European defense stocks are cooling off after the military spending boom. Here's what's next

Analysts say 2026 is likely to be a year of consolidation for the defense sector as the initial excitement around Europe’s higher defense spending fades. Stock performance is expected to shift from broad budget-driven enthusiasm to company-specific fundamentals and execution.

Analysis

Analysts say 2026 is likely to be a year of consolidation for the defense sector as the initial excitement around Europe’s higher defense spending fades. Stock performance is expected to shift from broad budget-driven enthusiasm to company-specific fundamentals and execution.