The fiscal 2026 National Defense Authorization Act calls for $924.7 billion in U.S. military 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.
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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 | Implied upside* |
| RTX Corp. (ticker: RTX) | 26% |
| Lockheed Martin Corp. (LMT) | 41% |
| Northrop Grumman Corp. (NOC) | 30% |
| Howmet Aerospace Inc. (HWM) | 15% |
| TransDigm Group Inc. (TDG) | 22% |
| Axon Enterprise Inc. (AXON) | 38% |
| Curtiss-Wright Corp. (CW) | 17% |
*From Dec. 4 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 has strong underlying business fundamentals and trades at a significant discount to competitors. In fact, RTX is her top stock pick in the aerospace industry. Morgan Stanley has an “overweight” rating and $215 price target for RTX stock, which closed at $171.31 on Dec. 4.
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 stock is attractively valued and the company is taking a more focused approach to its research and development spending, focusing on opportunities such as Golden Dome missile defense shield solutions and other next-generation defense systems. Morgan Stanley has an “overweight” rating and $630 price target for LMT stock, which closed at $448.35 on Dec. 4.
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’s initial 2026 guidance for mid-single-digit organic sales growth and $3.1 billion to $3.5 billion in free cash flow is conservative, and she says Northrop is her top overall stock pick in the defense group. Morgan Stanley has an “overweight” rating and $720 price target for NOC stock, which closed at $553 on Dec. 4.
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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. While Howmet’s stock may appear fully valued, Liwag says a combination of pricing power, strong market positioning and impressive execution will allow Howmet to expand margins and outgrow industry peers. In addition, she says Howmet has room for significant capital deployment given its strong balance sheet. Morgan Stanley has an “outperform” rating and $225 price target for HWM stock, which closed at $196.27 on Dec. 4.
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 bearish concerns about TransDigm’s business are overdone. Her long-term investment thesis for TransDigm has shifted from it being an aftermarket merger and acquisition compounder to it being a growth-at-a-reasonable-price investment. Morgan Stanley has an “overweight” rating and $1,660 price target for TDG stock, which closed at $1,360.10 on Dec. 4.
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 Axon delivered a shocking miss in the third quarter, but she remains confident opportunities such as drones, artificial intelligence, enterprise sales and international expansion can help the company maintain annual revenue growth of between 25% and 30% in coming years. Morgan Stanley has an “overweight” rating and $760 price target for AXON stock, which closed at $550.61 on Dec. 4.
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’s core defense business is outperforming and its margins are impressive, but most enthusiasm surrounding the stock at the moment is centered on its commercial nuclear business. She anticipates several new AP1000 reactor builds will drive the stock price higher in coming years. Morgan Stanley has an “overweight” rating and $645 price target for CW stock, which closed at $550.03 on Dec. 4.
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7 Best Defense Stocks to Buy Now originally appeared on usnews.com
Update 12/05/25: This story was published at an earlier date and has been updated with new information.
