Defense and warfare stocks have not exactly been the most impressive gainers in 2026. This is despite the ongoing Ukraine/Russia war and the Iran conflict having pressured defense stockpiles in the United States. The U.S. Congress approved a 13% hike in the defense budget to $900.6 billion in 2026. And NATO nations have made stronger in-roads to living up to their own defense commitments with a 5% of GDP target by 2035.
So, let’s think about what a record defense budget, depleted arms supplies and allies finally living up to (or promising to) their defense spending budgets all translates to for military spending. It doesn’t translate into automatic or assured gains in their stocks ahead. That’s just not quite how the stock market works with expectations and assumptions. It still translates into a solid backdrop for the defense and warfare companies to have solid sector fundamentals to fall back on.
To say that the U.S. is merely competing against China and Russia would be mislabeling reality. There is no indication that “the Taiwan situation” is going to suddenly come to an end. Ditto for North Korea. To believe that Iran is ready to sign a lasting peace agreement seems optimistic, as does a final and simple resolution for Ukraine/Russia. Still, these do not all add up to expected military spending plans turning into a scenario that assures equity gains for investors — but the overall environment remains strong for military spending ahead.
So, let’s look at the leaders and the secondary names rallying. This report also addresses some catches here that could interfere with investors expecting infinite gains.
THE TOP BENEFICIARIES FOR INVESTORS
The iShares US Aerospace & Defense ETF (ITA) is the top defense and warfare ETF of them all with assets of $14.08 billion as of July 23, 2026. Despite many weak defense stocks, its overall performance was up 11% YTD after Thursday’s 3.1% gain.
RTX Corporation (RTX) rose 7.3% after earnings to $209.16, and after hitting a daily high of $213.49 it’s now back at the top of its 52-week range of $150.61 – $214.50. RTX is also now up 14% YTD. The fresh gains came on the heels of a strong earnings report that both beat expectations and came with higher full-year guidance. With revenue of $24.71 billion in Q2-2026, RTX now shows a record backlog increase of 22% to $289 billion. That represents order commitments of 3.24 years when compared to 2025. Wall Street’s consensus price target is $215 before considering post-earnings commentary that will come out after the report.
Lockheed Martin Corporation (LMT) surged an even more impressive 10.5% to $568.59, but its intraday high of $576.00 is still handily within its 52-week range of $412.55 – $692.00. It’s now up 17.5% YTD. Lockheed Martin beat earnings expectations after showing impressive revenue growth of 10.5% to $20.1 billion, and it also raised full-year guidance as well. This record backlog of $230 billion represents 3.06 years of order commitments versus 2025. Without any adjustments from the news, Wall Street’s consensus analyst price target is still up at $606.
MORE DEFENSE STOCK GAINERS
Other key defense and warfare stocks saw gains as well in all of the top contractors. Some of these companies have larger commercial and civilian orders as a percentage of total revenues, but these are the top defense stocks showing gains (with a 52-week range and consensus analyst price targets provided):
The Boeing Company (BA) +0.3% to 209.23 ahead of its earnings report. Despite operating losses expected, Boeing is nearing its expected final FAA certification of its 737 Max 10 plane. Boeing posted a backlog of orders at last quarter of nearly $695 billion, more than 7.7 years’ worth compared to 2025.
YTD Change: -3.6%
52-week Range: $176.77 – $254.35
Analyst Price Target:$270
Market Cap: $165 Billion
GE Aerospace (GE) +2.3% to $349.00 with the prior week’s earnings report coming with stronger full year guidance. Analysts raised their target prices after the report. Its $210 billion in order backlog was 4.5 years of orders compared to 2025 revenues.
YTD Change: +13.3%
52-week Range: $261.71 – $382.97
Analyst Price Target: $403
Market Cap: $362 Billion
General Dynamics (GD) +2.3% to $381.79 even without earnings out yet.
YTD Change: +13.4%
52-week Range: $306.03 – $387.69
Analyst Price Target: $395
Market Cap: $103 Billion
Northrop Grumman (NOC) +1.5% to $533.48 as earnings showed reported strong earnings and raised full-year guidance, but margin concerns have weighed on the stock. Its $104 billion in backlog represented 2.5 years versus 2025 revenues.
YTD Change: -6.4%
52-week Range: $479.02 – $774.00
Analyst Price Target: $650
Market Cap: $76 Billion
L3Harris Technologies (LHX) +5.1% to $299.67 even without earnings out yet. Its shares have been weighed by supply-chain risks and what is considered a leveraged balance sheet after mergers. Still, its backlog is over $40 billion (almost 2 years versus 2025).
YTD Change: +2%
52-week Range: $262.98 – $379.23
Analyst Price Target: $375
Market Cap: $56 Billion
WHAT ARE THE RISKS?
And earlier in 2026, President Trump issued an executive order imposing defense contractors from future stock buybacks or issuing dividends at the “expense of accelerated procurement and increased production capacity.” Those contractors which are underperforming on contracts and not investing their own capital into necessary production capacity (and other conditions) could come under buyback and/or dividend scrutiny if the issues are not cured.
There is a more recent proposal from Senator Elizabeth Warren that would restrict Pentagon contractors (i.e. defense stocks) from conducting stock buybacks and paying dividends unless they are cleared by the Defense Department. The U.S. Chamber of Commerce has penned a letter in opposition to the bill, noting that thousands of companies could fall under this category whether they are a prime defense contractor manufacturing missiles or even a food vendor.
Another significant risk could impact many military orders in the years ahead. The U.S. has been taking steps to increase domestic production and production in nations deemed friendly to U.S. interest of rare earths and other mission-critical minerals that are necessary to power U.S. military weapons and capabilities. China can no longer be counted on for such materials being used for military purposes, and other nations are already more aligned with other nations like Russia. And by now we all know that chips that power every electronic in the world (certainly in all advanced military weapons) are not always available, and those supply chains could face critical risks and interruptions at any time.
Another risk to defense spending, particularly for allied nations, would be a rapid wind-down of the Ukraine/Russia war or an end to U.S./Iran hostilities. These would be welcome wagons for the rest of the world, but some ambitious military spending plans could be dialed down if the world believes it is entering into a “Peace!” phase.
DISCLAIMER
Please note that this report has not covered some of the smaller defense and warfare contractor stocks which have been battered and bruised in 2026. This is also in no way intended to be investment advice nor is it a recommendation to buy or sell any of these or other defense/warfare stocks. Oggonomics does not issue formal ratings and price targets on individual stocks.
