The United States is already the undisputed leader in global defence spending. Its defence budget is larger than the next several countries combined, giving the US defence industry a scale advantage that is difficult to replicate.
But US defence spending is set to move higher as Washington responds to a more contested geopolitical environment, from great-power competition to the lessons being drawn from Ukraine and the Middle East.
The US defence budget for the 2027 fiscal year will potentially be $1.45 trillion, the largest defence budget ever, representing a roughly 45% increase from the previous year.
At the same time, the annual increase in the US defence budget alone is greater than the total military spend of the next four largest spenders within NATO.
NATO leaders will meet in Ankara on 7–8 July at a critical moment for European and Global security. The summit comes after last year’s historic agreement for NATO members to spend 5% of GDP on defence and defence-related priorities such as cyber, but also at a time of growing strain within the alliance.
Questions over US troop commitments in Europe, divisions over the Iran conflict, and the future of support for Ukraine have all raised fresh doubts about NATO unity.
Join HANetf for a timely investor webinar as we dissect the outcome of the Ankara summit and what it could mean for defence markets.
World’s largest defence market
The US remains by far the world’s largest defence spender, with a proposed $1.5 trillion national defence budget for 2027. This supports exposure to the deepest defence market globally, across major platforms, cyber security, space, advanced systems and defence technology.
Home to next-generation defence technology leaders
The US is home to many of the companies shaping the next phase of military capability. The Pentagon is accelerating the adoption of autonomy, cyber-defence, software and other advanced technologies, while working with both established contractors and newer defence technology firms.
Strengthening the defence industrial base
US defence policy is increasingly focused on supply-chain resilience, production capacity and reducing reliance on narrow supplier bases. This broadens the investment case beyond the largest prime contractors to companies providing components, software, electronics, systems and mission-critical technologies.
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The Pentagon is putting greater emphasis on autonomous systems, cyber defence, space, secure communications, advanced sensors and more resilient supply chains. These priorities reflect a military that is trying to move faster, adopt new technologies and reduce dependence on a narrow group of suppliers.
For investors, this means the US defence opportunity is not limited to the traditional prime contractors. Established defence companies remain central, but rising budgets and changing procurement priorities may also support specialist firms providing the technologies, components and systems needed for the next era of defence.
For illustrative purposes only Source: Department of War, FY2027 Budget Request Overview Book. Figures are total DoW budget authority, current dollars. FY2027 is request. NATO member spend is from SIPRI 2025 Global Military Expenditure database (Germany; UK; France; Italy)
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