BlackRock, in its latest note, highlighted the defense sector as a prime investment opportunity, driven by accelerating geopolitical fragmentation and a global emphasis on national security.
What Happened: The financial giant is sharpening its focus on specific regions and technologies, with a strong preference for the United States.
According to BlackRock, the U.S. stands out due to its substantial defense expenditure, which, as SIPRI data indicates, “spends more than double on defense than Europe.”
Furthermore, the U.S. is home to the most sophisticated defense and defense technology firms, serving as a key supplier for critical systems like air and missile defense for many nations.
Within the defense sector, BlackRock highlights significant prospects in defense tech. This broad category encompasses not only artificial intelligence (AI) and software companies but also essential IT services and hardware, such as semiconductors, that power advanced defense capabilities.
The firm anticipates that numerous private defense tech companies could launch initial public offerings (IPOs) in the coming years, offering public market investors new avenues into this expanding theme. Space tech is another area of interest, expected to benefit from intensifying strategic competition.
BlackRock notes that “growing geopolitical fragmentation and strategic competition in AI are reinforcing the global focus on national security and resilience – creating opportunities in defense.” This underscores a selective approach to defense investments, where technological superiority and robust national security infrastructure are becoming paramount.
Here’s a list of some defense and defense tech stocks and global exchange-traded funds that investors could consider.
| U.S. Defense Stocks | YTD Performance | One Year Performance |
| Palantir Technologies Inc.’s (NASDAQ:PLTR) | 86.09% | 479.14% |
| General Dynamics Corp (NYSE:GD) | 8.16% | -5.43% |
| Northrop Grumman Corp (NYSE:NOC) | 6.76% | 16.02% |
| Lockheed Martin Corp (NYSE:LMT) | -2.03% | 0.20% |
| Boeing Co. (NYSE:BA) | 17.13% | 12.40% |
| RTX Corp (NYSE:RTX) | 25.69% | 43.01% |
| General Electric Co. (NYSE:GE) | 46.99% | 54.36% |
| TransDigm Group Inc. (NYSE:TDG) | 17.27% | 10.74% |
| Howmet Aerospace Inc. (NYSE:HWM) | 58.53% | 123.36% |
| Axon Enterprise Inc. (NASDAQ:AXON) | 31.31% | 167.59% |
| L3Harris Technologies Inc. (NYSE:LHX) | 21.10% | 11.36% |
| Global Defense ETFs | YTD Performance | One Year Performance |
| iShares US Aerospace & Defense ETF (BATS:ITA) | 26.34% | 37.32% |
| Invesco Aerospace & Defense ETF (NYSE:PPA) | 19.61% | 32.01% |
| SPDR S&P Aerospace & Defense ETF (NYSE:XAR) | 21.61% | 41.72% |
| Global X Defense Tech ETF (NYSE:SHLD) | 56.94% | 74.59% |
| ARK Space Exploration & Innovation ETF (BATS:ARKX) | 15.13% | 50.24% |
| Direxion Daily Aerospace & Defense Bull 3X Shares (NYSE:DFEN) | 75.10% | 78.38% |
| SPDR S&P Kensho Future Security ETF (NYSE:FITE) | 8.48% | 30.78% |
Why It Matters: The futures of the S&P 500, Dow Jones, and Nasdaq 100 indices rose on Tuesday as the investors overlooked a significant surge in Middle East tensions, triggered by Iran's missile attacks on U.S. military bases in Qatar and Iraq, which occurred just 48 hours following U.S. strikes on Iranian nuclear sites.
Donald Trump shared a post on Truth Social on Monday, announcing a "Complete and Total CEASEFIRE," at which point, he says, "THE 12 DAY WAR" will be considered "ended."
However, the Foreign Minister of Iran, Syed Abbas Araghchi, refuted claims of a ceasefire, saying that there was "no agreement" for cessation of military operations, in a post on X.
Price Action: The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Monday. The SPY was up 0.99% to $600.15, while the QQQ rose 1.03% to $531.65, according to Benzinga Pro data.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Mike Mareen / Shutterstock.com
