Four defense stocks key to Trump-Greenland crisis, Europe’s NATO fears
European defense stocks are seen as best-placed to capitalize on the continent’s growing push for military sovereignty, as fears grow over President Donald Trump’s bid to annex Greenland. Analysts at Bernstein have named four they expect to particularly benefit. NATO troops and vessels , including personnel from France and Germany, arrived in Greenland for military exercises this week, putting Europe’s security capabilities under renewed scrutiny. Bernstein analysts Adrien Rabier and Douglas Harned said that the U.S. defense companies still account for roughly 60% of European countries’ military spend. However, these countries are set to tilt towards continental suppliers as they spend more on defense, amid growing concerns over the U.S.’ commitment to NATO. BAE Systems , Dassault Aviation , Rheinmetall and Thales are particularly well-placed to capture the defense-driven ‘sovereign Europe’ trade, Bernstein said in a note Friday. U.K. defense staple BAE Systems, which manufactures a range of aircraft, weapons, munitions and warships, has gained more than 21% so far in 2026, while Germany’s Rheinmetall — the continent’s largest defense company — has surged 23.7%. French fighter jet maker Dassault Aviation is trading 14.8% higher year-to-date, with French tech and aerospace giant Thales rising 13.8%. BA.-GB YTD mountain BAE Systems. Overall, the Stoxx Europe Total Market Aerospace and Defense Index is up 14.5% over the same period. European NATO countries’ defense spending is forecast to reach 2.8% of GDP by 2030, up from 2.3% currently. While France remains the “most sovereign” large European nation in terms defense, and the second-largest arms exporter globally behind the U.S., leaning into its homegrown production capabilities, other nations — including the U.K., Germany and the Nordics — still depend heavily on U.S.-based suppliers. Denmark — currently embroiled in a war of words with the Trump administration over Greenland — has increased military spending from 1.4% to 3.2% of GDP in three years, with its equipment spend boosted fourfold. But it continues to buy drones, aircraft and missiles from the U.S., Bernstein said. RHM-DE YTD mountain Rheinmetall. However, recent orders underline Denmark’s pivot to European equipment providers and a greater focus on localized spend – and other NATO countries are expected to follow that lead. Denmark recently placed large orders with BAE Systems and Rheinmetall for its combat vehicles, while turning to Rheinmetall, Kongsberg and Thales for air defense systems. Bernstein said many other countries will “follow the same dynamics” as Europe’s governments look to catch up. Outlining the theme, Bernstein said large European countries could offer political and military support in exchange for large orders, similar to what the U.S. has done. Analysts pointed to Norway’s recent £10 billion ($13.4 billion) naval order to BAE Systems. “We see two baskets of stocks which are well positioned to capture the opportunity,” analysts said. Firstly, European players with in-house capabilities and large government support, and, secondly, local players in heavily U.S.-exposed countries, they added, with Kongsberg and Saab among the picks in the latter grouping. “In theory, BAE Systems and Leonardo should be in a good position given Italy and the U.K.’s dependency on U.S. imports,” Rabier and Harned said. “We expect local contractors to capture most of the incremental spending, and the share of equipment to keep growing, driving a LDD% addressable market CAGR for the European defense companies.” Raphaël Thuin, head of capital markets strategies at Tikehau Capital , recently told CNBC that the depleted state of Europe’s military capability following years of underinvestment is helping drive a multi-year “mega-trend” that will boost the region’s defense stocks. — CNBC’s Michael Bloom contributed to this story.
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