Best mega-cap defense stocks to invest in 2026

Mega-cap defense stocks represent the largest and most established companies in the global defense industry, offering investors exposure to military spending with the stability of large, diversified enterprises. These defense giants benefit from long-term government contracts, technological leadership, and essential national security capabilities.

RTX maintains leading positions across missile systems, aircraft engines, and aerospace technologies, creating substantial barriers to entry while providing stability through diversified government contracts. GE Aerospace manufactures jet engines and integrated systems for military aircraft worldwide, generating decades of aftermarket revenue through maintenance and spare parts. Palantir delivers data analytics and AI-powered decision intelligence for defense agencies and intelligence services, creating predictable revenue streams through deep operational integration.

As global defense spending continues rising amid geopolitical tensions and military modernization programs, these mega-cap defense stocks offer investors strategic exposure to essential national security capabilities. For investors seeking diversified defense exposure with strong fundamentals, these mega-cap companies represent compelling opportunities in 2026.

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Before we dive into each company, let`s take a look at how your investment would have performed if you had invested in stocks mentioned in this article.

Now, let`s take a closer look at each of the companies:

  • Palantir (NYSE:PLTR)

    Palantir Technologies is a premier data analytics and artificial intelligence company specializing in mission-critical software solutions for government agencies, defense contractors, and commercial enterprises worldwide. Founded in 2003 by Peter Thiel and Alex Karp, the Denver-based company has evolved from supporting US intelligence to becoming a global big data leader. The company has demonstrated strong growth in both government and commercial sectors, particularly benefiting from increased defense spending and digital transformation initiatives across industries.

    Its core business revolves around flagship platforms Gotham for government and Foundry for commercial enterprises, both leveraging advanced AI and machine learning capabilities. Palantir`s software enables organizations to integrate, analyze, and act on vast amounts of complex data for critical operations including national security and strategic decision-making. With rising demand for AI-powered analytics, Palantir is strategically positioned to capitalize on digital transformation trends and the growing need for sophisticated data analysis capabilities.

    Palantir financial statements

    Analysts recommendation: 2.17

    Financial Health

    • Return on assets (ROA): 21.32%
    • Return on equity (ROE): 26.23%
    • Return on investment (ROI): 21.46%

    Profitability

    • Gross margin: 82.37%
    • Operating margin: 31.59%
    • Net profit margin: 36.31%

    Growth

    • EPS (past 5 years): N/A
    • EPS (current): 0.64
    • EPS estimate (next quarter): 0.28
    • EPS growth (this year): 71.49%
    • EPS growth (next year): 42.24%
    • EPS growth (next 5 years): 50.01%
    • EPS growth (quarter-over-quarter): 669.23%
    • Sales growth (past 5 years): 32.58%
    • Sales growth (quarter-over-quarter): 70%

    💡 Why invest in Palantir?

    Palantir's robust government contracts and expanding commercial opportunities support strong, sustainable AI-driven growth globally:

    • Government Defense Dominance: Palantir holds long-term contracts with U.S. defense agencies, intelligence services, and allied governments, creating predictable revenue streams and deep operational integration with critical systems.
    • Advanced Analytics Platform: The company`s advanced artificial intelligence and machine learning platforms provide unmatched data integration and analysis capabilities that create significant competitive advantages and drive long-term value.
    • Commercial Market Expansion: Palantir is expanding its commercial footprint across healthcare, manufacturing, and financial services, diversifying revenue sources and reducing dependence on government contracts while capturing new market share.
    • High Customer Retention: The company`s deep integration with client operations and proprietary technology platforms create substantial switching costs and long-term customer relationships that drive predictable, recurring revenue growth consistently.

    🐌 Key considerations before investing in Palantir

    Palantir faces government dependency, ongoing profitability pressures, and complex surveillance-related ethical concerns:

    • Ongoing Profitability Pressure: Despite strong revenue growth, the company faces ongoing profitability challenges due to high operating expenses, significant R&D investments, and competitive pricing pressures in expanding commercial markets.
    • Government Contract Dependency: Heavy reliance on government and defense contracts makes the company vulnerable to budget cuts, political changes, and shifts in defense spending priorities that could impact long-term revenue stability.
    • High Valuation Volatility: As a high-growth technology stock, Palantir experiences significant price volatility driven by shifting market sentiment, earnings performance, and investor expectations for commercial growth acceleration.
    • Ongoing Ethical Concerns: The company`s involvement in government surveillance and defense applications raises ongoing ethical concerns and regulatory scrutiny that could significantly impact public perception and commercial adoption.

