This article looks at the defense stocks that are declining this week. We also discuss how American defense stocks have failed to capitalize on the global rally and analysts’ future outlook for the sector.
Defense stocks across the world are witnessing an unprecedented bull run and soaring to new heights as European governments unlock billions to supercharge their militaries. Stocks in Europe have rallied this year, with several companies in the sector registering double-digit returns. Asian contractors in South Korea and India are also benefiting from the splurge.
READ ALSO: 10 Best Performing Defense Stocks So Far in 2025 and 13 Best Defense Stocks to Buy According to Billionaires.
However, defense stocks in the US have struggled this year due to concerns about government budget cuts. President Trump has hinted at significantly reducing future military spending if things settle down with China and Russia. The creation of DOGE has also reshaped investors’ views of the industry.
Despite a shaky start to 2025, analysts at UBS are optimistic about the sector as they believe the downside is shrinking. Here is what the firm recently stated:
“Consensus estimates have moved higher since the election despite the 40% sell-off. The downside potential seems increasingly smaller. We believe that the current environment is markedly different from Sequestration and do not believe a similar outcome is likely.”
Citi analyst Jason Gursky, in a note to clients on March 5, also urged investors about this being the right time to buy American defense stocks. While the analyst acknowledged that the world may be moving toward a multi-polar order, he argued that it was not any less dangerous to decrease the need to acquire tools of deterrence.
Gursky also stated that as long as the global threat environment remains and the United States maintains its leadership role, regardless of whether it is as a sole superpower or as a power in a multipolar world order, defense spending is expected to remain robust, which would benefit stocks in the sector.
With that said, 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 companies. Their share prices could go high or low in the future, depending on external market conditions, industry-specific challenges, and the company’s capabilities. Additional research and caution are advised before making investment decisions.
A close-up of an antenna, its intricate designs a testament to the company’s expertise in space infrastructure.
Methodology
For this article, we went through screeners to see how stocks in the aerospace and defense industry performed over the past week (March 24-28). 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 28, 2025.
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).
10. Coda Octopus Group, Inc. (NASDAQ:CODA)
Weekly Decline: -8.52%
Coda Octopus Group, Inc. (NASDAQ:CODA) is an established supplier to the Underwater/Subsea market. The company sells technologies and equipment for 3D imaging, mapping, defense, and survey applications.
During its Q1 2025 earnings call on March 17, Coda Octopus Group, Inc. (NASDAQ:CODA) reported a total revenue of $5.2 million, up 16.8% from last year. Gross margin stood at 65.8%, compared to 69.2% during the prior year’s period. Net income after taxes grew 44.9% year-over-year to $0.91 million. Diluted EPS was logged at 8 cents, falling short of the $0.10 forecast.
Coda Octopus Group, Inc. (NASDAQ:CODA) expects Q2 to be quiet for business but anticipates robust performance from Q3 and onwards. Following the results, Alliance Global Partners lowered the stock’s price target to $8 from $10. It is among the defense stocks that are declining this week, with an 8.52% dip during the period.
9. Planet Labs PBC (NYSE:PL)
Weekly Decline: -8.71%
Planet Labs PBC (NYSE:PL) provides global daily satellite imagery and geospatial solutions.
With an 8.71% dip since March 24, it is among the defense stocks that are declining this week. Shares have fallen since the company announced financial results for the fourth quarter of the fiscal year 2025 on March 20 and missed analysts’ estimates for both revenue and earnings.
For the full year, revenue increased 11% from last year to $244.4 million, with a GAAP net loss per share of $0.42 and a non-GAAP net loss per share of $0.20. Following the results, Cantor Fitzgerald reiterated Planet Labs PBC (NYSE:PL)’s Overweight rating and maintained the stock’s price target at $6.3 per share.
8. Safe Pro Group Inc. (NASDAQ:SPAI)
Weekly Decline: -9.25%
Safe Pro Group Inc. (NASDAQ:SPAI) is a leading provider of security and protection solutions, with expertise in advanced AI/ML software technology for small object threat detection. It is among the defense stocks that are declining this week.
The stock has had volatile returns since its IPO in August because of sharp market reactions to news related to the company. There is also a lack of analyst coverage, which has resulted in low investor recognition. The general downturn in the defense sector is also affecting shares.
Safe Pro Group Inc. (NASDAQ:SPAI) surged after the signing of a multi-year agreement in late February with a leading Ukrainian university on utilizing SPAI’s AI-powered drone image processing technology to develop training programs and build enhanced demining methodologies. However, over the weeks that followed, the stock steadily declined.
7. Air Industries Group (NYSEAMERICAN:AIRI)
Weekly Decline: -10.03%
Air Industries Group (NYSEAMERICAN:AIRI) manufactures precision components and assemblies for aerospace and defense contractors.
Shares dropped by 5.84% on Friday to close at $3.59 per share. Investors are paying close attention to Air Industries Group (NYSE:AIRI)’s upcoming earnings call, which is expected on April 7. Analysts project the company’s EPS at $0.02, down nearly 67% from the prior year’s period. However, revenue is expected to increase 3.93% year-over-year to $14 million.
