U.S. military spending under the fiscal 2026 National Defense Authorization Act hit $900.6 billion. Considering the ongoing conflicts in the Middle East, the war between Russia and Ukraine and heightened tensions between the U.S. and China, global military spending is unlikely to slow down any time soon.
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Investors typically consider defense stocks to be safe, reliable and recession-resistant investments. Many of these companies are locked into long-term government contracts that make their revenue and earnings outlooks stable and predictable. Here are seven of the best defense stocks to buy now, according to Morgan Stanley:
GE Aerospace (GE)
GE Aerospace supplies jet engines and services around the world and currently has an installed base of roughly 30,000 military and 50,000 commercial aircraft engines. The company’s Defense & Propulsion Technologies business designs, produces and services jet engines, associated electrical systems, and components for governments, commercial airframes and militaries. Analyst Kristine Liwag says GE’s stock price weakness so far in 2026 is a buying opportunity given the company’s potential for upside earnings revisions if a resolution to the Iran conflict brings down oil prices. Morgan Stanley has an “overweight” rating and $400 price target for GE stock, which closed at $297.45 on May 12.
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 War. Liwag says RTX is benefiting from robust end-market demand and is her top aerospace stock pick. She says RTX’s outperforming defense business will fuel margin expansion and long-term growth. Morgan Stanley has an “overweight” rating and $220 price target for RTX stock, which closed at $178.89 on May 12.
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 anticipates Howmet’s pricing power, strong competitive positioning, recent strategic acquisitions and reliable execution will help the company expand its margins and maintain industry-leading growth. In addition, she says Howmet has a strong financial position that allows for significant financial flexibility and additional capital deployment opportunities. Morgan Stanley has an “overweight” rating and $315 price target for HWM stock, which closed at $269.76 on May 12.
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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. Liwag says General Dynamics’ Aerospace book-to-bill ratio of about 1.2x has reassured investors concerned Middle East customers would pull back on Gulfstream spending. Liwag says the defense segment is experiencing elevated demand and General Dynamics is outperforming its peers in 2026. Morgan Stanley has an “overweight” rating and $435 price target for GD stock, which closed at $346.46 on May 12.
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 recently upped its capital expenditures outlook for 2026 due to larger-than-expected B-21 Raider investments. However, she says Northrop’s missile and missile defense technology businesses and its B-21 program position Northrop well for the current military spending environment. Morgan Stanley has an “overweight” rating and $745 price target for NOC stock, which closed at $558.30 on May 12.
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 investors are too pessimistic about aerospace commercial aftermarket weakness, and TransDigm is the most attractively valued stock among aerospace and defense peers. The company’s recent guidance hike suggests limited negative impact from elevated oil prices. Morgan Stanley has an “overweight” rating and $1,680 price target for TDG stock, which closed at $1,191.19 on May 12.
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 strong international growth helped L3Harris generate an impressive book-to-bill ratio of 1.4x in the first quarter. She says the company’s Space & Missions Systems business was a particular standout in the quarter, and she sees L3Harris’ guidance as overly conservative. Morgan Stanley has an “overweight” rating and $390 price target for LHX stock, which closed at $309.47 on May 12.
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7 Best Defense Stocks to Buy Now originally appeared on usnews.com
Update 05/13/26: This story was published at an earlier date and has been updated with new information.