    Final thoughts on Palantir

    Palantir`s leadership in AI-powered data analytics and strategic partnerships create compelling opportunities for investors seeking exposure to growing artificial intelligence and defense technology sectors. However, the company`s profitability challenges, government contract dependency, valuation volatility, and ethical concerns require careful evaluation of the complex dynamics in data analytics markets. Palantir combines technological excellence with strategic positioning to deliver mission-critical analytics solutions, though valuation premiums and ethical concerns require careful long-term risk assessment.

  • GE Aerospace (NYSE:GE)

    GE Aerospace is a leading global manufacturer of jet engines and integrated aerospace systems for commercial, military, and business aviation markets. The company was originally part of General Electric, founded in 1892, and successfully became independent following a comprehensive corporate restructuring. Headquartered in Evendale, Ohio, it emerged as the standalone successor to the original General Electric Company with focused aerospace operations.

    GE Aerospace`s core business encompasses the design, manufacture, and servicing of aircraft engines and integrated systems for both commercial and military applications. The company operates through two primary segments: Commercial Engines and Services, and Defense and Propulsion Technologies for diverse global markets. With an installed base exceeding 44,000 commercial and 26,000 military engines, GE Aerospace supports a vast global fleet while focusing on aviation sustainability.

    GE Aerospace financial statements

    Analysts recommendation: 1.64

    Financial Health

    • Return on assets (ROA): 6.65%
    • Return on equity (ROE): 45.24%
    • Return on investment (ROI): 22.7%

    Profitability

    • Gross margin: 36.64%
    • Operating margin: 18.21%
    • Net profit margin: 18.95%

    Growth

    • EPS (past 5 years): 69.37%
    • EPS (current): 8.14
    • EPS estimate (next quarter): 1.59
    • EPS growth (this year): 16.64%
    • EPS growth (next year): 14.44%
    • EPS growth (next 5 years): 14.91%
    • EPS growth (quarter-over-quarter): 36.5%
    • Sales growth (past 5 years): -9.57%
    • Sales growth (quarter-over-quarter): 17.62%

    💡 Why invest in GE Aerospace?

    GE Aerospace's market leadership in aircraft engines supports strong, sustainable defense and commercial aviation demand growth:

    • Market Leadership Position: GE Aerospace dominates global aircraft engine manufacturing with over 44,000 commercial and 26,000 military engines in service, creating substantial recurring revenue through long-term maintenance contracts.
    • Financial Excellence Performance: The company delivered $38.7B revenue and $7.3B operating profit with 30% year-over-year growth, demonstrating operational excellence and improved execution across major engine programs consistently.
    • Aerospace Portfolio Diversification: GE Aerospace`s balanced portfolio spans commercial aviation, military defense contracts, and business jet engines, providing revenue stability across economic cycles and market conditions globally.
    • Global Market Reach: With manufacturing facilities, service centers, and customer relationships spanning six continents, GE Aerospace benefits from geographic diversification and proximity to key aviation markets worldwide effectively.

    🐌 Key considerations before investing in GE Aerospace

    GE Aerospace faces cyclical aerospace challenges, significant R&D requirements, and complex global supply chain vulnerabilities:

    • Cyclical Industry Exposure: The aerospace sector experiences significant volatility tied to economic cycles, airline profitability, and travel demand, creating unpredictable revenue patterns that can impact growth projections significantly.
    • R&D Investment Requirements: Developing next-generation aircraft engines requires massive capital investments in research, testing, and certification processes that can span decades, creating substantial upfront costs and financial risks.
    • Regulatory Risk Exposure: Operating across multiple international jurisdictions exposes GE Aerospace to complex aviation safety regulations, environmental standards, and trade policies that can impact operations and market access globally.
    • Supply Chain Vulnerabilities: Global supply chain disruptions, material shortages, and supplier quality issues can significantly impact production schedules, delivery timelines, and customer relationships across markets and regions.

