This article looks at Goldman Sachs Defense Stocks: Top 12 Stock Picks. We also discuss the firm’s recent recommendations and projections concerning the sector this year.
After a subdued start to the year, American defense stocks are beginning to see improved returns. Investors are buoyed by President Trump’s plans for a $1 trillion defense budget for fiscal 2026, adding to the momentum from last month’s unveiling of the F-47 and announcement to resurrect the country’s shipbuilding industry.
READ ALSO: 10 Best Mid Cap Defense Stocks to Buy According to Analysts and 10 Best Performing Defense Stocks So Far in 2025.
The sector has received another boost after market chatter that tariff negotiations to address trade imbalances could include commitments from foreign countries to buy weapons from the US. In a statement released on April 8, Vietnam’s prime minister asked for a 45-day delay in the imposition of tariffs and stated his country would buy more American goods, including weapons, to tackle the trade gap.
On April 11, Goldman analyst Noah Poponak adjusted his ratings and price targets for defense stocks, and the most notable adjustment was a prominent Navy shipbuilder receiving a double upgrade on the back of an executive order signed by Trump to revitalize the sector. Poponak expects the stock to benefit, with shipbuilding expected to be a high priority within the defense budget.
The firm is known for its expertise in stock recommendations, helping investors identify high-potential companies. GS boasts a vast network of analysts, covers a wide range of stocks. It also has a research team led by analysts and economists from around the world, offering insights on the economy and the broader market.
In a report released in March this year, Goldman Sachs Research projected a significant increase in defense spending by EU member nations. Military expenditure in the euro area accounted for 1.8% of the GDP in 2024, and is projected to rise to 2.4% by 2027. The firm’s analysts estimate the increased spending to positively impact GDP growth, with every €100 spent on defense to boost GDP by approximately €50.
Defense stocks have rallied in Europe this year, as regional capitals unlocked billions to supercharge their militaries. While recent tariffs have sparked a major plunge in shares over the past couple of weeks, this has been a year to remember for several European defense contractors, with significant returns so far in 2025.
With that said, let’s head over to the list of the top defense picks from the Goldman Sachs stock portfolio.
A fighter jet in formation, revealing the prowess of the companies defense arm.
Methodology
For this article, we scanned Goldman Sachs’ 13F portfolio as of December 31, 2024. From there, we picked the top 12 defense stocks according to their stake value and ranked them in ascending order.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
12. Textron Inc. (NYSE:TXT)
Stake Value as of Q4 2024: $85,886,997
Textron Inc. (NYSE:TXT) manufactures products for consumers across several industries, through its six business segments: Bell, Textron Aviation, Textron eAviation, Textron Systems, Industrial, and Finance. It is one of the top defense picks from the Goldman Sachs stock portfolio.
On April 8, Textron Inc. (NYSE:TXT) announced that Textron Systems was awarded a three-year, $100 million contract from the Naval Sea Systems Command (NAVSEA) to perform payload integration and software support activity for the Mine Countermeasures (MCM) Unmanned Surface Vehicle (USV). Under the agreement, the company will also be responsible for testing and demonstration work on potential future mission systems.
Textron Inc. (NYSE:TXT) is an important player in America’s defense industry. In November last year, the DoD awarded Textron Aviation a $277 million contract to produce 26 T-54A trainer aircraft for the Navy, Marine Corps, and Coast Guard, with an estimated completion date of September 2026.
The company is also working on the FTUAS Option 3 and Option 4 award for the US Army. Under the contract, awarded in May 2024, Textron Systems will complete flight and MOSA demonstrations and deliver an Aerosonde Mk. 4.8 Hybrid Quad uncrewed aircraft system to the Army for testing and evaluation.
However, Textron Inc. (NYSE:TXT)’s share price has declined 19% over the past three months, after a significant year-over-year dip in revenue for the fourth quarter of fiscal 2024. The top-line figure also missed Street estimates. The company is expected to report Q1 FY25 results on April 24.
11. Moog Inc. (NYSE:MOG-A)
Stake Value as of Q4 2024: $108,442,341
Moog Inc. (NYSE:MOG-A) designs, manufactures, and integrates precision control components and systems for OEMs and end users in the aerospace, industrial, and defense markets.
On March 25, the company announced the shipment of Meteor satellite buses for national security space missions. This is a significant milestone for Moog Inc. (NYSE:MOG-A), which has expanded its footprint to the DoD’s programs. It also continues the company’s seven-decade-long commitment to protect warfighters and support those who explore the universe.
