed full-year projections calling for escaped currency travel of astir $3.1 cardinal to $3.5 billion, indicating that underlying currency procreation remains steadfast adjacent arsenic it invests for growth.

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