The fiscal 2026 National Defense Authorization Act proposes $924.7 billion in U.S. military spending, a slight increase over 2025 spending levels. However, the Russia-Ukraine War, ongoing Middle East conflicts involving Israel, Iran and Hamas, and tensions between the U.S. and China regarding Taiwan may compel global governments to increase defense industry spending.
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At the same time, these geopolitical pressures could provide significant tailwinds for defense industry earnings. Defense stocks remain highly attractive for investors seeking stability, as these companies typically have predictable, multi-year government contracts. Morgan Stanley analysts have identified these seven top-tier defense stocks to buy in 2026:
| Stock | Implied change* |
| RTX Corp. (ticker: RTX) | 17% |
| General Dynamics Corp. (GD) | 17% |
| Northrop Grumman Corp. (NOC) | 9% |
| Howmet Aerospace Inc. (HWM) | -10% |
| TransDigm Group Inc. (TDG) | 29% |
| L3Harris Technologies Inc. (LHX) | 13% |
| Axon Enterprise Inc. (AXON) | 77% |
*From Feb. 13 close.
RTX Corp. (RTX)
RTX is the defense behemoth created by the 2020 merger of Raytheon and United Technologies. The company’s Collins and Pratt & Whitney subsidiaries are more focused on the commercial aerospace industry, but its Raytheon subsidiary develops advanced sensors and provides training, software and cybersecurity solutions for the U.S. intelligence community and the newly renamed Department of War. Analyst Kristine Liwag says RTX has strong tailwinds in both its commercial and defense businesses and will generate sustainable margin expansion and revenue growth. RTX is Liwag’s top aerospace industry stock pick. Morgan Stanley has an “overweight” rating and $235 price target for RTX stock, which closed at $200.06 on Feb. 13.
General Dynamics Corp. (GD)
General Dynamics is a diversified aerospace and defense company that produces a wide range of products, including Gulfstream jets, Abrams tanks and nuclear submarines. The majority of the company’s revenue comes from the U.S. government, particularly its large contracts with the Department of War. While operating margins were somewhat soft, Liwag says General Dynamics exceeded expectations on net income, revenue and operating cash flow in the most recent quarter. She says General Dynamics’ Marine sales have been particularly impressive, and its Combat Systems backlog is expanding. Morgan Stanley has an “overweight” rating and $408 price target for GD stock, which closed at $347.64 on Feb. 13.
Northrop Grumman Corp. (NOC)
Northrop Grumman is one of the world’s largest weapons and military technology producers. The company’s Defense Systems segment provides battle management and missile systems products and services, while its Mission Systems segment focuses on airborne sensors and networks, as well as other military and intelligence mission solutions. Liwag says Northrop has potential to secure several large government awards in 2026 related to the B-21, F/A-XX and Golden Dome projects, and the company will likely exceed its initial 2026 revenue growth guidance of 4.5%. Morgan Stanley has an “overweight” rating and $765 price target for NOC stock, which closed at $702.57 on Feb. 13.
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Howmet Aerospace Inc. (HWM)
Howmet Aerospace manufactures lightweight metal products, specializing in jet engine components, titanium structural parts, aerospace fastening systems and forged wheels. The company also provides defense solutions to its military partners, such as precision machining, integrated program management and metals expertise. Liwag says she was not surprised by the positive market reaction to Howmet’s superb fourth-quarter results. She says the strong quarter was driven by 32% growth in Gas Turbines revenue and 20% growth in Defense Aerospace revenue. In addition, Liwag says Howmet’s initial 2026 guidance is likely conservative. Morgan Stanley has an “overweight” rating and $225 price target for HWM stock, which closed at $250.21 on Feb. 13.
TransDigm Group Inc. (TDG)
TransDigm designs and manufactures original aircraft parts sold to manufacturers. The company also produces aftermarket replacement parts sold to commercial and military aircraft operators. In recent years, TransDigm has announced several significant buyouts, including acquiring SEI Industries, Raptor Scientific and the components and subsystems business of Communications & Power Industries. Liwag says TransDigm’s recent stock weakness is a buying opportunity for long-term investors, especially given its attractive valuation. Finally, its $10 billion in capital ready for deployment suggests TransDigm could soon announce another transformative acquisition. Morgan Stanley has an “overweight” rating and $1,660 price target for TDG stock, which closed at $1,286.67 on Feb. 13.
L3Harris Technologies Inc. (LHX)
L3Harris Technologies is an aerospace and defense company focused on technology-driven mission solutions. The company’s leading defense products include airborne ISR (intelligence, surveillance and reconnaissance) and electronic warfare systems, precision-guided munitions and propulsion products, communication systems, integrated vision solutions, and space and missile defense technologies. Liwag says L3Harris’ Mission Solutions business is positioned for durable double-digit annual revenue growth over the next several years. She says the company has essentially reinvented solid rocket motor production, creating a more efficient production model that emphasizes common components. Morgan Stanley has an “overweight” rating and $390 price target for LHX stock, which closed at $345.50 on Feb. 13.
Axon Enterprise Inc. (AXON)
Axon Enterprise is a law enforcement hardware and technology solutions provider. In addition to supplying body-worn cameras and virtual reality training to law enforcement, Axon’s military products include military body-worn cameras, drone technology, in-vehicle camera systems and digital management platforms. Analyst Meta Marshall says she is confident opportunities in drones, artificial intelligence, enterprise and international markets will support durable 25% to 30% annual growth for Axon over the next several years. Marshall says Axon’s recent acquisition of 9-1-1 platform Prepared is evidence of its expanding addressable market. Morgan Stanley has an “overweight” rating and $760 price target for AXON stock, which closed at $429.67 on Feb. 13.
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7 Best Defense Stocks to Buy Now originally appeared on usnews.com
Update 02/17/26: This story was published at an earlier date and has been updated with new information.