The Meteor is an ESPA Grande-class bus, featuring radiation-hardened space avionics, modular payload power, and mission-configurable flight software, making it ideal for dynamic space operations. This new bus builds on Moog Inc. (NYSE:MOG-A)’s earlier success of the Meteorite small satellite buses, which are currently supporting a national security mission on orbit.
In January, Moog Inc. (NYSE:MOG-A) was selected by Lockheed Martin to provide custom actuators for the PAC-3 MSE contract with the Army. The contract was valued at $100 million, making it one of the largest and most significant awards in the company’s defense division. The program is aimed at defending the country from inbound ballistic and cruise missiles, aircraft, and other advanced threats.
Moog Inc. (NYSE:MOG-A) is among the top defense picks from the Goldman Sachs stock portfolio, with the investment banking firm having a stake value of over $108 million in the company as of Q4 2024.
10. Howmet Aerospace Inc. (NYSE:HWM)
Stake Value as of Q4 2024: $144,773,105
Howmet Aerospace Inc. (NYSE:HWM) is one of the top defense picks from the Goldman Sachs stock portfolio. The company manufactures components for aircraft engines, fasteners, aluminum wheels for trucks, and titanium structures for aerospace and defense applications.
The stock has gained 94% over the past year, with year-to-date returns of nearly 13% as of the close of business on April 18. Howmet Aerospace Inc. (NYSE:HWM) has attracted significant investor interest due to its robust financial performance. In February, the company reported major year-over-year revenue and net income increases for the fourth quarter and full year 2024.
According to Insider Monkey’s database for Q4 2024, 58 hedge funds held a stake in the company, improving from 45 at the end of the third quarter. Hardman Johnston Global Equity Strategy stated the following regarding Howmet Aerospace Inc. (NYSE:HWM) in its Q4 2024 investor letter:
“From a sector standpoint, the main drivers of the portfolio’s outperformance during the fourth quarter were Industrials and Materials. Within Industrials, Howmet Aerospace Inc. (NYSE:HWM) and Vertiv Holdings Co. were the largest contributors to outperformance. Howmet reported an earnings beat during the quarter with broad-based strength spanning across all key segments. In particular, the company’s Engine Products and Fasteners segment performed well. During the earnings call, management spent significant time describing the emerging new growth driver of industrial gas turbines, which are used in gas power plants, which have become a focus for investors due to accelerating demand from AI data centers. Howmet is the leading supplier to the three major producers of these engines and will benefit from both initial purposes and the long-term maintenance demand.”
On April 9, Howmet Aerospace Inc. (NYSE:HWM)’s board of directors approved a dividend of 10 cents per share on the company’s common stock and 93.75 cents per share on the outstanding preferred stock, reiterating its commitment to shareholder returns.
9. Axon Enterprise, Inc. (NASDAQ:AXON)
Stake Value as of Q4 2024: $180,226,886
Axon Enterprise, Inc. (NASDAQ:AXON) manufactures weapons and technology for law enforcement agencies, the military, and civilian use. The company integrates cloud software solutions and hardware devices to help enable modern policing, defense, and security.
The stock has delivered a phenomenal performance over the last five years, with a staggering EPS growth of 218%. Investor sentiment in the company continues to strengthen because of its impressive financials, investments in new products, and an expanding software business.
According to Insider Monkey’s database for Q4 2024, 64 hedge funds held a stake in Axon Enterprise, Inc. (NASDAQ:AXON), improving from 46 at the end of the third quarter. Wall Street analysts are also bullish on the stock, with a consensus Strong Buy rating. Jim Cramer recently provided a positive overview of the stock, citing its transformation into a dominant SaaS provider for police departments:
“Remember Axon? We had Patrick Smith on. That’s, well I got to tell you, this used to be a taser and people still think it’s taser. It’s a decent business but not a big one. What this company really is now, is the dominant software-as-a-service system for law enforcement in cities all over America. Its body cam system is the gold standard. Its AI work gets rid of the drudgery of filling out and reports gives police officers more time to do their actual jobs. The best? The bad guys plead guilty because it’s all on tape.”
Axon Enterprise, Inc. (NASDAQ:AXON) reported a revenue of $2.1 billion for fiscal 2024, growing 33% from last year, and nearly double from the figure two years ago. The company also marked 12 successive quarters of 25% or above revenue growth. Annual net income stood at $377 million, supporting the non-GAAP net income of $466 million.
Axon Enterprise, Inc. (NASDAQ:AXON) is among the top defense picks from the Goldman Sachs stock portfolio, with the investment banking firm having holdings of over $180 million in the company.
