3 Defense Stocks Riding Nuclear, Missile, and Aerospace Demand

Rising global defense spending on military modernization and nuclear deterrence creates opportunities for both large and small defense-related companies. BWX Technologies and Mercury Systems both reported strong backlog growth and raised guidance, reflecting robust demand for their specialized defense niches. Howmet Aerospace continues posting strong revenue growth and pursuing acquisitions despite facing new competition from GE Aerospace's purchase of a rival supplier.

The United States and other governments around the world are prioritizing military modernization, building up their capacity for nuclear deterrence, enhancing missile defense capabilities, and generally investing heavily in defense. A move toward a more militarized world may mean investors can capitalize on both larger defense giants and smaller companies with the potential for major growth. When seeking significant return potential in defense, investors may want to look for firms with a unique technological niche and a distinct position within the defense supply chain, as well as significant operational updates or other signs of business momentum. BWX Technologies Inc. NYSE: BWXT, Mercury Systems Inc. NASDAQ: MRCY, and Howmet Aerospace Inc. NYSE: HWM may all be appealing candidates for these reasons.

BWX is a nuclear component maker that caters to the nuclear energy market as well as customers in the medical field and the U.S. government. In particular, its efforts in designing nuclear reactors and components for naval vessels have made it a major player in the U.S. Navy's nuclear propulsion program. This has led to noteworthy demand and backlog—the latter of these climbed 40% year over year (YOY) to $8.4 billion for the latest quarter. BWX's niche relationship with the U.S. Navy has also meant a boost to its top and bottom lines: Q2 2026 revenue climbed 18% to about $902 million, just shy of analyst predictions, and adjusted EBITDA and adjusted earnings per share (EPS) were also up YOY. The company's leadership raised its full-year guidance in response. There's reason to believe that this momentum could continue, and that it may reverse BWXT stock's downward performance trend (shares have fallen about 20% so far in 2026). Over the summer, the company secured a contract with the National Nuclear Security Administration to develop a new lithium processing facility. Additionally, BWX is narrowing its focus by selling its medical business for up to $800 million, both a hefty boost to its capital reserves and a chance to prioritize its highest-potential operations.

Mercury's role in the defense industry is different—this firm provides a variety of secure processing hardware, computer equipment, sensors, and other subsystems for aircraft, missiles, and radar tools. The large-scale shift of the defense industry toward software and electronics means that Mercury has an increasingly important role to play. Like BWX, Mercury reported impressive bookings and backlog in its latest quarter, with bookings rising 93% YOY to $660 million and the backlog approaching $2 billion.