The Top European Defense Stocks for 2025

European defense stocks are on fire — while their American counterparts have taken a step back. But why?

As we discussed in my previous article, a perfect storm of geopolitical tensions, rising military budgets, and shifting policy in the EU has fueled a surge in European defense spending. NATO countries are under pressure to hit the 2% GDP defense target, and with the U.S. signaling that Europe must take more responsibility for its own security, governments across the continent are ramping up military investments.

Meanwhile, institutional investors are taking notice, pouring capital into the sector as bond markets signal long-term defense commitments. The broader aerospace and defense industries are also benefiting, making European defense stocks a compelling opportunity for investors looking for growth in 2025.

So which companies are leading the charge? Let’s dive into three of the top European defense stocks poised to capitalize on this momentum.

Airbus — The Behemoth of European Defense Stocks

When you hear “Airbus,” you probably think of massive commercial airplanes ferrying millions of passengers across the globe. But Airbus is much more than just a commercial aerospace company — it’s a defense powerhouse with deep roots in military aviation, space, and cybersecurity.

Why Airbus Stands Out among European Defense Stocks:

• A Leading Force in Military Aviation — Airbus is the prime contractor for Europe’s Future Combat Air System (FCAS), a next-gen military aircraft program. Its lineup includes the Eurofighter Typhoon, A400M airlifter, and cutting-edge unmanned aerial systems (UAS) like the Eurodrone.
  
  
• Record-Breaking Growth — Airbus' Defence and Space division hit a record order intake of 16.7 billion euros, with total orders worth 629 billion euros — giving it a backlog that guarantees revenue for years to come.
  
  
• Strong Push Into Digital and Cybersecurity — Airbus isn’t just about planes; it’s at the forefront of integrated, digitized, and cyber-secure defense systems, ensuring dominance across air, land, sea, and space.
  
  
• Sustainable Innovation — The company is also leading the charge on sustainable defense technology, working toward net-zero carbon emissions in aerospace by 2050.

As Europe’s largest aerospace and defense company, Airbus is a must-watch in the European defense stocks space. With its dominant position in military aviation, growing defense contracts, and a future-focused strategy, Airbus is set to benefit from the surge in European military spending.

BAE Systems — The Jack-of-All-Trades in European Defense Stocks

If you’re looking for a defense company with serious diversification, BAE Systems is the one. Covering air, land, sea, cyber, and space, BAE Systems is involved in everything from combat aircraft to submarines and cybersecurity solutions.

Why BAE Systems is a European Defense Powerhouse:

• Explosive Financial Growth — BAE Systems posted 28.3 billion British pounds in sales for 2024 (a 14% increase) and a record-breaking 77.8 billion-pound order backlog.
  
  
• Involved in the World’s Biggest Defense Programs:
  
  
• Global Combat Air Programme (GCAP) — A next-gen fighter jet project with Italy, Japan, and the U.K.
  
  
• AUKUS Submarine Deal — Delivering nuclear-powered submarines to Australia under the historic AUKUS alliance.
  
  
• Hunter Class Frigates — Producing advanced naval warships for the Australian Navy.
  
  
• Dominance in Key Markets — BAE Systems is a global force, with a huge presence in the U.S. (44% of sales), the U.K. (26%), and Saudi Arabia.
  
  
• Cutting-Edge Innovation:
  
  
• Investing 220 million pounds in an advanced technology factory in the U.K.
  
  
• Expanding its space portfolio with the $5.5 billion acquisition of Ball Aerospace.
  
  
• Doubling down on cyber defense with recent acquisitions to bolster electronic warfare capabilities.

BAE Systems is one of the most well-rounded European defense stocks, offering exposure to air, naval, land-based, and cyber defense technologies. With strong financials, an unbeatable order backlog, and global military partnerships, BAE is an investor’s dream in the defense sector.

Leonardo SpA — The Best European Defense Stock You’ve Never Heard Of

If Airbus and BAE Systems are the headliners, Leonardo SpA is the underrated gem of the European defense stocks world. Specializing in aerospace, defense, and cybersecurity, Leonardo is quietly making moves that investors should pay attention to.

Why Leonardo Is a Rising Star Among European Defense Stocks:

• Major Player in Next-Gen Combat Systems — Leonardo is heavily involved in the Global Combat Air Programme (GCAP), ensuring it plays a central role in future military aviation.
  
  
• Strategic Joint Ventures — Partnered with Rheinmetall to develop next-gen armored combat vehicles and battle tanks for Europe’s defense forces.
  
  
• Rapid Growth in Cyber and Space:
  
  
• Expanded into cybersecurity, UAVs, and satellite tech through a series of acquisitions.
  
  
• Recently consolidated its Space Division, giving it a stronger foothold in Europe’s growing space defense sector.
  
  
• Solid Financials and Liquidity:
  
  
• 5.2 billion euros in available liquidity (as of Q4 2024).
  
  
• Strong order book and strategic focus on efficiency, saving €190 million annually through cost-cutting measures.
  
  
• Expanding in Global Markets — Leonardo is increasing its international presence, particularly in the U.S., U.K., and NATO-aligned countries, securing major defense contracts along the way.

Leonardo may not get the same spotlight as Airbus or BAE, but its aggressive expansion, strategic partnerships, and strong financial position make it a hidden gem in European defense stocks. For investors looking for high-growth potential with exposure to next-gen defense technology, Leonardo is a stock worth serious consideration.

The Case for European Defense Stocks in 2025

With defense budgets skyrocketing, geopolitical tensions rising, and governments prioritizing military modernization, European defense stocks are set for long-term growth.

Airbus, BAE Systems, and Leonardo represent the best of the best, each offering unique advantages:

✅ Airbus — The undisputed aerospace leader with strong defense contracts and a growing focus on cybersecurity.

✅ BAE Systems — A diversified global giant with exposure to air, sea, land, and cyber defense.

✅ Leonardo — A rising star making bold moves in cyber, space, and next-gen combat systems.

Now you’re ready to start your own European defense stocks portfolio. And if you want to stay ahead of the curve and learn more about the world’s top defense stocks…

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