The demand for low-cost military technology has surged, with small and mid-cap defense stocks in the U.S. outperforming the S&P 500 and major defense contractors this year

Zhitong
2025.09.18 13:42
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As demand for low-cost military technology increases, U.S. small and medium-sized defense stocks have outperformed the S&P 500 and larger competitors. In 2025, the NYSE Arca Defense Index rose by 34%, while the S&P 500 only increased by 12%. The Pentagon has allocated nearly $6 billion for drone and anti-drone systems within its $892.6 billion budget, indicating a reduction in investment in traditional projects. Analysts believe this trend benefits companies that produce modular, software-driven weapons. In 2025, aerospace and defense startups raised over $14 billion, reaching a ten-year high