European defense stocks surged further on March 3, driven by heightened military spending commitments across the continent.
Leading the charge is Rheinmetall AG (ETR: RHM), which is now up almost 12% by midday. The German powerhouse continues to soar, with a current price of €1,128.50 (just under $1,182).
Following closely are Thales SA (EPA: HO) from France, up by over 13%, and BAE Systems plc (LON: BA) from the UK, which gained around 14% by midday on Monday, March 3.
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Sparked by European leaders’ pledges at a London summit on Sunday, March 2 to bolster defense budgets and support Ukraine, defense stocks relied in anticipation of contract opportunities.
Rheinmetall AG (ETR: RHM)
Best known for producing Leopard 2 tanks and artillery systems, Rheinmetall has seen a year-to-date gain exceeding 88%, bolstered by a JPMorgan price target hike from €800 to €1,200 ($838 to $1,257).
Analysts cite Europe’s rearmament cycle as a tangible driver, with billions in contracts up for grabs. However, some investors question whether this surge is sustainable, given potential political shifts or budget constraints.
Still, Rheinmetall’s diversified portfolio—spanning military vehicles to high-energy lasers and ammo factories—positions it as a cornerstone of Europe’s defense strategy.
Thales SA (EPA: HO)
On the other hand, Thales SA, a leader in aerospace and security systems, offers another compelling case. Its 13.54% jump today follows a £1.6 billion (over $2 billion) UK order for surface-to-air missiles destined for Ukraine.
With a 58% year-to-date increase, Thales benefits from its technological edge in sensors and actuators, critical for modern warfare. Critics argue its reliance on government contracts could expose it to volatility, yet its broad applications across defense and civilian sectors mitigate such risks.
BAE Systems plc (LON: BA)
BAE Systems rounds out the trio, climbing over 14% at midday timestamp amid the sector-wide boom. As one of the largest European defense firms, its stock reflects confidence in sustained NATO spending.
Up over 38% this year, BAE’s portfolio—including fighter jets and naval systems—draws steady demand.
Broader sector gains
Beyond these three major players in the defense industry, the STOXX Europe Aerospace and Defense Index rose 7.5% today—its biggest leap since November 2020—highlighting broader sector strength.
Meanwhile, the backdrop of a Ukraine peace plan and NATO’s evolving role adds intrigue, potentially fueling further investor interest as geopolitical tensions simmer.
Featured image via Shutterstock
