The fiscal 2025 National Defense Authorization Act (NDAA) calls for $923.3 billion in U.S. military spending, up 4.1% from 2024 levels. However, the ongoing war in Ukraine, tensions between China and Taiwan and conflicts between Israel and Iran, Hezbollah and Hamas in the Middle East may force the U.S. government to increase defense industry investment in the coming years, which could serve as a tailwind for defense sector earnings.
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Defense stocks are attractive investments because they often have predictable, long-term government contracts. Here are seven defense stocks to buy, according to Morgan Stanley:
| Stock | Upside/downside potential from May 30 |
| RTX Corp. (ticker: RTX) | -1.1% |
| Lockheed Martin Corp. (LMT) | 19.2% |
| TransDigm Group Inc. (TDG) | 7.3% |
| Howmet Aerospace Inc. (HWM) | 0.1% |
| Northrop Grumman Corp. (NOC) | 17.6% |
| Axon Enterprise Inc. (AXON) | -7.4% |
| Curtiss-Wright Corp. (CW) | -8.0% |
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 Department of Defense. Analyst Kristine Liwag says more than 50% of the company’s total revenue comes from the defense industry, insulating RTX from negative tariff impacts. Liwag says RTX’s stock is also attractively valued. Morgan Stanley has an “overweight” rating and $135 price target for RTX stock, which closed at $136.48 on May 30.
Lockheed Martin Corp. (LMT)
Lockheed Martin is one of the world’s largest defense, security and intelligence firms and is also an important supplier to NASA and other non-defense government agencies. The company produces missile and targeting systems, as well as mission systems for ships, submarines and aircraft. It also manufactures Black Hawk and Seahawk military helicopters. Liwag says Lockheed’s ability to pass through rising costs and its mostly domestic supply base helps protect the company’s earnings from tariffs. In fact, she says Lockheed is her top defense stock pick in 2025. Morgan Stanley has an “overweight” rating and $575 price target for LMT stock, which closed at $482.38 on May 30.
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 sales data from distributors and positive booking trends suggest commercial aftermarket demand is strong. The company has aggressively repurchased stock so far in 2025, and Liwag says investors should expect capital deployment to continue. Morgan Stanley has an “overweight” rating and $1,575 price target for TDG stock, which closed at $1,468.43 on May 30.
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 Howmet remains undervalued even after the stock outperformed in recent years. She says the aerospace and defense market is growing at an impressive clip, and Howmet is positioned to outgrow the overall industry thanks to its pricing leverage and market share gains. Morgan Stanley has an “overweight” rating and $170 price target for HWM stock, which closed at $169.89 on May 30.
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, and other military and intelligence mission solutions. Liwag says Northrop investors were blindsided by a $477 million pre-tax charge on the company’s B-21 bomber program in the first quarter of 2025, but she says the charge was mostly due to adjustments that allow Northrop to ramp up production more rapidly. Morgan Stanley has an “overweight” rating and $570 price target for NOC stock, which closed at $484.77 on May 30.
Axon Enterprise Inc. (AXON)
Axon Enterprise is a law enforcement hardware and technology solutions provider. In addition to supplying body-worn cameras and other hardware to law enforcement and military customers, Axon also provides training and cloud-based software services such as digital evidence management. Analyst Meta Marshall says Axon is an attractive investment thanks to its software growth, new artificial intelligence
offerings and opportunities to expand into adjacent markets. Even after five consecutive quarters of above 30% revenue growth, Marshall says Axon is positioned to maintain 25% to 30% annual sales growth. Morgan Stanley has an “overweight” rating and $695 price target for AXON stock, which closed at $750.36 on May 30.
Curtiss-Wright Corp. (CW)
Curtiss-Wright provides specialized solutions, engineered products and other services primarily to the aerospace and defense markets. The company’s defense electronics segment includes products such as commercial off-the-shelf embedded computing board-level modules, integrated subsystems, and data acquisition and flight test instrumentation equipment. Liwag says Curtiss-Wright exceeded expectations in the first quarter of 2025, driven by unexpected strength in the company’s defense electronics business. In addition to its aerospace and defense business, Curtiss-Wright has opportunities to grow its commercial nuclear reactor business and is ramping up nuclear technology development efforts. Morgan Stanley has an “overweight” rating and $405 price target for CW stock, which closed at $440.11 on May 30.
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7 Best Defense Stocks to Buy Now originally appeared on usnews.com
Update 06/02/25: This story was published at an earlier date and has been updated with new information.
