Two years into the Russia-Ukraine war, the defense landscape has shifted significantly as government security spending surges. This climate has reawakened investor interest in the defense sector, with a particular focus on technology firms that serve this industry.
In this context, companies such as Hensoldt, Thales, Indra, Babcock, Kongsberg, and QinetiQ have seen their market value rise by an average of about 90% over the last two years, well above the roughly 70% gain typical of traditional defense players.
Hensoldt stands out as the best performer in the sector, up 153% during the period. The German leader in defense sensors and security applications has broadened its portfolio with new products that address evolving threats through data management, robotics, and cybersecurity initiatives.
Kongsberg has climbed about 134%. The Norwegian firm collaborates with its armed forces to deploy national defense air systems that aim to reduce vulnerability and secure Norway’s autonomy as a democratic nation.
In third place is Indra, rising 81% in the period, driven by solid defense prospects and a strategic shift toward a stronger defense focus. The Spanish company offers end-to-end solutions across all defense domains, earning a reputation as the reference point in Spain. In recent sessions, its stock briefly rose as much as 8% after results showed a 20% profit increase, fueled by defense demand.
Indra is the Spanish leader in the European Defense Fund with 19 contracts totaling 72 million euros and coordinates Spain’s participation in the FCAS European defense program, which develops next-generation technologies for the industry. March 6 is expected to bring a new strategic plan, and investors anticipate a clear defense roadmap that could position Indra as the national champion.
The next strongest performer is Thales, up 80%. This French champion is the largest defense company in Europe, delivering solutions, products, and services across the sector, with special strengths in mission systems, sensor networks, communications, and infrastructure.
Meanwhile, in the United Kingdom, Babcock and QinetiQ lead in defense technology, gaining 56% and 39% respectively. Babcock develops civil and defense technologies and systems aimed at modernization and risk reduction. QinetiQ offers integrated solutions to address current and future challenges, advancing cutting-edge technology that supports defensive needs today and tomorrow.
Investment
According to NATO data, the European members invested 347 billion dollars in defense last year, representing about 1.85% of regional GDP, up from 235 billion dollars in 2014 (around 1.47% of GDP).
The alliance members expect continued growth this year, targeting around 380 billion dollars in investments, staying near 2% of GDP. This environment benefits traditional defense contractors and a subset of national technology champions focusing on defense that have improved their business prospects.
Beyond individual national efforts, the European Commission launched an initiative in 2021 to back collaborative defense research, creating the European Defense Fund (EDF) with 7.9 billion euros for 2021-2027 to stimulate industrial innovation in defense within the region.