8. TransDigm Group Incorporated (NYSE:TDG)
Stake Value as of Q4 2024: $261,791,022
TransDigm Group Incorporated (NYSE:TDG) manufactures engineered aircraft components for commercial and military aircraft. It is one of the top defense picks from the Goldman Sachs stock portfolio.
On February 4, the company reported strong results for Q1 FY25, with net income surging 29% year-over-year to $493 million, while net sales increased 12% from last year to $2,006 million. Adjusted EPS was logged at $7.83, in line with expectations and up 9% from the prior year’s quarter.
Recent strategic acquisitions are positioning the company well for long-term growth, including major increases in future revenue. In June 2024, TransDigm Group Incorporated (NYSE:TDG) acquired Communications & Power Industries’ Electron Device business, which manufactures electronic components and subsystems for the aerospace and defense industry. Later in July, it completed the acquisition of Raptor Scientific, a leading provider of complex text and manufacturing solutions.
TransDigm Group Incorporated (NYSE:TDG) is an important player in the aerospace and defense industry, enjoying significant pricing power. Andvari Associates stated the following regarding the company in its Q1 2025 investor letter:
“TransDigm is a business with extreme pricing power. They make hundreds of different parts that go into commercial and military aircraft. Because TransDigm owns the intellectual property or is the sole source provider of nearly all its products, it can easily raise price increases when there is inflation or when its costs rise.”
Wall Street analysts are bullish on the stock, with a consensus Buy rating and an average share price upside potential of nearly 10%. According to Insider Monkey’s database for Q4 2024, 69 hedge funds held a stake in TransDigm Group Incorporated (NYSE:TDG).
7. L3Harris Technologies, Inc. (NYSE:LHX)
Stake Value as of Q4 2024: $304,901,080
L3Harris Technologies, Inc. (NYSE:LHX) is known for its wireless and night vision equipment, command and control systems, avionics, and terrestrial and spaceborne antennas. The company was formed in 2019 after Harris Corporation and L3 Technologies merged.
It is among the top defense picks from the Goldman Sachs stock portfolio. On April 11, the firm upgraded L3Harris Technologies, Inc. (NYSE:LHX)’s rating from Sell to Buy and raised its price target to $263 per share from $198. The analyst cited the company’s agile business model and strong financial health as major factors behind the upgrade.
Recent contract awards have enhanced L3Harris Technologies, Inc. (NYSE:LHX)’s appeal among investors. On April 7, it received the next contract option year from the US Space Force to continue the modernization and sustainment of ground system infrastructure for space domain awareness capabilities.
On March 31, the company signed a long-term agreement, valued at up to 1 billion euros, with the Dutch Ministry of Defense for Falcon IV radios for the FOXTROT program. In January, L3Harris Technologies, Inc. (NYSE:LHX) clinched a $263 million deal from the US Army for additional production of Enhanced Night Vision Goggle–Binocular (ENVG-B) systems.
L3Harris Technologies, Inc. (NYSE:LHX) recently announced the delivery of the first missionized OA-1K Skyraider II aircraft to the US Air Force to support special operations. The aircraft will be used to provide close air support, armed intelligence, surveillance, and precision strike capabilities.
According to Insider Monkey’s database for Q4 2024, 48 hedge funds held a stake in L3Harris Technologies, Inc. (NYSE:LHX), up from 40 at the end of the third quarter. Wall Street analysts are also bullish on the stock, with a consensus Buy rating and an average share price upside potential of 17%.
6. General Dynamics Corporation (NYSE:GD)
Stake Value as of Q4 2024: $337,296,669
General Dynamics Corporation (NYSE:GD) is a leading global aerospace and defense company, operating through its Aerospace, Marine Systems, Combat Systems, and Technologies segments.
In March, the company was awarded a $1 billion contract modification from the Department of Defense, allowing its Electric Boat business unit to purchase long-lead-time materials for the Virginia-class submarines. It is the prime contractor and lead design yard for these submarines and constructs them in a teaming arrangement with Huntington Ingalls Industries, Inc.’s Newport News Shipbuilding.
On April 16, General Dynamics Corporation (NYSE:GD)’s subsidiary, Gulfstream Aerospace Corp, announced that the G800 business jet had received FAA and EASA certifications, which will allow the company to begin customer deliveries of the jet in the United States and Europe.
Despite recent positive developments, several analysts have lowered their price targets for General Dynamics Corporation (NYSE:GD) due to concerns over potential tariff headwinds. However, the overall outlook for the company is encouraging, with analysts having a consensus Buy rating for the stock, with an average upside of nearly 10%.
