According to the Zhitong Finance APP, Wall Street financial giant JP Morgan recently released a research report stating that the significant short-term decline of global defense and military stocks, including European defense stocks, this week provides a major opportunity for investors to buy on dips in this still high-performing sector. JP Morgan believes that defense and military stocks are very suitable for &#34;buying on pullbacks&#34; and has established a bullish outlook for military defense stocks based on a &#34;multi-year global rearmament upcycle,&#34; asserting that the new upward trajectory of global defense spending is &#34;still in a very early stage&#34; and may last for &#34;another decade.&#34;
JP Morgan senior analyst David Perry provided this latest investment advice following a drop in defense and military stocks after President Donald Trump’s speech at the World Economic Forum in Davos, Switzerland, on Wednesday. Trump stated this week that he does not want to use excessive military force to control Greenland, which currently belongs to Denmark, leading to a general decline in the defense and military sector of global stock markets.
Some senior analysts view these statements as a significant cooling of the global geopolitical tensions. Subsequently, Trump indicated that a &#34;territorial and military framework&#34; regarding Greenland's future has been formed after meeting with NATO Secretary General Mark Rutte.
In the stock market, another financial giant on Wall Street, Goldman Sachs, saw its basket of &#34;European defense stocks&#34; benchmark index drop by 3.0% on Thursday, marking three consecutive days of decline. One of the largest companies in this sector, Rheinmetall AG from Germany, has fallen by 5.6% over the past three trading days.
Buy military stocks on dips, seize this round of &#34;international rearmament&#34; trend
&#34;We still recommend that investors choose to buy on dips whenever European defense stocks show any weakness,&#34; Perry from JP Morgan stated. &#34;We are in a new global defense spending upcycle, or in the very early stages of 'international rearmament,' which may continue for another ten years,&#34; he added.
Perry cited recent remarks from Canadian Prime Minister Mark Carney, who advocated for middle powers around the world to unite to resist military coercion from strong superpowers during his speech in Davos.
European defense stocks are considered the &#34;most attractive&#34; in European equities for 2025, but after experiencing a significant rise below the benchmark throughout 2025, military stocks have become increasingly sensitive to geopolitical news flows, primarily due to the market's persistent high tension in the context of high valuations. For example, shares of Rheinmetall in Germany are priced at over 40 times the expected earnings for the next year (i.e., an expected price-to-earnings ratio of 40x), nearly double the valuation multiple from a year ago
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The peace negotiations surrounding Russia and Ukraine have also been a focal point for the military industry market, with a U.S. envoy expected to meet with Russian President Vladimir Putin on Thursday.
However, Perry stated that JP Morgan expects the Russia-Ukraine war to continue &#34;until one side or both are exhausted,&#34; and that major European countries will block any &#34;bad&#34; or &#34;detrimental to European geopolitics&#34; peace agreement between Russia and Ukraine.
&#34;We have entered a new world order characterized by chaos and reshaping,&#34; the senior analyst added.
If an investor is concerned about the escalating global geopolitical conflicts, investing in traditional defensive sectors of the stock market (such as utilities and consumer staples, which are the most typical &#34;traditional safe havens&#34;) is not the best choice. The real good place is the defense and military sector, which is closely related to geopolitics and is known as an &#34;alternative safe haven.&#34; The latest statistics show that the investment frenzy in the defense and military sector has swept the stock market; for example, U.S. aerospace and defense stocks have recorded a rise of up to 36% from 2025 to date, while European military stocks in the same category have seen a significant increase of 60% in 2025, even outperforming the core driving sector of the U.S. stock market bull run—the semiconductor sector, which has risen about 45%, mainly due to Germany and the entire European continent's desire to rearm Europe after Trump announced a full focus on domestic defense construction in the U.S.
Preferred international military leaders like Raytheon for air defense, missile defense, and precision-guided munitions
Wall Street financial giant Citigroup's bullish stance on military stocks is similar to that of JP Morgan. Recently, Citigroup released a research report stating that the trend of &#34;International Rearmament&#34; is about to become a structural and multi-year global military defense demand theme. Citigroup also predicts that the military sector in the international stock market will continue to rank among the popular investment sectors in global markets over the next 2-3 years, likely becoming a core contributor to the stock market's rise.
Both Citigroup and JP Morgan stated that U.S. military giant Raytheon Technologies (RTX.US), due to its significantly higher international business revenue/order exposure compared to peers like Lockheed Martin, is bound to become one of the core beneficiaries in the international military defense sector.
Citigroup emphasized in its research report that Raytheon's (RTX) exposure and order structure in international military defense business relative to its peers are more prominent, directly linking this advantage to NATO's significant increase in military spending targets, potential EU enhancements, and the acceleration of defense exports (FMS) and co-production trends
Citi summarizes the current demand for military and defense as the &#34;International Re-Armament Super Trend&#34;: major defense contractors are experiencing record international backlogs, and with the strong drive of NATO's increased military spending as a percentage of GDP and the potential for large-scale military spending increases in the EU, ally budgets are showing a &#34;structural upward shift.&#34; The research report emphasizes two macro signals: FMS orders and joint production rhythms are accelerating—indicating that demand is moving from &#34;intent/purchase negotiations&#34; to more visible execution and delivery (friendly to order growth and more favorable for revenue recognition for defense giants); defense companies' management is increasing investment in capacity, partnerships, and local industrialization (Europe/Asia) to capture the incremental military demand from 2026 onwards.
Both Citi and JP Morgan emphasize that during the rearmament cycle, cross-ocean system-level defense giants in areas such as air defense and missile defense, precision-guided munitions, sensors/radar, command control, and interception systems are often the first to benefit from budget increases; Raytheon's (RTX) core military defense business portfolio (missiles and air defense systems, radar and sensors, integrated avionics and integrated military mission systems, etc.) aligns well with the procurement direction of &#34;ally stock replenishment + enhancing system confrontation capabilities.&#34; This also explains why Citi considers &#34;the proportion of international orders/international backlog&#34; as a core winning indicator for RTX.
Raytheon's proud Patriot air defense missile system is one of the backbone systems for air defense and missile defense in multiple countries, with RTX disclosing that &#34;19 countries use it&#34;; the NASAMS National Advanced Surface-to-Air Missile System (developed in cooperation with Norway's Kongsberg, with the core missile type being Raytheon AMRAAM) is disclosed by RTX to be used by 13 countries; the FIM-92 Stinger portable air defense missile is further disclosed by RTX as &#34;the preferred surface-to-air missile for 24 countries.&#34;

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JP Morgan released a research report stating that global defense and military stocks have significantly declined in the short term, providing investors with a buying opportunity on dips. Analyst David Perry believes that defense and military stocks are suitable for increasing positions during pullbacks, and expects global defense spending to enter a sustained upward cycle lasting ten years. Despite Trump's speech in Davos causing a drop in military stocks, JP Morgan still recommends that investors buy when European defense stocks weaken to capitalize on the trend of international rearmament

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"Rearmament" trend sweeps the globe, JP Morgan calls to "buy defense stocks on dips"