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Investing.com -- Defense stocks are seeing a significant increase as investors adjust to shifting geopolitical realities, according to the CEO of deVere Group, a global financial advisory firm. This comes as the Stoxx Europe aerospace and defense index is experiencing its largest single-day gain since 2020, indicating a growing trend in defense spending.
Nigel Green, the CEO of deVere Group, has suggested that this trend is likely the start of a fundamental shift that will shape markets for the foreseeable future. As European leaders look to strengthen their military capabilities after the US has stepped back from security commitments, defense companies are expected to benefit greatly.
According to Green, the shift is structural as European governments are realizing that their long-standing reliance on US military support is not a guarantee. This realization, triggered by the Trump administration’s lack of clear security guarantees, is expected to result in significant and sustained increases in defense budgets.
This shift is not just confined to Europe. Globally, military expenditures are on the rise as nations adjust to a world marked by intensifying rivalries and fractured alliances. From Asia to the Middle East, countries are prioritizing security and resilience, and the defense sector is the primary beneficiary.
Defense spending as a percentage of GDP has steadily increased in key economies over the past decade. Governments are allocating larger budgets to modernize military capabilities and acquire advanced weapons systems. The investment case for defense stocks goes beyond immediate conflict-driven surges.
Green suggests that this is a long-term megatrend as the world enters a new era characterized by multipolar power struggles, strategic competition, and rapid technological advancements in warfare. Defense companies, at the forefront of innovation—from cyber capabilities to next-generation weapons systems, AI-driven surveillance, and hypersonic missiles—are becoming increasingly indispensable.
Institutional investors are already shifting into the sector, recognizing its defensive characteristics in uncertain economic times. With global instability unlikely to diminish in the near future, exposure to defense provides a crucial hedge. It’s a sector supported by substantial government spending, insulated from consumer-driven volatility, and ready for structural growth.
As geopolitical tensions rise, investors are advised to consider not only traditional defense giants but also emerging companies developing advanced military technology. Defense technology firms specializing in AI, quantum computing, and advanced materials are set to benefit from record-breaking research and development spending.
The surge in European defense stocks on Monday signals a trend that can’t be overlooked. Green suggests that investors who understand the trajectory of global security realignments will recognize that this is just the start. The future of global security is shifting, and markets are responding.
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