European Defense Stocks Are Rallying in 2025 🚀
Key takeaways
- European defense stocks are climbing as investors anticipate increased military spending
- Uncertainties about the future of U.S. involvement in European security is pushing nations to take greater responsibility for their own defense
Europe's largest defense stocks
This graphic shows the YTD performance of Europe’s seven largest defense stocks by market cap. All of them have seen double-digit gains as of Feb. 25, 2025.
Climbing the most is Rheinmetall, a German producer of air defense systems, large & medium caliber weapons (e.g. tank cannons), and lasers.
The company announced in 2024 that it would be building an ammunition plant in Ukraine as part of a joint venture with a Ukrainian state-owned company.
End of the status quo
According to a report by CSIS, the transatlantic alliance between Europe and the U.S. could be completely transformed during Trump’s second term.
The U.S. appears intent on reducing its responsibility for European security, meaning European countries would need to drastically expand their defense spending.
As this burden shifts, companies like the ones shown in this graphic are likely to benefit from new government contracts.