Why are defense stocks performing so well in 2025?

Defense stocks are benefiting from evolving warfare tactics, increased global military spending due to geopolitical tensions, and the rise of innovative, tech-like upstart companies.

Which new defense companies are leading stock market gains?

Companies like Kratos Defense, Planet Labs, and Palantir Technologies are leading, with their stock prices at least doubling this year.

How does the Ukraine conflict impact defense stock performance?

The conflict highlights new warfare methods and has prompted many nations to increase their defense budgets, directly boosting demand for military contractors.

Home / Business and Economy / Defense Stocks Soar: New Dawn for Military Investors

Defense Stocks Soar: New Dawn for Military Investors

21 Dec, 2025

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Summary

New defense upstarts show tech-like growth, doubling stock prices.
Ukraine conflict and geopolitical shifts boost military spending globally.
Defense sector surpasses S&P 500 and even Magnificent Seven tech gains.

Defense Stocks Soar: New Dawn for Military Investors

The landscape of military contractors is shifting, with new, agile companies emerging alongside traditional giants. Upstarts such as Kratos Defense & Security Solutions and Palantir Technologies are achieving tech-firm valuations, with their stock prices at least doubling this year. This transformation is partly fueled by changing warfare dynamics, exemplified by Ukraine's drone-centric defense, and a global increase in military spending.

Nations worldwide are reevaluating their defense capabilities, with some European and Asian countries significantly boosting their budgets. This trend benefits US contractors as well. The S&P 1500 Aerospace and Defense group has seen a substantial 41% jump this year, significantly outperforming the S&P 500 and major tech stocks. European defense firms are also experiencing rallies as their respective governments increase military investments.