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It’s Time to Play Defence: Three European Defence Stocks Backed by a Global Supercycle
By Halo Technologies Research Team
With geopolitical instability rising and global defence budgets surging, European defence stocks are firmly in the spotlight—and for good reason. Ongoing conflict in Ukraine, threats from Russia and China, and uncertainty around future U.S. military support under a Trump presidency are forcing Europe to become more self-reliant. In response, governments across the continent are ramping up military spending, creating a multi-year investment opportunity for defence-focused investors.
Halo Technologies sees a strong tailwind forming for select European defence names, and we’re highlighting three standout stocks in this space: BAE Systems, Thales S.A., and Rheinmetall AG. These companies are at the forefront of Europe’s rearmament strategy and are well-positioned to benefit from long-term policy and budgetary shifts—including NATO targets of 2–3.5% of GDP for defence by 2032, and EU plans like the €800 billion “ReArm Europe” initiative.
As one of the world’s largest defence contractors, BAE Systems is a global leader in military aircraft, submarines, electronics, and cybersecurity. It has strong relationships with both the UK and U.S. governments and is playing a key role in supporting European security, including Ukraine and Indo-Pacific operations. In 2024, BAE’s order backlog surged to £77.8 billion, with key contracts for Australia’s Hunter-class frigates and Eurofighter jets for Spain and Italy.
BAE is also investing heavily in next-gen tech like the Tempest fighter jet and Striker II smart helmets, further cementing its role in the future of warfare. With a 14% rise in revenue and operating profit in 2024, it’s one of our top picks for defensive exposure.
Thales is a diversified defence and aerospace company with strong exposure to cybersecurity, satellite tech, and electronic warfare. Its Q4 2024 sales surged 33% year-on-year, driven by defence demand and high-margin security solutions. The company generates 30% of revenue from emerging markets and continues to win high-profile contracts across Europe and Asia.
Thales stands out for its innovation in AI, quantum tech, and secure communication. Its Sentinel platform protects AI-based systems, and its growing satellite business recently landed a major order from Japan. With a broad footprint across aerospace, digital security, and mission systems, Thales is a key player in Europe’s defence resurgence.
Rheinmetall has transformed into a pure-play defence powerhouse, with 80% of 2024 group revenue coming from military operations. Its 36% sales growth last year pushed total revenue to €9.75 billion, and its order backlog hit €55 billion. Rheinmetall is Europe’s go-to supplier for Leopard 2 tanks, 155mm artillery shells, and Lynx fighting vehicles, all of which are in high demand across NATO nations.
With expansion plans including new plants in Ukraine, Romania, and Lithuania, plus U.S. acquisitions like Loc Performance, Rheinmetall is scaling up to meet the “defence supercycle.” Its push into battlefield AI, digitisation, and cyber warfare further enhances its strategic appeal.
Why Now? The STOXX Europe Aerospace & Defence Index has outperformed broader European markets in 2025, with companies like Rheinmetall and Thales doubling in value. EU-led joint procurement, tax incentives, and a growing domestic supply chain all point to a golden era for European defence contractors.
While traditional military hardware remains the foundation, the next generation of warfare—AI, digital command systems, and autonomous platforms—is where these companies are headed. These are not just war stocks; they are high-tech powerhouses in a rapidly evolving security landscape.
At Halo Technologies, we believe now is the time to play defence. European defence stocks aren’t just reactive—they’re becoming foundational holdings in a more dangerous, fragmented world. For investors looking to tap into this megatrend, these three companies offer exposure to growth, innovation, and geopolitical resilience.
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