The report highlights a dramatic increase in global military expenditures, which are projected to reach $2.7 trillion in 2024, accounting for 2.5% of the global GDP. This marks a 9.4% increase from the previous year, representing the steepest rise in military spending since the Cold War. Beyond traditional expenditures on weapons and vehicles, the report underscores the growing importance of defense technology and dual-use innovations—such as satellite surveillance, autonomous monitoring, and cyber defense—as essential components of national security. These technologies are crucial for protecting societies from both environmental disruptions and geopolitical shocks.
The BofA report also outlines various national and regional initiatives aimed at enhancing security and securing resources, all of which are expected to contribute to the rise in global defense spending. In the European Union, officials have announced a plan to invest €800 billion (approximately $939 billion) to bolster spending on air and missile defense, artillery systems, drones, and advanced technologies like AI and quantum computing. Meanwhile, the U.S. has committed to increasing its already substantial military budget. The recently passed One Big Beautiful Bill allocates an additional $150 billion for defense, particularly for the construction of the “Golden Dome for America,” a proposed defense system designed to protect the U.S. from hypersonic and long-range missiles.
The use of drones for military and infrastructure purposes is also experiencing a boom across multiple continents. This growing demand has led to efforts aimed at developing cost-effective methods for mass-producing unmanned aerial vehicles. However, BofA cautions that “a drone bubble may be forming.” Despite this, the bank identifies several stocks with significant potential for growth. Researchers have highlighted some of the largest stocks by market capitalization that are rated as “buy” by the investment bank, offering exposure to at least two of BofA’s key themes: security, technology, and infrastructure.
Among the bank’s stock picks are Parsons and General Dynamics.
**Parsons**: Headquartered about 25 miles west of the Pentagon in northern Virginia, Parsons provides critical infrastructure, cyber, and space solutions for national security and intelligence sectors. Their offerings include counter-unmanned aircraft systems and missile defense integration. Recently, Parsons secured a contract from the National Nuclear Security Administration to support counter-nuclear smuggling systems in the Indo-Pacific region. Additionally, in June, they partnered with IBM to serve as the prime contractor for a new air traffic control system. Notably, Parsons stock has surged 40% over the past six months.
**General Dynamics**: This aerospace and defense company manufactures the U.S. Navy’s submarine fleet through its Electric Boat division. General Dynamics also produces armaments and services for militaries worldwide. Its Bath Iron Works builds surface ships for the Navy, while the Gulfstream subsidiary specializes in luxury, long-range business jets. Based in northern Virginia, General Dynamics has seen its stock rise more than 29% in the past six months, significantly outperforming the S&P 500 during the same period.
