Budget constraints cannot stop the growth of expenses! Bank of America: Companies like Northrop (NOC.US) and Rocket Lab (RKLB.US) will be the preferred choices in the defense industry by 2025.

Bank of America Corp analysts recently stated that Northrop Grumman Corp. (NOC.US), Booz Allen Hamilton Consulting Company (BAH.US), Rocket Lab (RKLB.US), Raytheon Technologies (RTX.US), and GE Aerospace (GE.US) are the top picks for defense industry stocks in 2025. Despite the possibility of the Republican Party controlling the White House, Senate, and House of Representatives, federal budget constraints will still be an issue, but defense spending is expected to increase. Bank of America Corp analyst Ronald Epstein noted in a report on January 16th, "Historically, when the Republican Party has full control of all three branches of government, defense spending tends to increase, but current cost pressures continue to rise." He mentioned, "Proposed tax cuts, ongoing continuing resolutions, escalating program costs, and the calls for government efficiency from DOGE increase the uncertainty in our expected timing and amount of defense spending." Despite these uncertainties, Epstein stated, "We maintain the opposite view and expect defense spending to continue to grow." According to the bank's analysis, Northrop Grumman Corp. is the contractor for the so-called "triad" nuclear system, which includes land-based intercontinental ballistic missiles, submarine-launched ballistic missiles, and strategic bombers carrying nuclear warheads and missiles. Rocket Lab is expected to benefit from the ongoing emphasis on space security. The report also pointed out, "DOGE's efforts will accelerate the trend towards more flexible, more commercial contract strategies and stimulate innovation in the defense information technology sector." Additionally, "We believe Raytheon Technologies and GE Aerospace will benefit from the continued strong recovery in the commercial aftermarket and wide-body aircraft markets. We expect GE Aerospace's investment in next-generation platforms to lay a solid foundation for the company's future growth and increase its market share in the short term."