The year 2025 was another record setter for global defense companies, so much so that production bottlenecks in Western nations — not the usual industry lamentations about lacking government spending — began creeping up as the key problem many NATO countries are facing today.
Companies in the United States and Europe rode a wave of significant defense-spending increases on both sides of the Atlantic. In Europe, individual national budget increases, as well as the European Union’s increasing involvement in brokering and financing joint procurement, continued to increase the revenue of defense industry players large and small.
In the United States, the 2025 Reconciliation Act is set to pump most of the legislation’s total $156 billion into acquisition — on top of the regular defense budget of roughly $900 billion for that year.
“Now, it’ll take years for that enacted money to actually flow to the companies and to their financial statements,” said Mark Cancian, a senior adviser in the defense analysis program at the Washington-based Center for Strategic and International Studies. “But it will be a big boost for many companies.”
Click here to view the 2025 Defense News Top 100
In Europe, the trajectory is perhaps more immediate, as governments spooked by Russia’s full-scale invasion of Ukraine in February 2022 began dialing up their military expenditures drastically years ago.
Besides absorbing the overall plus-up in the amount of money available, companies on the continent have rewired their business strategies to align with a preference for European-made equipment by many European governments, though the massive influx of cash on all sides obfuscates whether European companies have meaningfully cut into the bottom lines of U.S. defense giants.
More money on both sides of the pond
The latest Defense News Top 100 ranking of global defense companies bears out the overall upward trend, with companies posting higher annual defense revenues, a combined $700 billion compared with $629 billion in the prior year, a 11.3% increase.
The first four spots of our latest ranking continue to be in the hands of U.S. firms, with Lockheed Martin in the top spot with $72.1 billion in annual defense revenue, followed by RTX ($46 billion), General Dynamics ($39.4 billion) and Northrop Grumman ($37 billion), in that order.
Britain-based BAE Systems, which has a sizable U.S. operation, is the first non-American company in the lineup, creeping up one spot into number five over last year’s ranking, with $36 billion in revenue reported.
Boeing’s defense segment similarly climbed one position, into slot number six with $35.7 billion in revenue, as did L3Harris ($17.4 billion), which now places eighth.
In between sits a Chinese entrant, Aviation Industry Corporation of China, at $32.3 billion.
Click here to view the 2025 Defense News Top 100
On the heels of that company begins a lineup of firms from all over the world, with European outfits continuing to inch upwards — the big players Leonardo, Airbus and Thales placing 9, 10 and 12, respectively.
Perhaps no company represents the European defense uptick as much as Germany’s Rheinmetall, which reported $11.2 billion in 2025 annual revenue, up from $8.3 billion in the previous year. The company now sits at number 15 on the list, up from 18 in the prior year.
The firm has, over the years, branched out its operations into virtually all domains of war — land, air, naval, space, cyber and unmanned — from Europe to Australia, and has embraced the formerly low-brow segment of explosives and ammunition.
That category, which includes artillery shells, missiles and air-defense interceptors, has seen unprecedented demand in all NATO countries, based on the experiences since Russia’s full-scale invasion of Ukraine in February 2022.
Air defense competitions on the rise
The air defense category is also where the biggest shortfalls lie. Companies have expanded their supply chain setups in recent years to build artillery shells, urgently needed in Ukraine to shoot over immediate front lines’ robot-dominated no-go zones for infantry.
But what’s still lacking are sufficient interceptor missiles and drones to defend against Russian missiles fired at Ukrainian cities.
With the Patriot air defense complex — radars, launchers and interceptors — in the hands of U.S. firms, European and Ukrainian officials have begun thinking through alternatives to the scarce equipment.
Offerers include the Israeli companies involved in that country’s anti-missile architecture, with Elbit ranking 21 on the list, Israeli Aerospace Industries at 27 and Rafael at 30, as well as pan-European firm MBDA at 26 and Germany’s Diehl at 58, up from 82 last year.
