What You Need to Know
• BAE Systems (BA.) Sales jumped 14% in 2024 to £28.3 billion, with a record £77.8 billion order backlog.
• Rheinmetall (RHM.DE): Stock soared nearly 40% this year due to higher EU and NATO defense spending, plus major Ukraine contracts.
• Hensoldt (HAG.DE): Orders surged 28% to €2.9 billion, with projected revenue growth in 2025.
• Rolls-Royce (RR.L): Stock hit record highs, with revenue up 16% and a £1 billion share buyback.
• Trump’s NATO stance: His rhetoric and threats to reduce U.S. support are driving European countries to boost defense budgets.
European Defense Stocks Soar
European defense contractors are seeing record-breaking growth as governments ramp up military spending in response to global tensions. BAE Systems (BA.), Rheinmetall (RHM.DE), Hensoldt (HAG.DE), and Rolls-Royce (RR.L) are among the key beneficiaries, with rising revenues, increased order backlogs, and surging stock prices.
BAE Systems reported a 14% rise in sales to £28.3 billion in 2024, backed by a £77.8 billion order backlog. Major contracts include warships for Australia and Eurofighter Typhoon orders from Italy and Spain. Germany’s Rheinmetall has seen its stock skyrocket nearly 40% since January, fueled by EU-wide defense budget hikes and heavy military aid for Ukraine.
Hensoldt, a specialist in defense electronics, reported a 28% increase in order intake, reaching €2.9 billion. The company expects revenue to hit up to €2.6 billion in 2025, reflecting heightened demand for cutting-edge security solutions. Meanwhile, Rolls-Royce’s stock hit a record high as the company beat profit targets two years ahead of schedule. Revenue rose 16% to £17.8 billion, and the company announced a £1 billion share buyback.
Trump’s NATO Rhetoric Accelerates European Military Spending
Former U.S. President Donald Trump’s recent statements about NATO have added urgency to Europe’s defense spending. His suggestion that the U.S. may not defend NATO allies who don’t meet defense spending targets has spurred European governments to increase military budgets and reduce reliance on American support.
In response, European nations are prioritizing domestic defense manufacturing, securing major contracts with homegrown companies. This shift is expected to further boost the defense sector’s long-term growth, with companies like BAE, Rheinmetall, and Hensoldt well-positioned to benefit.
The Oracle Says:
“The Oracle says European defense stocks are a strong play as geopolitical risks and U.S. policy uncertainty push Europe toward greater military self-reliance. Watch for continued contract wins and budget increases fueling further stock gains.”
