The fiscal 2026 National Defense Authorization Act calls for $924.7 billion in U.S. defense spending, up slightly from 2025 levels. However, the ongoing war in Ukraine, tensions between China and Taiwan, and conflicts involving Israel, the U.S., Iran and Hamas in the Middle East may force governments to increase defense industry investment in coming years, which could serve as a tailwind for defense sector earnings.
[Sign up for stock news with our Invested newsletter.]
Defense stocks are attractive investments because they often have predictable, long-term government contracts. Here are seven of the best defense stocks to buy now, according to Morgan Stanley analysts.
| Stock | Upside Potential* |
| RTX Corp. (ticker: RTX) | 23.6% |
| Lockheed Martin Corp. (LMT) | 33.2% |
| Northrop Grumman Corp. (NOC) | 26.2% |
| Howmet Aerospace Inc. (HWM) | 1.8% |
| TransDigm Group Inc. (TDG) | 38.2% |
| Axon Enterprise Inc. (AXON) | 38.4% |
| Curtiss-Wright Corp. (CW) | -3.4% |
*Implied upside potential based on Morgan Stanley price target and share price as of the Nov. 5 market 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 Department of Defense. Analyst Kristine Liwag says RTX’s stock is extremely undervalued relative to peers given the company’s strong underlying business fundamentals. In fact, RTX is Liwag’s top stock pick in the aerospace group. Morgan Stanley has an “overweight” rating and $215 price target for RTX stock, which closed at a share price of $174 on Nov. 5.
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 the Trump administration’s focus on building a Golden Dome multi-layer U.S. defense system could be a major opportunity for Lockheed, and the company is already working on developing Golden Dome solutions. Morgan Stanley has an “overweight” rating and $630 price target for LMT stock, which closed at $473.14 on Nov. 5.
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 spent the last several years investing in key growth areas, including tactical missiles and munitions. She says these innovations could help support the company’s impressive international sales growth. Northrop is Liwag’s top overall defense stock pick. Morgan Stanley has an “overweight” rating and $720 price target for NOC stock, which closed at $570.50 on Nov. 5.
[Read: 7 Best Semiconductor Stocks to Buy in 2025]
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 is a high-quality supplier that has a world-class management team, a pristine balance sheet and high exposure to key secular growth themes. She says the company’s earnings multiple should eventually surpass its aerospace and defense competitors as Howmet’s margins expand over time. Morgan Stanley has an “overweight” rating and $210 price target for HWM stock, which closed at a share price of $206.31 on Nov. 5.
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 defense and commercial aftermarkets have generated solid growth in 2025, and steady integration of the company’s acquisitions has boosted revenue. Looking ahead, Liwag says TransDigm has ample opportunities for additional capital deployment. Morgan Stanley has an “overweight” rating and $1,750 price target for TDG stock, which closed at $1,266.31 on Nov. 5.
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 Axon’s growing portfolio of products and services will help the company maintain annual revenue growth above 20% for the foreseeable future. Marshall says Axon also has opportunities to further diversify and expand its total addressable market outside of law enforcement. Morgan Stanley has an “overweight” rating and $885 price target for AXON stock, which closed at $639.53 on Nov. 5.
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 accelerating demand in Europe has driven Curtiss-Wright’s defense electronics margins to new highs in 2025. She says the U.S. government’s commitment to begin construction of 10 new large-scale nuclear reactors by 2030 will also be a major tailwind for Curtiss-Wright’s commercial nuclear business. Morgan Stanley has an “overweight” rating and $565 price target for CW stock, which closed at a share price of $585.12 on Nov. 5.
More from U.S. News
10 of the Best Bank Stocks to Buy for 2025
10 Best Value Stocks to Buy Now
10 of the Best Stocks to Buy for 2025
7 Best Defense Stocks to Buy Now originally appeared on usnews.com
Update 11/06/25: This story was published at an earlier date and has been updated with new information.