    Final thoughts on GE Aerospace

    GE Aerospace`s dominant market position, exceptional financial performance, and diversified revenue streams create compelling investment opportunities in the recovering aerospace sector. However, investors must carefully weigh industry cyclicality, substantial R&D requirements, and complex regulatory environments that can impact long-term growth trajectories. GE Aerospace combines technological excellence with operational scale to deliver sustained shareholder value, though cyclicality and regulatory risks require careful long-term assessment.

  • RTX (NYSE:RTX)

    RTX Corporation is a major aerospace and defense contractor headquartered in Arlington, Virginia, serving military and commercial aviation customers worldwide. Founded in 1925, the company has grown into one of the world's largest and most diversified defense technology providers globally. RTX delivers advanced military systems, aircraft engines, and commercial aviation technologies to government and commercial customers located across the globe.

    The company operates through three primary business segments that serve diverse aerospace and defense markets around the world today effectively. Raytheon provides advanced missile systems and integrated defense solutions, Pratt & Whitney manufactures military and commercial aircraft engines, and Collins Aerospace delivers avionics systems. RTX supplies Patriot missiles, F-35 Lightning II engines, and advanced military electronics systems to allied defense forces operating worldwide in multiple regions.

    RTX financial statements

    Analysts recommendation: 2.04

    Financial Health

    • Return on assets (ROA): 4.03%
    • Return on equity (ROE): 10.74%
    • Return on investment (ROI): 6.66%

    Profitability

    • Gross margin: 20.08%
    • Operating margin: 10.03%
    • Net profit margin: 7.6%

    Growth

    • EPS (past 5 years): N/A
    • EPS (current): 4.96
    • EPS estimate (next quarter): 1.49
    • EPS growth (this year): 8.74%
    • EPS growth (next year): 10.6%
    • EPS growth (next 5 years): 9.71%
    • EPS growth (quarter-over-quarter): 8.42%
    • Sales growth (past 5 years): 9.35%
    • Sales growth (quarter-over-quarter): 12.09%

    💡 Why invest in RTX?

    RTX combines diversified defense capabilities with strong backlog and commercial synergies for sustained growth potential:

    • Diversified Defense Portfolio: RTX maintains leading positions across missile systems, aircraft engines, and aerospace technologies, creating substantial barriers to entry and reducing dependence on single markets while providing stability.
    • Advanced Military Innovation: Develops cutting-edge Patriot missile systems, F-35 engines, and military avionics that command premium pricing and secure long-term government contracts with allied nations worldwide and domestically today.
    • Strong Contract Backlog: Benefits from substantial contract backlog providing revenue visibility and stability from U.S. defense spending and international military modernization programs across multiple business segments worldwide.
    • Commercial Defense Synergies: Leverages technology development across commercial aviation and defense markets, creating cost efficiencies and innovation advantages in both sectors simultaneously while reducing overall development costs.

    🐌 Key considerations before investing in RTX

    RTX faces engine quality challenges, supply chain complexity, and significant government contract dependency risks ahead:

    • Engine Quality Issues: Geared Turbofan engine challenges including recalls and inspection requirements create increased costs, delivery delays, and potential reputational damage affecting commercial aviation business operations significantly.
    • Supply Chain Complexity: Global supply chain disruptions, labor shortages, and manufacturing bottlenecks cause production delays and order fulfillment challenges across multiple business divisions and customer commitments worldwide.
    • Defense Budget Dependency: Heavy reliance on U.S. government defense contracts makes the company vulnerable to budget cuts, political changes, and shifts in military spending priorities affecting revenue stability across global markets.
    • Substantial Capital Intensity: High R&D spending requirements and capital-intensive manufacturing operations pressure margins and require disciplined financial management during economic uncertainty and market volatility in global markets.

    Final thoughts on RTX

    RTX offers diversified defense exposure through missile systems, aircraft engines, and avionics capabilities serving global military forces and commercial aviation markets. Engine quality issues and government contract dependency require careful investor monitoring and thorough risk assessment before making any investment decisions. For investors seeking aerospace and defense exposure with reliable dividend income, RTX represents a compelling mega-cap opportunity worth considering today.

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