This article looks at the defense stocks that are declining this week.
American defense stocks slumped last month after President Trump mentioned he could significantly cut defense spending in the future. He made these comments in the context of a potential future conference with China and Russia to discuss cutting defense expenditure to spend the money in other areas:
“At some point, when things settle down, I’m going to meet with China and I’m going to meet with Russia, in particular those two, and I’m going to say there’s no reason for us to be spending almost $1 trillion on the military and I’m going to say we can spend this on other things.”
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The defense industry has been shaky since Trump’s return to the White House, amid mixed statements on military expenditure during his election campaign and in the early days of his second stint. The creation of the Department of Government Efficiency (DOGE), headed by Elon Musk, is also reshaping investors’ views of the industry.
On March 3, the Pentagon, working with DOGE, found some $80 million in what it deemed wasteful funding, which included funds devoted to diversity, equity and inclusion programs, and climate change research. Press Secretary Sean Parnell made the following remarks in a statement posted on X while stating these actions were ‘just the start’:
“This stuff is not a core function of our military. This is a distraction. We believe that these initial findings will probably save $80 million in wasteful spending.”
Byron Callan, managing partner at Capital Alpha Partners, believes there is a high level of uncertainty in the U.S. defense sector related to current and future programs and the likelihood of severe cuts to government workforces.
In contrast, defense stocks in Europe have rallied this year, with several armament manufacturers seeing double-digit growth, and some even reaching record highs, as governments faced pressures to increase military expenditure.
Washington has repeatedly called for Europe to spend more on defense while stressing that the US could no longer foot the bill. EU leaders met in Brussels last week to discuss the ‘ReArm Europe Plan’, which will allow the bloc to mobilize funds up to $860 million through bonds and relaxed rules on borrowing and spending.
According to a Financial Times report on February 24, shares of the six largest American defense companies had fallen 4% under Trump’s second term. Whereas, Europe’s top defense groups returned gains of around 40% during the same period.
Despite a grim outlook, Citi analyst, Jason Gursky, is urging investors that this is the right time to buy American defense stocks. Here is what he wrote in a note to clients on March 5:
“We recognize the world order is evolving under the current President, perhaps to a multi-polar one in which three countries control spheres of influence over the Americas, Europe and Asia. However, we don’t view that world to be any less dangerous or one that decreases the need to acquire the tools of deterrence.”
Let’s now head over to the list of defense stocks that are declining this week. Please note that the stocks listed are based on one week’s performance. Our analysis does not reflect the prospects of the company. Their share price could go high or low in the future, depending on the external market conditions, industry-specific challenges, and the company’s capabilities. Additional research and caution are advised before making investment decisions.
Philip Pilosian / Shutterstock.com
Methodology
For this article, we went through screeners to see how stocks in the aerospace and defense industry performed over the past week (March 10-14). From there, we picked the top 10 defense stocks with the highest percentage decline in share price during this period. All data is as of the close of business on Friday, March 14, 2025.
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10. CAE Inc. (NYSE:CAE)
Weekly Decline: -3.26%
CAE Inc. (NYSE:CAE) is a technology company specializing in simulation training and critical operations support solutions. It operates in two segments: Civil Aviation and Defense and Security.
The stock surged 14% after the company reported impressive results for the third quarter of fiscal 2025 on February 13. However, over the past month, CAE Inc. (NYSE:CAE)’s shares have steadily dipped and have now returned to the levels they were trading at prior to the earnings call, likely due to market correction.
CAE Inc. (NYSE:CAE) is among the defense stocks that are declining this week, with a 3.46% fall over the period. Despite the dip, most analysts maintain a consensus Buy rating for the stock, amid improved defense margins and a positive outlook for the Civil Aviation division.
9. Coda Octopus Group, Inc. (NASDAQ:CODA)
Weekly Decline: -3.36%
Coda Octopus Group, Inc. (NASDAQ:CODA) is an established supplier to the Underwater/Subsea market. It sells technologies and equipment for 3D imaging, mapping, defense, and survey applications.
