It’s Time to Play Defence: Three European Defence Stocks Backed by a Global Supercycle

By Halo Technologies Research Team

With geopolitical instability rising and global defence budgets surging, European defence stocks are firmly in the spotlight—and for good reason. Ongoing conflict in Ukraine, threats from Russia and China, and uncertainty around future U.S. military support under a Trump presidency are forcing Europe to become more self-reliant. In response, governments across the continent are ramping up military spending, creating a multi-year investment opportunity for defence-focused investors.

Halo Technologies sees a strong tailwind forming for select European defence names, and we’re highlighting three standout stocks in this space: BAE Systems, Thales S.A., and Rheinmetall AG. These companies are at the forefront of Europe’s rearmament strategy and are well-positioned to benefit from long-term policy and budgetary shifts—including NATO targets of 2–3.5% of GDP for defence by 2032, and EU plans like the €800 billion “ReArm Europe” initiative.

1. BAE Systems (UK)

As one of the world’s largest defence contractors, BAE Systems is a global leader in military aircraft, submarines, electronics, and cybersecurity. It has strong relationships with both the UK and U.S. governments and is playing a key role in supporting European security, including Ukraine and Indo-Pacific operations. In 2024, BAE’s order backlog surged to £77.8 billion, with key contracts for Australia’s Hunter-class frigates and Eurofighter jets for Spain and Italy.

BAE is also investing heavily in next-gen tech like the Tempest fighter jet and Striker II smart helmets, further cementing its role in the future of warfare. With a 14% rise in revenue and operating profit in 2024, it’s one of our top picks for defensive exposure.

2. Thales S.A. (France)

Thales is a diversified defence and aerospace company with strong exposure to cybersecurity, satellite tech, and electronic warfare. Its Q4 2024 sales surged 33% year-on-year, driven by defence demand and high-margin security solutions. The company generates 30% of revenue from emerging markets and continues to win high-profile contracts across Europe and Asia.

Thales stands out for its innovation in AI, quantum tech, and secure communication. Its Sentinel platform protects AI-based systems, and its growing satellite business recently landed a major order from Japan. With a broad footprint across aerospace, digital security, and mission systems, Thales is a key player in Europe’s defence resurgence.

3. Rheinmetall AG (Germany)

Rheinmetall has transformed into a pure-play defence powerhouse, with 80% of 2024 group revenue coming from military operations. Its 36% sales growth last year pushed total revenue to €9.75 billion, and its order backlog hit €55 billion. Rheinmetall is Europe’s go-to supplier for Leopard 2 tanks, 155mm artillery shells, and Lynx fighting vehicles, all of which are in high demand across NATO nations.

With expansion plans including new plants in Ukraine, Romania, and Lithuania, plus U.S. acquisitions like Loc Performance, Rheinmetall is scaling up to meet the “defence supercycle.” Its push into battlefield AI, digitisation, and cyber warfare further enhances its strategic appeal.

Why Now? The STOXX Europe Aerospace & Defence Index has outperformed broader European markets in 2025, with companies like Rheinmetall and Thales doubling in value. EU-led joint procurement, tax incentives, and a growing domestic supply chain all point to a golden era for European defence contractors.

While traditional military hardware remains the foundation, the next generation of warfare—AI, digital command systems, and autonomous platforms—is where these companies are headed. These are not just war stocks; they are high-tech powerhouses in a rapidly evolving security landscape.

At Halo Technologies, we believe now is the time to play defence. European defence stocks aren’t just reactive—they’re becoming foundational holdings in a more dangerous, fragmented world. For investors looking to tap into this megatrend, these three companies offer exposure to growth, innovation, and geopolitical resilience.

