As geopolitical tensions mount, from Ukraine to Gaza to Iran, nations are pouring greater amounts of money into their defense systems — not just to protect their borders, but also to guard against cyberattacks. Bank of America identified several stocks that are best positioned to profit from the growing defense sector, a new report said. “Developing greater self-sufficiency in strategic sectors such as Energy and Defense is becoming an increasingly important aspect of resilience at the national level,” the BofA analysts said in out Tuesday. “The opportunities across advanced defense technologies, their dual-use applications and the value chain are becoming hard to ignore.” As a consequence, world military expenditures are surging. In 2024, defense spending reached $2.7 trillion, or 2.5% of the global GDP, up 9.4% from year before, according to the report. That marks the steepest year-over-year rise in military expenditures since the Cold War. But even beyond traditional spending on bullets, planes and tanks, “defense technology and dual-use innovations – such as satellite surveillance, autonomous monitoring and cyber defense – are becoming essential components of security resilience. They protect societies from both environmental disruptions and geopolitical shocks,” the BofA analysts said. Jump in defense spending The BofA report highlights several national and regional efforts to bolster security and secure resources—all of which are poised to boost global defense spending. In the EU, officials have unveiled a plan to invest 800 billion euros ($939 billion) to enhance Europe’s spending on air and missile defense; artillery systems; ammunition and missiles; drones and counter-drone systems; military mobility; AI, quantum, cyber and electronic warfare; and strategic enablers and critical infrastructure. The U.S. has also pledged to beef up its already vast military budget. Passed in July, the One Big Beautiful Bill allocates an additional $150 billion to defense spending, particularly for the construction of the “Golden Dome for America,” a proposed defense system that would defend the U.S. from hypersonic and long-range missiles. Finally, the use of drones for military and infrastructure building is booming across several continents. The growing demand has spurred efforts to create cost-efficient methods of mass-producing the unmanned devices, although BofA also argues that “a drone bubble may be forming.” All told, the bank says several stocks have room to rally further. Researchers named several of the largest stocks by market capitalization that are rated buy at the investment bank and that offer exposure to at least two of BofA’s security, technology and infrastructure-related themes. The bank’s stock picks to capitalize on the trend include Parsons and General Dynamics . Parsons The company, headquartered about 25 miles west of the Pentagon in northern Virginia, offers critical infrastructure, cyber and space solutions for the national security and intelligence sectors, including counter-unmanned aircraft systems, missile defense integration and satellite resiliency solutions. In September, Parsons won a contract from the National Nuclear Security Administration to deliver end-to-end support for counter-nuclear smuggling systems to countries in the Indo-Pacific region. In June, Parsons joined forced with IBM and said it will serve as prime contractor on a new, state-of-the-art air traffic control system. Parsons stock has jumped 40% in the six months through Tuesday. General Dynamics General Dynamics , which makes the U.S. Navy’s submarine fleet at its Electric Boat division , is an aerospace and defense company that sells armaments and services to militaries across the world. The company’s Bath Iron Works builds surface ships for the Navy, while its Gulfstream subsidiary makes luxury, long-range business jets. General Dynamics, also based in northern Virginia, has climbed more than 29% in the past six months, more than double the gain in the S & P 500 over the same span. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
