Defense Tech Stocks Are Rising: Which Companies Are on the Front Line of Profit?

Following Ukraine’s successful drone strikes on Russian airbases and escalating tensions in the Middle East and Asia, interest in defense technologies has surged. In response, the Trump administration is ramping up investments in drones, artificial intelligence, hypersonic weapons, and missile defense systems (such as the “Golden Dome”).

Despite an overall defense budget increase of +12%, the focus is shifting toward agile, cost-effective, and high-tech solutions rather than traditional weapons platforms.

1. AeroVironment is a manufacturer of unmanned aerial vehicles (UAVs) and autonomous systems used in both military and civilian applications. The company’s stock has risen 60% year-to-date. Even after a brief dip related to a bond issuance, investor demand remains strong. Analysts at RBC have raised their price target to $275, while BTIG projects an even higher target of $300. The average price target, according to FactSet, is around $266 — suggesting the market still sees significant growth potential.

2. Kratos Defense & Security Solutions is in the development of autonomous drones, missiles, and military systems that use commercial technologies to reduce costs compared to traditional solutions. In 2025, its stock has climbed 69%, including a 14% gain over the past month alone. Goldman Sachs raised its price target to $52, and Stifel to $54. Kratos also has a strategic partnership with Israel’s Rafael, called Prometheus, which is expected to significantly boost revenue following the Middle East conflicts.

3. Teledyne Technologies provides advanced sensors, space equipment, and components used in defense. While no specific stock price projections are mentioned, the company is considered a sector leader due to its presence in emerging fields like missile systems, hypersonic technologies, and satellite surveillance. Analysts rank it among the top investment opportunities in the defense tech sector.

4. Karman Holdings manufactures components for rockets and space systems. Its stock has also attracted increased interest, with RBC raising its price target from $44 to $51 — roughly 13% above current market value. The company is expected to play a role in major defense programs, including initiatives like the “Golden Dome” aimed at protecting critical infrastructure.

These companies represent the next wave in the defense industry, where innovations such as drones, autonomous systems, and AI are rapidly displacing legacy military contractors. Investor attention is shifting toward more flexible and efficient technological solutions, which are seen as better suited to modern threats and evolving government defense priorities.