Defense spending is undergoing a genuine structural shift as governments worldwide rethink what national security actually costs. Analysts and researchers tracking defense spending are focused on which companies are best positioned to capture the next decade of that spending, not just the next contract.
Here are three names worth understanding, ranked from a solid foundation to the highest-growth story in the sector.
#3: The Diversified Foundation
iShares U.S. Aerospace & Defense ETF (NYSEARCA:ITA | ITA Price Prediction)
If you want defense exposure without picking individual winners, ITA is the cleanest way to get there. The fund 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 tell the story: GE Aerospace at 20.5%, RTX at 16.2%, and Boeing at 8.3% together make up nearly half the fund. You’re getting the primes, the suppliers, and emerging defense tech names like Axon and Rocket Lab mixed in.
Performance has been strong. ITA is up 11.2% year-to-date and 61.9% over the past year. That reflects genuine sector tailwinds, not just multiple expansion.
The tradeoff is obvious: diversification comes with drag. Boeing’s operational struggles weigh on the fund even as other holdings outperform. ITA is a starting point for defense exposure, but the individual names below offer more concentrated exposure to specific growth drivers.
#2: The Nuclear Backbone
BWX Technologies (NYSE:BWXT)
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.
The company just posted a record fiscal 2025. Full-year revenue hit $3.2 billion, up 18% year-over-year, with a backlog that grew 50% to $7.26 billion. That backlog number matters enormously — it’s essentially pre-booked revenue signaling where this company is headed over the next several years.
CEO Rex Geveden put it directly on the earnings call: “BWXT operates at the intersection of national security and commercial nuclear power markets, where demand for both remains exceptionally strong.”
The commercial segment is where the surprise is. Commercial Operations grew 95% in Q4 2025, driven by the Kinectrics acquisition and surging demand for CANDU services, SMR components, and international nuclear projects including an AP1000 build in Bulgaria.
For 2026, management guided for revenue of approximately $3.75 billion and non-GAAP EPS of $4.55 to $4.70. The stock trades around $195, up 103.6% over the past year. Analysts have a consensus target of $230.89, with 7 buy or strong buy ratings and zero sells.
The main risk is valuation. At roughly 55x trailing earnings, you’re paying a premium for a company where new program margins start low and expand over time. That requires patience.
#1: The Platform That Runs Public Safety
Axon Enterprise (NASDAQ:AXON)
Axon started as the company that made TASERs. Today it’s building the operating system for law enforcement and increasingly broader national security applications — that distinction is what makes it a notable name on this list.
Q4 2025 results were exceptional. Revenue came in at $796.7 million, up 38.5% year-over-year, beating estimates by 5.6%. Non-GAAP EPS of $2.15 crushed the $1.60 consensus by 34%.
The software business is the engine. Software margins exceed 80%, annual recurring revenue surpassed $1.35 billion, and net revenue retention sits at 125%. That last number means existing customers are expanding their spend year over year — a subscription business with genuine lock-in.
Future contracted bookings hit $14.4 billion, up 43% year-over-year. Combined with a 2028 revenue target of approximately $6 billion, the growth runway is unusually visible for a company at this scale.
CEO Rick Smith framed the AI opportunity bluntly: “nobody should be more aggressive or more thoughtful on AI than Axon. If we get that balance right, we won’t just be a vendor, we’ll be the partner our customers can’t imagine operating without.”
The risks are real. Heavy stock-based compensation, a disclosed material weakness in internal controls, and a GAAP operating loss are all on the table. The stock is down about 8.9% year-to-date after a volatile stretch, representing a pullback from its recent highs.
The Bottom Line
National security spending now runs through nuclear propulsion, commercial reactors, AI-powered law enforcement platforms, and the software tying it all together. ITA provides broad sector exposure. BWXT offers a uniquely positioned nuclear franchise with a 50% backlog surge backing up its growth story. And Axon delivers a high-growth platform in the space, where software margins and locked-in customer relationships point to continued revenue expansion ahead. Each occupies a different segment of the defense and public safety landscape, together illustrating where national security dollars are flowing.
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