Companies with a naval shipbuilding portfolio, such as General Dynamics, Huntington Ingalls (ranking 13, at $12.3 billion annual revenue, up from 16) and South Korea’s Hanwha (rank 16, at $10.4 billion, up from 22), have been lifted by a favorable tide of capital-intensive naval modernization projects worldwide.
In the U.S., defense officials and lawmakers have envisioned a new armada of warships and icebreakers, dedicating a whopping $29 billion for shipbuilding in the 2025 Reconciliation Act alone.
“The Biden administration, and now the Trump administration, have just been pouring money into shipbuilding — way beyond what the industry can absorb,” said Cancian. “And then they’re talking about building another shipyard to produce all these ships that have now been funded,” he added, leaving shipbuilders with order books filled into the 2030s or beyond.
Defense spending as an ‘engine’?
Production bottlenecks for defense components, combined with economic woes in civilian industry sectors, have led to some new creative arrangements.
In Europe, some automotive companies and rail car makers have turned their factory floors into production sites for drones and counter-drone equipment.
The rush to re-arm, based on the worry that Russia might try a Ukraine-style attack elsewhere, has prompted political leaders in Europe to tout what they consider secondary economic effects of the defense bonanza.
Defense officials in the U.K. published figures in August, for example, that said the 2024-25 period saw British weapons and ammunition manufacturing jobs rise by 51%, “part of a wider 26,000 increase” in defense-supported roles nationwide.
Click here to view the 2025 Defense News Top 100
“The increase underlines defense as an engine for growth and the move towards a resilient industrial base, proving that investment in the U.K.’s security is investment in the U.K.’s prosperity,” reads an Aug. 20 statement by the Ministry of Defence.
Some Turkish companies, meanwhile, representing a country with a government mandate for making defense equipment at home rather than importing it, made the latest Top 100 list again, improving positions in some cases. Aselsan jumped from spot 43 to 40 on roughly $4.5 billion in reported annual revenue, and Roketsan gained seven ranks, on $2.4 billion, landing at spot 64.
Similarly, Polish state-owned armaments group PGZ jumped from rank 54 in 2024 figures to number 41 in the latest accounting, based on $4.4 billion in revenue last year.
The Polish government has set out plans to create one of NATO’s most powerful armies in Europe, and local weapons programs are typically designed to include Warsaw’s go-to producer as a key partner.
Meanwhile, the collection of Ukrainian defense companies under the umbrella of Ukroboronprom improved their ranking to spot number 36, up from 49 last year, with a reported revenue of $4.6 billion in 2025.
The country’s defense industry over the past years has put the Kyiv government in a position to provide armaments to its forces that the country previously had to import, often with operational limitations attached.
So much has the Ukrainian defense industry gained in expertise that allied militaries are itching to incorporate its know-how into their own supply chains.
Looking ahead, there is more spending expected, and more business for relevant defense companies, in the field of air and missile defense, said Cancian. Much of that will be connected to whatever the Trump administration’s Golden Dome program will entail, he noted.
Golden Dome wildcard
The controversial Golden Dome effort will consist of a sweeping suite of sensors and interceptors — stationed on Earth, in space and everywhere in between — that would make the United States almost impervious to aerial attacks of any kind, the theory goes.
Details have been scant on its exact architecture, and companies are searching for avenues into what they suspect will be a generational chunk of government spending in the hundreds of billions of dollars.
“We still don’t really know what it is,” Cancian said, adding the lack of clarity could make the whole project an increasingly hard sell as time goes by.
On the whole, the analyst said, there is so much defense spending on the books that the U.S. government, for its part, isn’t forced to choose between buying legacy weaponry and new technology.
“The thing that struck me most — I come out at this from a program budget perspective — is that there was enough money to do both,” he said.
Turning the influx of defense money into meaningfully improved defenses will be a top oversight job for politicians. And industry will have to be disciplined to get its ducks in a row to contend with order backlogs and production bottlenecks.
As PricewaterhouseCoopers analyst Scott Thompson noted in a recent performance analysis of the aerospace and defense sectors, “In a market where demand is not the constraint, execution is the differentiator.”
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