The stock has slumped by 16% over the past month after it announced results for fiscal 2024. Despite reporting a 5% increase in annual revenue and an improvement in its gross profit margin, Coda Octopus Group, Inc. (NASDAQ:CODA) saw a significant reduction in revenue from American defense programs.
Coda Octopus Group, Inc. (NASDAQ:CODA) also stated that the uncertainty around the policies of the new administration related to defense programs, tariffs, and offshore renewables had resulted in many projects being put on hold, which is likely to adversely affect Q1 2025 results. CODA’s share price has dipped 3.36% over the past week in the run up to the first quarter earnings call on March 17.
8. General Dynamics Corporation (NYSE:GD)
Weekly Decline: -3.51%
General Dynamics Corporation (NYSE:GD) is a leading global aerospace and defense company. It is among the defense stocks that are declining this week.
The stock has registered robust gains over the past month following the Q4 2024 earnings call in which General Dynamics Corporation (NYSE:GD) reported revenue and earnings growth across segments. Investor sentiment was also bolstered after the company, on March 5, declared a 5.6% hike in its quarterly dividend.
However, shares have fallen by 3.51% over the past week. According to a report, General Dynamics Corporation (NYSE:GD)’s senior vice president, Marguerite Amy Gilliland, sold a substantial amount of the company’s shares – valued at approximately $7.5 million – on March 10. This is likely to have triggered the fall.
7. L3Harris Technologies, Inc. (NYSE:LHX)
Weekly Decline: -4.11%
L3Harris Technologies, Inc. (NYSE:LHX) is known for its wireless and night vision equipment, command and control systems, avionics, and terrestrial and spaceborne antennas. It is among the defense stocks that are declining this week.
On March 7, Wells Fargo lowered L3Harris Technologies, Inc. (NYSE:LHX)’s price target from $269 to $268, while maintaining its Overweight rating. Later on March 10, Jon Rambeau, the company’s President of Integrated Mission Systems, was also reported to have sold shares worth $718,228.
L3Harris Technologies, Inc. (NYSE:LHX) was down by 4.11% over the past week. However, analysts expect the company’s shares to bounce back amid a growing demand opportunity from Europe.
6. CPI Aerostructures, Inc. (NYSEAMERICAN:CVU)
Weekly Decline: -6.85%
CPI Aerostructures, Inc. (NYSEAMERICAN:CVU) manufactures structural parts for fixed-wing aircraft and helicopters in the commercial and defense markets.
The stock has been declining since the end of January due to a general downturn in the aerospace and defense industry. Recent tariffs targeting steel and aluminum have further aggravated the situation for companies operating in the sector. CPI Aerostructures, Inc. (NYSEAMERICAN:CVU)’s shares have dropped 23% in the last month and fell by 6.85% over the past week. It is among the defense stocks that are declining this week.
CPI Aerostructures, Inc. (NYSEAMERICAN:CVU)’s financial performance has also lagged year-over-year. During the first nine months of 2024, the company generated a revenue of $59.3 million compared to $63 million in the corresponding period in 2023. Net income was also down from $2.4 million to $2.3 million.
5. Byrna Technologies Inc. (NASDAQ:BYRN)
Weekly Decline: -7.25%
Byrna Technologies Inc. (NASDAQ:BYRN) manufactures less-lethal equipment and munitions for personal security, private security firms, military, and law enforcement agencies.
The company’s share price is down 28% year-to-date, likely due to overvaluation concerns among investors, given its high P/E ratio of 43.44. The stock plunged 9.75% during the week of February 24, then dropped 12.63% in the following week. With a dip of 7.25% over the past week, Byrna Technologies Inc. (NASDAQ:BYRN) has made the list of the top declining defense stocks for the third week in a row.
