Everyone pretends to hate war until they see the earnings.

Global defense spending is on pace to reach $2.6 trillion in 2026, an 8.1% increase from 2025's $2.4 trillion. Forecast International called it. SIPRI confirmed the trajectory. Multiple projections peg the number north of $3 trillion by decade's end.

That money isn't going into more tanks. It's pouring into space, missiles, uncrewed systems, and the software and sensors that make all of it lethal and networked.

Sound familiar? It should.

Defense tech companies just grew their profits per share by 29% in Q3 2025, nearly double the average big U.S. company. Profit margins are widening. The confirmed-but-not-yet-delivered orders across the top five U.S. defense giants exceed $750 billion. Defense stocks are up roughly 11% so far in 2026, compared to about 1% for the overall stock market.

This is not a niche anymore. This is a massive trend with teeth.

And the U.S.? The Trump administration just proposed the first-ever trillion-dollar defense budget for 2027, with $961.6 billion in base funding for 2026 alone. NATO allies are scrambling to meet new spending targets of 3–5% of their total economic output. Germany turned its post-Ukraine defense commitment into a multi-decade buying spree. Japan just launched its largest military expansion since 1952.

Translation: the era of cutting military budgets to fund everything else is dead. Somebody forgot to send flowers.

This is not "your whole portfolio." This is a bolt-on.

A $10,000 side bet specifically in defense and space stocks is designed to swing about 50% harder than the overall market, both up and down. Think of it as an afterburner you attach to a boring core of index funds, savings, and maybe a few reliable dividend-paying stocks your dad would approve of.

Here's the brief:

You're not trying to "protect against war." You're explicitly trying to get paid for taking concentrated risk in the part of the market benefiting from rising defense budgets and the militarization of orbit.

Let's not pretend this is noble. It's math.

In plain English, expected return = "what you'd earn risk-free" + "bonus for accepting risk" × how wild your portfolio is.

A safe 10-year U.S. government bond pays about 4.1% right now (mid-February 2026). Historically, the stock market pays you an extra 4–4.5% above that for accepting the risk of owning stocks. That gives a boring index fund an expected return of roughly 8–9% per year.

This defense/space side bet swings about 1.5x as hard as the market. The finance textbook formula says:

Plug in the numbers (4% safe rate, 4–4.5% stock bonus, 1.5x swing factor) and you land around 10–11% expected per year for a portfolio that swings this hard.

But this isn't a generic collection of wild stocks. It's focused on a sector with faster-growing profits, massive order books, and a clear government spending tailwind. That could nudge returns into the 11–13% range over a full market cycle ifstock prices don't get crushed by rising interest rates or disappointing growth.

You don't earn that in a straight line. You earn it the hard way: with sudden drops, scary headlines, and NASA delays.

Think of it as the financial equivalent of running a home server cluster, brilliant when it works, existentially stressful when something crashes during production.

Here's the working mix for a $10,000 side bet:

These stocks move a lot. They are where your gains come from if the theme works.

1. Rocket Lab (RKLB) 10% ($1,000)

Small-launch and space systems company. Puts payloads into orbit and builds spacecraft for government and commercial customers. This stock swings about 2.2x as much as the market. Revenue up 78% in 2024 to $436 million. Just completed its 81st rocket launch in January 2026 and landed an $816 million military satellite contract.

Analysts are split between "generational space company" and "unprofitable cash incinerator." Both are correct. Their next-gen Neutron rocket development hit a snag when a January 2026 fuel tank rupture pushed back the first launch date. Stock hit an all-time high of $99.58 in January, then dropped to the high-$60s.

This is your aggressive growth engine for your space. It either goes to the moon or reminds you why the moon is far away.

2. Planet Labs (PL) 9% ($900)

Operates the largest network of Earth-watching satellites on the planet. Sells satellite imagery and data analytics to governments and corporations. Swings about 2x the market. Revenue grew 33% to $81.3 million last quarter. Their confirmed future orders surged 216% to $734.5 million. Total contracted future revenue obligations up 371%.

Just signed a multi-year, over $100 million deal with the Swedish Armed Forces. Military and intelligence revenue up 72%. This is the "Netflix of satellite imagery" part of the portfolio, the subscription-based space data space, and it's actually starting to look profitable.

Stock went from under $3 to over $30 in a year. Wild swings are the price of admission.

3. Intuitive Machines (LUNR) 7% ($700)

Lunar landers, moon services, and a front-row seat to the "moon as infrastructure" economy. A key contractor for NASA's Commercial Lunar Payload Services program, they've already successfully landed on the moon.

In January 2026, they announced an $800 million acquisition of Lanteris Space System,s transforming themselves into a full-service space company with combined revenue exceeding $850 million and $920 million in future orders. Trading around $15–18, with a past-year range of $6.14 to $23.32.

This is your lottery ticket with a thesis. Highly speculative. Revenue comes in chunks, not streams. If moon infrastructure becomes a recurring business, it's a different conversation. Until then, buckle up.

4. Kratos Defense (KTOS) 9% ($900)

Mid-size defense tech company focused on drones, uncrewed systems, space, and missile defense. Swings about 1.5x the market. Just selected for Phase 1 of the Pentagon's "Drone Dominance Program." Confirmed future orders total $1.51 billion. Largest single contract in company history: $1.45 billion for a hypersonic weapons test platform.

Kratos forecasts 14%+ revenue growth from its core business. It acts more like an aggressive tech company than a boring defense contractor. Pentagon priorities are literally its product roadmap.

