3 Defense Stocks Built for the New Era of National Security Spending

"iShares U.S. Aerospace & Defense ETF (ITA) holds 43 positions across the aerospace and defense ecosystem, with $16 billion in net assets and an expense ratio of just 0.38%. The top three holdings—GE Aerospace at 20.5%, RTX at 16.2%, and Boeing at 8.3%—together make up nearly half the fund, providing exposure to primes, suppliers, and emerging defense tech names like Axon and Rocket Lab."

"BWXT sits at one of the most strategically important intersections in defense: nuclear propulsion for the U.S. Navy and commercial nuclear power. These markets share manufacturing facilities, technical expertise, and regulatory credentials that took decades to build, creating significant competitive advantages and barriers to entry."

"The company just posted a record fiscal 2025 with full-year revenue hitting $3.2 billion, up 18% year-over-year, and a backlog that grew 50% to $7.26 billion. That backlog number matters enormously—it's essentially pre-booked revenue signaling sustained demand and growth visibility."

Global defense spending is undergoing fundamental restructuring as governments reassess national security costs. Investors are analyzing which companies will capture sustained growth over the coming decade rather than focusing on individual contracts. Three investment approaches offer different exposure levels: diversified aerospace and defense ETFs provide broad sector access with lower risk but higher drag; nuclear propulsion specialists like BWXT occupy strategically critical positions serving both military and commercial markets with strong backlogs; and emerging defense technology companies offer concentrated growth potential. The sector demonstrates genuine tailwinds beyond valuation expansion, with strong year-to-date and trailing performance reflecting underlying demand fundamentals.

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