Air Industries Group (NYSEAMERICAN:AIRI) is among the defense stocks that are declining this week, with a cumulative slump of more than 10% since March 24.
6. Embraer S.A. (NYSE:ERJ)
Weekly Decline: -12.22%
Embraer S.A. (NYSE:ERJ) is a Brazil-based jet manufacturer that produces aircraft for commercial and executive aviation and defense purposes.
Shares fell by 12.22% this week after Wolfe Research downgraded the stock to Peer Perform from Outperform, citing risks associated with recent tariffs and Embraer S.A. (NYSE:ERJ)’s limited upside potential. As a result, it finds itself among the defense stocks that are declining this week.
Despite the dip, 2025 has been a stellar year for Embraer S.A. (NYSE:ERJ), with year-to-date gains of over 73% as of the close of business on March 28. The company has received several high-value orders this year, including a $7 billion agreement with Flexjet in February.
5. Draganfly Inc. (NASDAQ:DPRO)
Weekly Decline: -13.59%
Draganfly Inc. (NASDAQ:DPRO) develops cutting-edge unmanned and remote data collection and analysis platforms and systems. It is among the defense stocks that are declining this week, with a slump of 13.59% since March 24.
Shares crashed after Draganfly Inc. (NASDAQ:DPRO)’s Q4 2024 earnings call on Thursday, in which the company reported a modest 0.1% increase in its revenue for fiscal 2024. Gross profit also decreased by 32.3% from the prior year. The gross margin stood at 21.3%, compared to 31.5% in 2023.
Draganfly Inc. (NASDAQ:DPRO) recorded a net loss of $14.06 million for the year. While this was an improvement from the loss of $23.71 million in the fiscal year 2023, the company is not expected to achieve profitability until 2026, which is hurting investor sentiment. DPRO is also one of the worst performing stocks this year, with a YTD dip of 42%.
4. AAR Corp. (NYSE:AIR)
Weekly Decline: -15.88%
AAR Corp. (NYSE:AIR) provides products and services to commercial aviation, government, and defense customers worldwide. It is among the defense stocks that are declining this week.
The company’s shares tumbled on Friday after it reported results for the third quarter of fiscal 2025 on March 27. AAR Corp. (NYSE:AIR) posted adjusted diluted EPS of $0.99, beating forecasts by two cents. While sales grew 20% from last year to $678 million, they fell well short of expectations.
Following the mixed financial results, Truist Securities lowered AAR Corp. (NYSE:AIR)’s price target to $78 per share from $81 previously while reiterating a Buy rating for the stock.
3. Nauticus Robotics, Inc. (NASDAQ:KITT)
Weekly Decline: -15.97%
Nauticus Robotics, Inc. (NASDAQ:KITT) develops autonomous robots for the ocean industry. The company is also a key player in the defense sector.
The stock has been under pressure over the past few months to comply with NASDAQ’s listing requirements, with the share price at risk of falling below the $1 mark again. It is also facing major financial challenges, with revenue significantly declining during the third quarter and net loss growing by $6 million sequentially.
Nauticus Robotics, Inc. (NASDAQ:KITT) is among the defense stocks that are declining this week, with a dip of nearly 16% during the period. It is also one of the worst performing stocks in 2025, with a year-to-date dip of 35%.
2. Archer Aviation Inc. (NYSE:ACHR)
Weekly Decline: -16.74%
Archer Aviation Inc. (NYSE:ACHR) is an aerospace company, headquartered in San Jose, California, engaged in the development of eVTOL aircraft. It is also working on a hybrid aircraft platform for the defense market.
The stock surged over the past two weeks after Archer Aviation Inc. (NYSE:ACHR) announced it had formed a strategic partnership with Palantir Technologies to build the next-gen aviation software that utilizes artificial intelligence to improve air traffic control, route planning, and movement control.
On March 27, Ethiopian Airlines signed an agreement with Archer Aviation Inc. (NYSE:ACHR) to deploy a fleet of Midnight aircraft under the ‘Launch Edition’ program, valued at $30 million. Despite the positive development, shares fell sharply last week, likely due to a market correction to offset the gains made earlier this month.
1. Redwire Corporation (NYSE:RDW)
Weekly Decline: -23.19%
Redwire Corporation (NYSE:RDW) is a global space company, providing critical space infrastructure for government and commercial users.
The company’s shares have crashed by 46% this year amid weak financial performance in the recently-concluded quarter and ongoing investigations around the fairness of the Edge Autonomy acquisition to shareholders. The slump continued this week, with a 23.19% decline.
During its Q4 2024 earnings call on March 10, Redwire Corporation (NYSE:RDW)’s reported net loss was $59 million higher compared to the prior year’s period. Its free cash flow for the quarter was also down to $3 million from $12.6 million in Q4 2023. Full year loss was recorded at $114.3 million, worsening substantially from a loss of $27.3 million in FY23.
Overall, Redwire Corporation (NYSE:RDW) 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 RDW but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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