Almost every investor needs exposure to defense stocks amid shifting geopolitical realities, opines the CEO of global financial advisory giant deVere Group.
The comments from Nigel Green come as the Stoxx Europe aerospace and defence index has skyrocketed, heading for its biggest one-day gain since 2020, as investors reposition for what is now an undeniable reality: defence spending is set to climb for years to come.
He says: “With European leaders scrambling to reinforce their military capabilities after the US distanced itself from security commitments, defence companies stand to be major beneficiaries.
“We believe that this is likely to be the beginning of a fundamental realignment that will shape markets for the foreseeable future.
“The shift is structural. Governments across Europe are coming to terms with the fact that their decades-long reliance on US military backing can no longer be taken for granted.
“The Trump administration’s refusal to provide clear security guarantees has made it clear that Europe must shoulder more of the burden itself. This will translate into significant, sustained increases in defence budgets.
“The market is already waking up to this reality, and those who act now stand to gain the most.
“This realignment is not confined to Europe. Across the globe, military expenditures are surging as nations recalibrate to a world defined by intensifying rivalries and fractured alliances.
“From Asia to the Middle East, the pattern is clear: countries are prioritising security and resilience, and the defence sector is the primary beneficiary,” notes the deVere Group CEO.
Defence spending as a percentage of GDP has risen steadily in key economies over the past decade, with governments allocating larger budgets toward modernising military capabilities and acquiring advanced weapons systems.
The investment case for defence stocks is about more than immediate conflict-driven surges.
“We expect this is a long-term megatrend. The world is entering a new era—one defined by multipolar power struggles, strategic competition, and rapid technological advancements in warfare. Defence companies are at the forefront of innovation, from cyber capabilities to next-generation weapons systems, artificial intelligence-driven surveillance, and hypersonic missiles.
“Their order books are expanding, their government contracts are becoming more robust, and their role in national security strategies is becoming increasingly indispensable.”
Nigel Green continues: “Institutional investors are already rotating into the sector, recognising its defensive characteristics in uncertain economic times.
“With global instability unlikely to fade anytime soon, exposure to defence provides an essential hedge. It’s a sector backed by deep-pocketed government spending, insulated from consumer-driven volatility, and poised for structural growth.”
As geopolitical tensions escalate, investors should consider not just traditional defence giants but also emerging companies developing cutting-edge military technology. Drone warfare, space-based defence systems, and cybersecurity solutions are becoming critical components of modern military strategy, creating new investment opportunities in the sector.
Defence technology firms specialising in AI, quantum computing, and advanced materials are poised to benefit from record-breaking research and development spending.
The market reaction speaks for itself. Monday’s surge in European defence stocks is a signal that can’t be ignored.
“Investors who understand the trajectory of global security realignments will recognise that this is just the beginning.
“The future of global security is shifting, and markets are responding. The biggest mistake investors could perhaps make is underestimating the scale of change unfolding before them.”
deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients. It has a network of offices around the world, more than 80,000 clients, and $14bn under advisement.