On March 13, Byrna Technologies Inc. (NASDAQ:BYRN) announced that its first ammunition production facility in the United States was now operational in Fort Wayne, Indiana. It has the capacity to produce 8 million rounds of its proprietary less-lethal ammunition per annum. The news is expected to help the stock recover in the weeks ahead.
4. Redwire Corporation (NYSE:RDW)
Weekly Decline: -12.11%
Redwire Corporation (NYSE:RDW) is a global space company that provides critical space infrastructure for government and commercial users. The stock has been under pressure this year due to ongoing investigations around the fairness of the Edge Autonomy acquisition to shareholders.
The stock has slumped by more than 12% over the past week, with a major dip after Redwire Corporation (NYSE:RDW) announced financial results for the fourth quarter of fiscal 2024 on March 10. While Q4 revenue increased 9.6% year-over-year, the net loss for the quarter was $59 million higher than the prior year’s period.
Redwire Corporation (NYSE:RDW)’s free cash flow for the quarter stood at $3 million, down from $12.6 million in Q4 2023. The company’s annual loss was recorded at $114.3 million, worsening substantially from a loss of $27.3 million in fiscal 2023. It is among the defense stocks that are declining this week.
3. Momentus Inc. (NASDAQ:MNTS)
Weekly Decline: -12.50%
Momentus Inc. (NASDAQ:MNTS) is a commercial space company that offers satellite buses and in-space infrastructure services, including hosted payloads, in-space transportation, and other in-orbit services. It is also working on several space-related defense contracts.
The stock has had a continuous slide in 2025, having lost 78% of its value year-to-date. The company has been under pressure after receiving several delisting warnings and deficiency notices over the last few months. It is among the defense stocks that are declining this week, with a 12.50% dip over the period.
However, Momentus Inc. (NASDAQ:MNTS) shares gained toward the end of the week after the company announced a strategic partnership with Solstar Space for on-demand communication for space systems. The stock closed at $1.75 per share on Friday, March 14, up 4.16% from the prior day.
2. Hyperscale Data, Inc. (NYSEAMERICAN:GPUS)
Weekly Decline: -17.82%
Hyperscale Data, Inc. (NYSEAMERICAN:GPUS) is an advanced data center solutions provider. Its services include data center management, colocation, cloud hosting, and managed services solutions. The company also provides customized solutions for military markets in different parts of the world.
On March 5, Hyperscale Data, Inc. (NYSEAMERICAN:GPUS) announced that it had been granted a listing extension by NYSE until June 18, 2026, on the back of a recent plan submitted by the company to regain compliance, specifically with the requirement of achieving stockholders’ equity of $6 million or more. Shares fell 5% premarket that day. Year-to-date, the stock has crashed by 53.50%, with a near 18% decline over the past week.
Earlier in the month, Hyperscale Data, Inc. (NYSEAMERICAN:GPUS) declared preliminary results for fiscal 2024, with a total revenue of $108.8 million. The company reaffirmed its commitment to transform into a pure-play AI data center operator by the end of this year. In August last year, its Giga-tronics defense unit filed a petition for reorganization under Chapter 11 of the bankruptcy laws.
1. KWESST Micro Systems Inc. (NASDAQ:KWE)
Weekly Decline: -19.76%
KWESST Micro Systems Inc. (NASDAQ:KWE) is engaged in the development of tactical systems and ammunition for military and security forces.
The company’s share price is down by nearly 50% year-to-date, as it runs against time to regain compliance with NASDAQ’s minimum bid price requirement. In November 2024, the stock exchange extended KWESST Micro Systems Inc. (NASDAQ:KWE)’s listing for another 180 days, giving the company until May 12, 2025, to regain compliance with the minimum $1 bid price per share requirement.
KWESST Micro Systems Inc. (NASDAQ:KWE) was trading at just $0.3611 per share at the close of business on Friday, March 14, after shares dropped 19.76% during the past week.
Overall, KWE ranks first among the defense stocks that are declining this week. 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. If you are looking for an AI stock that is more promising than KWE but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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