Defense Stocks Have Their Best Week Ever

I’m not sure if you saw, but defense stocks blasted off in a big way last week. 

To give you a broad indicator, the iShares U.S. Aerospace & Defense ETF (ITA) and the Invesco Aerospace & Defense ETF (PPA) each surged by about 9%. 

Lockheed Martin (NYSE: LMT) jumped 12%, Northrop Grumman (NYSE: NOC) jumped 11.5%, and Huntington Ingalls Industries (NYSE: HII) jumped 14%.

And drone companies did even better, as AeroVironment (NASDAQ: AVAV) blasted 46% higher and Red Cat (NASDAQ: RCAT) soared 47%. 

So where did all of this momentum suddenly come from? 

Donald Trump, of course. 

Defense stocks began the week spiking higher on news of the Venezuela operation. 

Trump’s assault on the county showed he’s determined to exploit the vast military tools at his disposal. And it opened the door to speculation about future interventions in other countries, like Colombia, Mexico, Cuba, Iran, and Greenland.

And indeed, the success of the operation in Venezuela seems to have whetted Trump’s appetite for more military confrontation. 

In addition to threatening numerous countries with similar operations, Trump backed up his sabre-rattling with a call to drastically increase America’s already exorbitant defense budget.

Taking to his social media platform Truth Social Trump wrote:

After the long and difficult negotiations with Senators, Congressmen, Secretaries, and other Political Representatives, I have determined that, for the Good of our Country, especially in these very troubled and dangerous times, our Military Budget for the year 2027 should not be $1 Trillion Dollars, rather $1.5 Trillion Dollars.

This will allow us to build the “Dream Military” that we have long been entitled to, and, more importantly, that will keep us SAFE and SECURE, regardless of foe.

To put this in perspective, Trump’s last budget request (made in 2025) called totaled $848 billion. And his “Big Beautiful Bill” added another $156.2 billion boost to defense initiatives like the Golden Dome.

That brought the total figure to about $1 trillion. 

However, Congress typically adds even more money to the defense budget when it goes to authorize the president’s request. 

This case was no different, as Congress added another $52 billion to Trump’s total — taking it from $848 billion to an even $900 billion. 

So having clearly vaulted over his initial $1 trillion target, President Trump has now set his sights on $1.5 trillion.

And with that, defense contractors took another leg up. 

But that’s all. 

Trump made one more move to fully send defense stocks soaring. It largely flew under the radar given all the other headlines. But it was the key reason drone companies led the charge.

Just before Christmas, the FCC  banned foreign-made drones from the United States citing “national security concerns.”

This obviously is a net positive for domestic drone companies like the ones I mentioned up top. And combined with the other two political developments, helped catalyze the latest surge in defense stocks. 

Of course, this shouldn’t surprise anyone. 

I, for one, have been pounding the table on defense stocks for the past decade and especially after Trump resumed office. 

After all, the U.S. defense budget rose an astonishing 37% in Trump’s first term, climbing from $534 billion to $733 billion. Defense spending as a percentage of GDP also increased, going from 3.1% to 3.4% in that time.

It should surprise no one that he’s now looking to push it even higher. Especially since he’s clearly taking an even more aggressive approach to foreign policy this time around. 

Trump has also thrown his weight behind massive defense initiatives like the Golden Dome and the Golden Fleet — both of which I anticipated and recommended stocks for. 

In fact, my Golden Dome play has more than doubled in value in the past year. And could log another triple-digit gain in the next year or two considering Trump’s heavy defense push. 

So be sure to check it out if you haven’t already.