The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how defense contractors stocks fared in Q4, starting with Leonardo DRS (NASDAQ: DRS).

Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds.

The 14 defense contractors stocks we track reported a satisfactory Q4. As a group, revenues beat analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was 0.8% below.

Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 5.7% since the latest earnings results.

Best Q4: Leonardo DRS (NASDAQ: DRS)

Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ: DRS) is a provider of defense systems, electronics, and military support services.

Leonardo DRS reported revenues of $1.06 billion, up 8.1% year on year. This print exceeded analysts’ expectations by 7%. Overall, it was an exceptional quarter for the company with a solid beat of analysts’ revenue and EBITDA estimates.

Interestingly, the stock is up 16.5% since reporting and currently trades at $44.42.

Is now the time to buy Leonardo DRS? Access our full analysis of the earnings results here, it’s free.

RTX (NYSE: RTX)

Originally focused on refrigeration technology, Raytheon (NSYE:RTX) provides a a variety of products and services to the aerospace and defense industries.

RTX reported revenues of $24.24 billion, up 12.1% year on year, outperforming analysts’ expectations by 7%. The business had a very strong quarter with a solid beat of analysts’ organic revenue and EBITDA estimates.

However, the results were likely priced into the stock as it’s traded sideways since reporting. Shares currently sit at $195.85.

Is now the time to buy RTX? Access our full analysis of the earnings results here, it’s free.

Weakest Q4: AeroVironment (NASDAQ: AVAV)

Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.

AeroVironment reported revenues of $408 million, up 143% year on year, falling short of analysts’ expectations by 14.6%. It was a softer quarter as it posted full-year revenue and EBITDA guidance missing analysts’ expectations.

AeroVironment delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. As expected, the stock is down 8.6% since the results and currently trades at $202.43.

Read our full analysis of AeroVironment’s results here.

CACI (NYSE: CACI)

Founded to commercialize SIMSCRIPT, CACI International (NYSE: CACI) offers defense, intelligence, and IT solutions to support national security and government transformation efforts.

CACI reported revenues of $2.22 billion, up 5.7% year on year. This print lagged analysts' expectations by 2.4%. More broadly, it was a satisfactory quarter as it also recorded full-year EPS guidance slightly topping analysts’ expectations but a significant miss of analysts’ revenue estimates.

The stock is down 15.6% since reporting and currently trades at $534.03.

Read our full, actionable report on CACI here, it’s free.

Mercury Systems (NASDAQ: MRCY)

Founded in 1981, Mercury Systems (NASDAQ: MRCY) specializes in providing processing subsystems and components for primarily defense applications.

Mercury Systems reported revenues of $232.9 million, up 4.4% year on year. This number beat analysts’ expectations by 10.4%. Overall, it was a very strong quarter as it also produced a beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.

The stock is down 22.1% since reporting and currently trades at $77.38.

Read our full, actionable report on Mercury Systems here, it’s free.

Market Update

Late in 2025 into early 2026, there was hand wringing around artificial intelligence. For software companies, the fear was that AI would erode pricing power and compress margins as new tools made it easier to replicate what once required expensive enterprise platforms. Crypto investors had their own version of the same anxiety: if AI agents could trade, allocate capital, and manage wallets autonomously, what exactly was the long-term value of today’s crypto infrastructure?

These concerns triggered a noticeable rotation away from these sectors and into safer havens. But markets rarely dwell on one narrative for long. Spring 2026 came, and the focus shifted abruptly from technological disruption to geopolitical risk. The US’ conflict with Iran became the dominant driver of market psychology, and when geopolitics takes center stage, the script changes quickly. Investors stop debating growth rates and start worrying about oil supply, inflation, and global stability.

Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.