It is also one of the top defense picks from the Goldman Sachs stock portfolio, with the firm’s holdings valued at over $337 million in General Dynamics Corporation (NYSE:GD) as of December 31. According to Insider Monkey’s database for Q4 2024, 46 hedge funds held a stake in the company.
5. Northrop Grumman Corporation (NYSE:NOC)
Stake Value as of Q4 2024: $342,671,759
Northrop Grumman Corporation (NYSE:NOC) is one of the largest defense contractors in the world. The company is manufacturing the B-21 Raider for the US Air Force (USAF).
It is one of the top defense picks from the Goldman Sachs stock portfolio. As of December 31, the investing banking firm held positions valued at nearly $343 million in the company. On April 11, GS upgraded Northrop Grumman Corporation (NYSE:NOC) from Sell to Neutral. It also raised the stock’s price target from $424 per share to $521. The analyst cited NOC’s long-term growth potential through projects like the B-21 and Sentinel as reasons behind the adjustment.
Investor sentiment in Northrop Grumman Corporation (NYSE:NOC) remains strong. According to Insider Monkey’s database for Q4 2024, 54 hedge funds held a stake in the company, up from 48 at the end of the third quarter. The confidence is expected to continue amid chatter about countries moving to buy American planes and military hardware to address trade imbalances with the US.
Recent contract awards are also adding to the momentum. In April, the Royal Australian Air Force selected Northrop Grumman Corporation (NYSE:NOC) to equip its C-130J fleet with the AN/ALQ-251 advanced radio frequency countermeasures system. The company was also awarded two national security contracts by the United States Space Force (USSF) for in-space refueling.
Wall Street analysts have a consensus Buy rating for Northrop Grumman Corporation (NYSE:NOC) with an average share price upside potential of 4.40%.
4. The Boeing Company (NYSE:BA)
Stake Value as of Q4 2024: $496,973,724
The Boeing Company (NYSE:BA) is a leading aerospace company that manufactures commercial airplanes, space systems, and defense equipment for customers in over 150 countries. It is among the top defense picks from the Goldman Sachs stock portfolio, with the firm having holdings of nearly $497 million in the company.
On March 21, the US Air Force selected The Boeing Company (NYSE:BA) to design and build its next-generation fighter aircraft, the F-47, to replace the F-22 Raptor. The jet will have stealth and penetration capabilities that exceed those of the current fleet. The initial contract to proceed with the production is expected to cost approximately $20 billion.
The Boeing Company (NYSE:BA) recently shared a press release stating that the production of its Patriot Advanced Capability-3 (PAC-3) seekers reached an all-time high in 2024, with 500 deliveries during the year. The component enables advanced interceptors in the Patriot air defense system to identify and defeat threats like missiles and hostile aircraft. The 35,000-square-foot expansion of its Alabama factory in spring this year is expected to unlock further production capacity.
The company also received a $240 million contract late last month from the US Army Special Operations Aviation Command (USASOAC) to remanufacture five MH-47G Block II Chinook, with deliveries scheduled for 2027. This follows USASOAC’s 2024 award for four MH-47G Block II aircraft and has taken the total number of aircraft under the contract to 51. The Boeing Company (NYSE:BA) anticipates the entirety of the fleet to be delivered by 2030.
While financial challenges and recent tariffs continue to pressure the stock’s share price, most analysts remain bullish on The Boeing Company (NYSE:BA), considering its huge order backlog and believe the stock is bound to recover once the headwinds subside.
3. Lockheed Martin Corporation (NYSE:LMT)
Stake Value as of Q4 2024: $531,892,801
Lockheed Martin Corporation (NYSE:LMT) is one of the largest defense contractors in the world. It specializes in the research, design, and development of advanced technology systems, products, and services.
The stock is down 25% over the past six months amid heavy losses in certain classified programs, a delay in the rollout of upgrades for the F-35, and, more recently, losing out to Boeing on the F-47 program. Industry experts believe the company is also facing competition from companies like Palantir and Anduril, offering high-quality software-based defense technologies that are cheaper, unmanned, and autonomous.
While many analysts have lowered the price targets for Lockheed Martin Corporation (NYSE:LMT), the stock still has a consensus Buy rating, with analysts having faith in the company as it continues to be a major defense contractor for the DoD and a partner of choice for several American allies in their quest to bolster their national defense.