The HALO Investment Research software (‘the Software’) and www.halo-technologies.com (‘the Website’) are created, operated and controlled by HALO Technologies Pty Ltd ACN 623 830 866 ('HALO'). HALO is a Corporate Authorised Representative 001261916 of Macrovue Pty Limited ACN:600 022 679 AFSL 484264 ('Macrovue'). Macrovue is a wholly owned subsidiary of HALO. HALO is wholly owned by HALO Technologies Holdings Limited (‘HALO Tech’) ABN 73 645 531 219. We collectively refer to 'HALO', 'Macrovue' and 'HALO Tech' as ‘HALO', ‘Us’, We’, ‘Our’ and 'our representatives'. You may receive contact from Australian Stock Report Pty Ltd ABN 94 106 863 978 (ASR) AFSL 301682. ASR is the distributor of the HALO products offered by HALO. These companies are related entities with Amalgamated Australian Investment Group Limited ABN 81 140 208 288 (‘AAIG’). Please refer to the website for access to the HALO Technologies Financial Services Guide, Privacy Policy and Terms & Conditions.

All information contained in this communication is of general nature only; it is not intended or to be construed as an offer, solicitation or recommendation for any financial product and does not take into account your financial situation, objectives or needs. You should seek professional investment advice prior to making any decision to acquire or dispose of a financial product. Before acting on the information provided in this communication you should consider whether it is appropriate for you in light of your personal circumstances. Investing in financial markets and instruments involves risks, including loss of some or all capital. The payment of income and the return of capital are not guaranteed. Past performance is not an indicator of future performance. Forward-looking statements involve known and unknown uncertainties and other factors, and reliance should not be placed on such statements. 

To the maximum extent permitted by law, HALO, ASR, its related bodies corporate, officers, directors and employees, do not accept liability for any loss or damage arising out of or in connection with any reliance on the information presented in its reports, or any omission, inadequacy or inaccuracy in this material. While this article is based on information from sources that are considered reliable, HALO, ASR, its directors, and employees, do not represent, warrant or guarantee that the information contained in this article is complete or accurate. Any opinions and estimates are current as at the date of publication and subject to change without notice. The opinions and recommendations in these publication are based on a reasonable assessment by the author who wrote the report using information provided by industry resources and generally available in the market. Employees and/or associates of HALO or any of the other related entities may hold one or more of the investments reviewed in these reports. Any personal holdings by HALO, any related entities employees and/or associates should not be seen as an endorsement or recommendation in any way. No representation is given, warranty made, or responsibility taken about the accuracy, timeliness or completeness of information sourced from HALO and ASR. Because of this, we recommend you consider, with or without the assistance of a financial adviser, whether the information is appropriate having regard to your particular circumstances. 

HALO, ASR and related entities and their associates and respective directors and staff each declare that they, from time to time, may hold interests in securities and/or earn fees, brokerage or other benefits from products and services mentioned in this communication.

Privacy Statement

As a consequence of this correspondence, we may collect information about employees, clients, or contractors (relevant persons). A copy of the Privacy Policy and Collection Statement can be obtained at www.halo-technologies.com.

If you have a complaint, HALO’s dispute resolution process can be accessed by telephone on + 61 2 8294 5993 or 1300 7420 292 or by email to www.compliance@halo-technologies.com.

Copyright applies to all content

HALO and the terms, logos and marks included in our content that identifies our services and products are proprietary materials. Copyright is applicable to all content produced by us, and in the information and material therein, is proprietary material owned by us unless otherwise indicated. Unless otherwise noted, all information provided on this site is provided by us and is subject to copyright and trademark laws. Logos and marks contained in links to third party sites belong to their respective owners.

Cyber Fraud Warning

This email is for the use of the intended recipient(s) only. If you have received this email in error, please notify the sender immediately and then delete it. If you are not the intended recipient, you must not use, disclose or distribute this email without the author's prior permission. The unauthorised use of this email may result in liability for breach of confidentiality, privilege or copyright.

We have taken precautions to minimise the risk of transmitting software viruses, but we advise you to carry out your own virus checks on any attachment to this message. We cannot accept liability for any loss or damage caused by software viruses.

Please telephone your contact person at HALO (on a separately verified number) should you be concerned about the authenticity of any email you receive from us. We will never otherwise contact you by email alone to ask you to transfer or deposit money, or to tell you of a change to our payment or bank account details.