Spoiler: when the Secretary of War creates a program called "Drone Dominance," the companies that build drones tend to notice.

5. Axon (AXON) 7% ($700)

Defense-adjacent. Makes Tasers, body cameras, and cloud-based software for managing police evidence. Strong revenue growth with expanding profit margins, plus recurring subscription revenue layered on top of hardware sales.

Recently lost 30% of its stock value on fears that AI could disrupt its business, but next quarter's earnings are expected to show 31% revenue growth. This is your domestic security, data platform, and law enforcement tech play.

Expensive at 109x next year's expected earnings. But so is every fast-growing quality company right now. Welcome to 2026.

These are the grown-ups. They still rise and fall with the market, but they're backed by multi-year government contracts, dividend payments, and stock buyback programs.

1. Northrop Grumman (NOC) 14% ($1,400)

Major defense contractor. Builds strategic weapons systems, space hardware, missiles, and classified programs. Up 20% so far in 2026. Massive order book and a key player in the "Golden Dome" missile defense initiative.

NOC is here to add steady income, dividend checks, and lower volatility to counterbalance your aggressive stocks. Think of it as the boring uncle who always has a job.

2. RTX Corp. (RTX) 14% ($1,400)

One of the largest defense and aerospace companies on Earth. Makes missiles, avionics, sensors, and commercial airplane parts. A Wall Street favorite in a world where geopolitical risk keeps rising, with upside from both military demand and commercial airline recovery.

RTX anchors your risk while still participating in the defense spending wave. It's the financial equivalent of keeping one hand on the railing.

3. Lockheed Martin (LMT) 12% ($1,200)

The flagship U.S. defense company. Builds the F-35 fighter jet. Critical in missiles and space. Up a staggering 26% so far in 2026.

Steady cash generation. Regular dividend payments. Stock buybacks. The programs politicians are least likely to cut. This is the "military blue chip," the financial equivalent of a bunker with climate control.

4. Howmet Aerospace (HWM) 9% ($900)

In a "picks and shovels" play, Howmet manufactures advanced metal parts and components that go into jet engines and defense systems. Swings about 1.4x the market. Just posted record Q4 2025 revenue of $2.17 billion, up 15%. Full-year 2025: $8.3 billion in record revenue with 40% growth in profits per share.

Projecting double-digit growth in 2026. Just announced a $1.8 billion acquisition to expand its product line. As more planes are built and defense programs ramp up, Howmet's share of the value in each aircraft grows. You're owning the supply chain rather than just the big contractors.

Stock up roughly 85% in the past year. John Plant, the 72-year-old CEO, runs it like a Swiss watch. What happens when he retires is the conversation nobody wants to have.

5. ITA iShares U.S. Aerospace & Defense ETF 9% ($900)

A defense sector fund is essentially a basket of dozens of defense and aerospace stocks in a single purchase. Gives you broad exposure to big contractors, component makers, and diversified players without betting everything on individual companies.

In this mix, ITA is your "don't get too clever" stabilizer. The index fund of violence.

Three pillars: budgets, technology, and the high ground.

Budgets are going one way. Global defense spending hit $2.72 trillion in 2024, a 9.4% jump after inflation adjustment, the steepest since the Cold War. 2026 projections: $2.6 trillion or more. The U.S. alone proposed $961.6 billion in base funding for 2026. Europe's defense budgets rose by ~13%. Asia-Pacific is pushing past $550 billion. NATO's combined total: $1.4 trillion in 2025.

Rising budgets don't automatically mean rising stock prices. But they create a revenue floor that makes these companies very hard to bet against.

Tech is eating the battlefield. Drones, uncrewed systems, and space-based assets are moving from experiments to core warfighting tools. Defense tech profit margins expanded by over 2 percentage points in 2025, with another 1.2 points expected in 2026. Software-based defense businesses make fundamentally better money than companies that just bolt together airframes.

That's where names like KTOS (drones), PL (space data), and RKLB (rocket launches) live.

Space is becoming the high ground. Governments and companies are pushing into Earth observation, surveillance, navigation, and lunar infrastructure. The "Orbital Defense" pivot is real satellite protection, and advanced tracking systems are where Northrop and Lockheed are shifting their research dollars.

You're not betting on one mission. You're betting on the build-out of an entire space-based economy.

Sound paranoid? Good. Paranoia is the investment thesis.

On paper, this is designed to swing about 1.5x as hard as the market. In practice:

In a good year for stocks and defense/space, this side bet should beat the market by a healthy margin if the aggressive stocks don't implode individually. In a market crash, expect bigger losses than a regular index fund. The stabilizers won't save you from red days. They just keep your account from reenacting a rocket launch failure in slow motion.

A few ways a sane human might use this:

Want to go more aggressive? Sell some ITA and one of the big contractors. Push those dollars into the smaller, faster-growing names or add a new space stock from your own research.

Want to play it safer? Cut LUNR and shrink RKLB, PL, and KTOS. Move that money into NOC, RTX, LMT, and ITA. You'll drift toward "defense stocks with a space garnish" instead of "space stocks with some adult supervision."

It would be cute to call this a "hedge," but it isn't. It's a concentrated bet on one slice of the market.

Here's the short list:

If you can't stomach a 30–40% drop in this side bet without panicking and selling your core investments, it's too big.

If you want to run with this:

This side bet is not here to replace a diversified core. It's here to give you exposure to a part of the market that is structurally getting paid while the world quietly re-arms and moves the battlefield into orbit.

The machines didn't replace the battlefield. They just made it more expensive.

You're welcome.