7 Aerospace and Defense Stocks to Watch in the U.S.

NEW YORK, Oct. 31, 2026 — The fiscal 2027 National Defense Authorization Act calls for $1.15 trillion in U.S. military spending, taking the annual figure above $1 trillion for the first time. The war in Ukraine, tensions between China and Taiwan, and conflicts involving Israel, the United States and Iran, along with Iran-backed militant groups in the Middle East, could prompt governments to allocate more funding to military programs. Higher defense budgets would benefit companies that manufacture military aircraft engines, missile systems, naval vessels, defense electronics and related equipment.

Six of the seven companies below have an overweight rating from Morgan Stanley analyst Kristine Liwag. Her assessments point to their defense contracts, established product lines, revenue prospects, and exposure to military spending. Morgan Stanley analyst Meta Marshall sees growth opportunities for Axon Enterprise as it develops products for military and public safety customers.

GE Aerospace

GE Aerospace designs, manufactures, and services jet engines for military and commercial aircraft. The company has approximately 30,000 military and 50,000 commercial aircraft engines in service worldwide. Its Defense & Propulsion Technologies business also develops and services electrical systems and components for government agencies, aircraft manufacturers, and military customers.

Morgan Stanley analyst Kristine Liwag considers GE Aerospace a leading aerospace and defense company. She points to its established position in specialized industry segments, where limited competition gives the company pricing power and provides investors with long-term visibility into financial performance.

Morgan Stanley has an overweight rating and a $375 price target for GE stock. Shares closed at $313.05 on Oct. 29.

RTX Corp.

RTX Corp. was formed in 2020 through the merger of Raytheon and United Technologies. Its Collins Aerospace and Pratt & Whitney businesses serve the commercial aviation industry. Raytheon develops advanced sensors and provides training, software, and cybersecurity solutions for the U.S. intelligence community and Department of Defense.

Liwag sees further revenue growth and an attractive risk-reward profile for RTX. She points to the company's free cash flow, accelerating revenue growth and potential for higher profit margins as reasons for her positive assessment.

Morgan Stanley has an overweight rating and a $240 price target for RTX stock, which closed at $199.40 on Oct. 29.

General Dynamics

General Dynamics manufactures Gulfstream business jets, Abrams tanks and nuclear submarines. The U.S. government accounts for most of its revenue, with the Department of Defense representing a major customer.

Liwag notes that demand for business jets has remained resilient and that higher defense spending worldwide could generate additional business for General Dynamics. She also identifies the Trump administration's focus on domestic shipbuilding as a potential source of new contracts for the company.

Morgan Stanley has an overweight rating and a $465 price target for GD stock. Shares closed at $370.82 on Oct. 29.

Howmet Aerospace

Howmet Aerospace manufactures lightweight metal products for aircraft engines and other aerospace applications. Its portfolio includes jet engine components, titanium structural parts, aerospace fastening systems and forged wheels. The company also provides military customers with precision machining, program management and metals expertise.

Liwag points to demand for replacement parts used in commercial aircraft and Howmet's expectation of further growth in spare engine component sales. She also cites the company's balance sheet and its record of delivering revenue growth and profit margins above analyst estimates.

Morgan Stanley has an overweight rating and a $335 price target for HWM stock, which closed at $205.94 on Oct. 29.

Northrop Grumman

Northrop Grumman develops weapons systems and military technologies for government customers. Its Defense Systems segment produces battle management and missile systems, while its Mission Systems segment develops airborne sensors, networks and other technologies for military and intelligence operations.

Liwag considers Northrop's existing defense business well established and identifies long-term opportunities in microelectronics and quantum computing. She also points to the B-21 bomber and Sentinel intercontinental ballistic missile programs as sources of long-term revenue visibility.

Morgan Stanley has an overweight rating and a $765 price target for NOC stock. Shares closed at $562.36 on Oct. 29.

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Honeywell Aerospace

Honeywell Aerospace became an independent company following its June spinoff from Honeywell International. The company develops engines, mission-critical avionics and control systems for commercial and defense customers.

The company's AGT1500 gas turbine engines power M1 Abrams tanks, while its Inertial Navigation Systems provide guidance for combat vehicles and missiles.

Liwag acknowledges that Honeywell Aerospace has delivered less growth than some competitors. However, she considers the stock undervalued relative to the company's defense portfolio and demand from its commercial and military customers.

Morgan Stanley has an overweight rating and a $205 price target for HONA stock, which closed at $160.04 on Oct. 29.

Axon Enterprise

Axon Enterprise develops hardware and technology for law enforcement and public safety agencies. Its products include body-worn cameras, virtual reality training systems and digital evidence management platforms. The company's military offerings include body-worn cameras, drone technology, in-vehicle camera systems and digital management platforms.

Morgan Stanley analyst Meta Marshall sees opportunities for Axon to reach customers beyond traditional law enforcement agencies. She points to the company's software business and investment in new products as factors that could bring in additional military and public safety customers. Artificial intelligence features could also encourage existing customers to purchase additional services, while new products could create opportunities to sell bundled offerings.

Morgan Stanley has an overweight rating and a $640 price target for AXON stock, which closed at $438.05 on Oct. 29.