Top 3 Defense Stocks for May 2026: Geopolitical Tension Isn't Going Anywhere
- Will Bell
- 2 days ago
- 5 min read
Russia-Ukraine. Iran and the Middle East. Taiwan.
The South China Sea. The world is not getting quieter. And defense stocks are reflecting that reality in their backlogs, earnings, and stock prices.
Defense is one of the few sectors that gets stronger as the world gets more dangerous.
President Trump proposed a 13.4% increase to the fiscal 2026 defense budget, bringing total U.S. military spending to over $1.01 trillion for the first time in history.
Europe is rearming at a pace not seen since the Cold War.
NATO allies are scrambling to hit the 2% GDP defense spending threshold.
Global defense spending is expected to hit $2.6 trillion in 2026... up 8.1% from 2025.
Every dollar of that spending flows into the order books of the companies below.
And with multi-year government contracts providing revenue visibility that almost no other sector can match... traders researching defensive positioning in a volatile April are finding these names hard to ignore.
1. RTX Corporation (RTX) ... $268 Billion Backlog and a Patriot Missile Boom
RTX is the defense behemoth created by the 2020 merger of Raytheon and United Technologies.
It is currently sitting on a record $268 billion backlog... more contracted future revenue than any other defense company on earth.
That backlog does not disappear when markets are volatile. It converts into revenue and earnings quarter after quarter regardless of what the Nasdaq is doing.
The Raytheon division has become Europe's preferred air defense provider as the continent rearms.
In 2025 alone, RTX secured a $1.7 billion Patriot contract from Spain, $529 million to replenish the Netherlands' donated unit, and $168 million from Romania.
Nineteen countries now operate the Patriot platform.
A massive $50 billion umbrella contract from the Defense Logistics Agency covers Patriot sustainment through 2045... giving RTX unprecedented long-term revenue visibility in air defense alone.
RTX also operates the Pratt & Whitney commercial jet engine business, which benefits from the ongoing commercial aviation recovery.
Management guided 5% to 6% organic revenue growth in 2026 with capital expenditure and R&D spending rising 35% to $5 billion... specifically targeting missile production capacity and next-generation systems.
Morgan Stanley has RTX among its top seven defense stocks for 2026.
Analysts tracking the Patriot system expansion, the Stinger missile restocking cycle, and the Pratt & Whitney aftermarket recovery are watching April Q1 earnings closely for confirmation that all three are accelerating simultaneously.
📊 RTX: $268 billion record backlog. Patriot contracts in 19 countries. $50 billion DLA sustainment contract through 2045.
5 to 6% organic growth guided 2026. Morgan Stanley top pick.
2. Northrop Grumman (NOC) ... Building the B-21 and the Next Nuclear Arsenal
If RTX owns air defense, Northrop Grumman owns strategic deterrence.
The company is currently building two of the most important and expensive weapons programs in U.S. history simultaneously: the B-21 Raider stealth bomber and the Sentinel ICBM... the replacement for America's aging Minuteman III nuclear missile fleet.
UBS named Northrop Grumman one of their top aerospace and defense picks for 2026, citing some of the greatest program visibility for long-term above-peer growth of any company in the sector.
The B-21 and Sentinel are not one-cycle programs.
They are multi-decade government commitments that will generate revenue for Northrop well into the 2040s and beyond.
Beyond those flagship programs, Northrop is also well positioned in satellites, command and control systems, and space defense... three areas the Pentagon is investing in aggressively.
In Q3 2025, Northrop beat earnings expectations significantly and management cited massive demand for solid rocket motors and space systems as the primary driver.
Northrop has also secured a $94.3 million Navy contract to develop a new solid rocket motor and approximately $149 million in additional military technology awards recently.
Analysts note that Northrop's exposure to nuclear modernization and space-based warfare... two of the Pentagon's highest funding priorities... creates a revenue profile that is structurally different from traditional defense contractors.
📊 NOC: Building B-21 Raider + Sentinel ICBM. UBS top pick for above-peer long-term growth. Q3 2025 beat on solid rocket motor demand. Space systems + nuclear modernization dual revenue driver.
3. GE Aerospace (GE) ... The Engine Behind Every Military Aircraft
GE Aerospace is not typically the first name traders think of in defense.
It should be.
The company is one of the world's leading designers and producers of jet engines for military, commercial, and business aircraft.
Nearly every major military aircraft program runs on GE or GE-joint venture engines.
The Zacks consensus estimate for GE Aerospace's 2026 revenues and earnings implies 11.7% revenue growth and 13% earnings growth year over year.
UBS sees meaningful upside to those consensus estimates and cites strong margins as the primary differentiator.
GE secured a $5 billion contract from the U.S. Air Force to supply F110 engines, parts, and support services as part of a Foreign Military Sales program during the first nine months of 2025.
On the commercial side... which flows directly into GE's military aftermarket business... the company secured engine agreements to power Saudia Group's 39 Boeing 787 Dreamliners and an order from Emirates for 130 GE9X engines.
Those commercial wins matter for defense traders because engine aftermarket services... maintenance, repair, and overhaul... are the highest-margin business GE Aerospace runs.
Analysts watching the defense budget expansion are specifically noting that GE's F414 and F110 engine programs are central to both U.S. and international fighter jet programs that are accelerating under current geopolitical conditions.
The stock has gained 7.1% over the past month alone as that thesis gains traction.
📊 GE Aerospace: $5 billion USAF F110 contract (2025). 11.7% revenue growth forecast + 13% earnings growth for 2026. UBS sees upside to consensus. 30% growth trend in aftermarket orders. Up 7.1% in past month.
May 2026 Defense Watchlist: Quick Reference
• RTX Corporation (RTX) ... $268 billion record backlog. Patriot system in 19 countries. $50 billion DLA contract through 2045. 5 to 6% organic growth guided. Morgan Stanley top pick.
• Northrop Grumman (NOC) ... Building B-21 Raider + Sentinel ICBM. UBS top pick. Multi-decade program visibility. Space systems and nuclear modernization leader.
• GE Aerospace (GE) ... $5 billion USAF engine contract. 13% earnings growth forecast. UBS sees upside to consensus. 30% order growth trend in aftermarket.
Why Defense Is One of the Most Compelling Sectors in May 2026
Most sectors slow down when geopolitical tension rises. Defense is the one sector that accelerates. And right now... the tension is not receding.
The three names above share a characteristic that almost no other sector can offer traders in May 2026: predictability.
RTX has $268 billion in contracted backlog. Northrop has B-21 and Sentinel programs that run for decades.
GE Aerospace has engine contracts stretching years into the future.
These are not companies guessing what demand will look like next quarter. They already know. The contracts are signed.
In an May environment full of earnings uncertainty, tariff volatility, Fed speculation, and geopolitical headlines... that kind of revenue visibility is rare.
It is one reason analysts at Morgan Stanley, UBS, and KeyBanc are all circling defense as a core sector position heading into Q1 earnings.
The world is not getting quieter. Defense budgets are not shrinking.
And the companies that manufacture the systems governments cannot live without tend to be very good at turning those contracts into consistent earnings growth.
Traders researching where to find stability with upside in May 2026 may find the defense sector worth a closer look.
All three companies above report Q1 2026 earnings this month... and the setup analysts are watching is unusually clear.
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