On March 31, the US Army awarded Lockheed Martin Corporation (NYSE:LMT) an IDIQ contract worth up to $4.94 billion to produce Precision Strike Missiles (PrSM), which are surface-to-surface weapons capable of engaging targets beyond 400 kilometers. In April, the company delivered the first TPY-4 radar to the US Air Force after the successful completion of early phase testing.
On April 14, Lockheed Martin Corporation (NYSE:LMT) and Bulgaria marked the arrival of the first F-16 Block 70 in the European country, which has ordered a total of 16 of these jets to protect its airspace and strengthen security cooperation across allies. The first eight jets are expected to be delivered by the end of this year.
According to Insider Monkey’s database for Q4 2024, 65 hedge funds held a stake in Lockheed Martin Corporation (NYSE:LMT), improving from 58 at the end of the third quarter. It is also among the top defense picks from the Goldman Sachs stock portfolio, with the firm having holdings valued at nearly $532 million in the company.
2. RTX Corporation (NYSE:RTX)
Stake Value as of Q4 2024: $646,676,123
RTX Corporation (NYSE:RTX) is a giant in the global aerospace and defense industry, providing systems and services to commercial, military, and government clients. The company operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.
Regular high-value contract awards have made the stock an attractive pick for investors. It is among the top defense stocks from the Goldman Sachs portfolio. Hedge fund sentiment also remains strong. According to Insider Monkey’s database for Q4 2024, 80 hedge funds held a stake in RTX Corporation (NYSE:RTX), up from 72 at the end of Q3.
On March 24, RTX Corporation (NYSE:RTX)’s Raytheon business was awarded a follow-on order from the US Army to continue utilizing its RCADE modeling and simulation capability. During an initial contract, the company developed multi-domain conflict theatre scenarios to test concepts of operations. Under the latest award, RTX will build a continuous experimentation environment to enable Battle Labs and concept developers to inform strategic force design decisions.
In January, RTX Corporation (NYSE:RTX) was awarded a $946 million contract to provide additional Patriot air and missile defense systems to Romania, inclusive of radars, missiles, and control stations. Last year, the company also clinched two contracts from the US Navy valued at over $1.3 billion for the AIM-9X SIDEWINDER missiles and the Next Generation Jammer Mid-Band (NGJ-MB) system.
Longleaf Partners Fund stated the following regarding RTX Corporation (NYSE:RTX) in its Q1 2025 investor letter:
“RTX Corporation (NYSE:RTX) – Aerospace and defense company RTX was a contributor this quarter. We purchased RTX at a significant discount in 2023 when concerns over Pratt & Whitney’s Geared Turbofan (GTF) issues reached what turned out to be a point of max pessimism. We also were able to partner with great leaders in Greg Hayes & Chris Calio, who took advantage of this opportunity to repurchase a material amount of stock while improving operations. Just last quarter, we wrote how strong industry tailwinds, prudent capital allocation and a solid balance sheet provide a foundation for sustained growth and eventual full value recognition. That thesis played out this quarter, as the stock price traded through our value, and we exited our position at a gain.”
Wall Street analysts also maintain a positive outlook for RTX Corporation (NYSE:RTX) with a consensus Buy rating and an average share price upside potential of 12.5%.
1. GE Aerospace (NYSE:GE)
Stake Value as of Q4 2024: $878,138,079
GE Aerospace (NYSE:GE) is a global aerospace propulsion, services, and systems company with an installed base of around 25,000 military and 45,000 commercial aircraft engines.
The company’s share price has plunged by 12% over the past month, with analysts lowering their price targets for the stock due to concerns around potential tariff impacts. At the same time, GE Aerospace (NYSE:GE) has been in the news recently for notable defense contract awards.
On March 31, the company received a subcontract to build avionics systems for the Army’s Future Long Range Assault Aircraft (FLRAA) program, working as part of a team led by Bell Textron Inc. Earlier during the month, GE Aerospace (NYSE:GE) received a $5 billion IDIQ contract from the US Air Force to support Foreign Military Sales (FMS) for the F110-GE-129 engines.
GE Aerospace (NYSE:GE) has also made headlines this year for its ambitious investment plans. The company has announced to spend up to $1 billion in its US facilities in 2025 to strengthen manufacturing and innovation. It will also invest over €78 million in its European manufacturing sites in 2025.
Wall Street analysts are bullish on GE Aerospace (NYSE:GE) with a consensus Strong Buy rating and an average share price upside potential of over 20%. With holdings of over $878 million, it is the top defense pick from the Goldman Sachs stock portfolio.
Overall, GE ranks first among the Goldman Sachs Defense Stocks: Top 12 Stock Picks. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than GE but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires.
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