We recently published a list of Why These Defense Stocks Are Declining This Week. In this article, we are going to take a look at where AeroVironment, Inc. (NASDAQ:AVAV) stands against other defense stocks that are declining this week.
European defense stocks have rallied this year, with several companies in the sector registering double-digit returns, and some even reaching record highs, as regional capitals unlock billions to supercharge their militaries.
The United States has repeatedly called for Europe to spend more on defense while stressing that Washington could no longer foot the bill. EU leaders met in Brussels earlier this month to discuss the ‘ReArm Europe Plan’, which will allow the bloc to mobilize funds up to $860 million through bonds and relaxed rules on borrowing and spending.
A conservative victory in Germany has further added to the momentum. Last week, the country’s parliament voted in favor of a historic fiscal package, which includes reforms to long-standing debt policies to allow for higher defense spending.
Several Asian contractors are also benefiting from Europe’s defense splurge. A leading aerospace and defense company in South Korea has gained over 92% year-to-date, driven by demand for weapons from NATO countries like Poland and Romania. On March 20, The Economic Times reported a 20% increase in India’s defense and shipbuilding stocks, in response to Germany’s big military plans.
In contrast, America’s defense sector has wobbled this year, due to uncertainty around the country’s future military expenditure. The creation of DOGE has also reshaped investors’ views of the industry. While Trump’s pivot on Ukraine has helped fuel the defense industry elsewhere, American stocks in the sector have lagged behind and failed to capitalize on the global rally.
According to a Financial Times report on February 24, shares of the six largest American defense companies had fallen 4% under Trump’s second term. Whereas, Europe’s top defense groups returned gains of around 40% during the same period.
Despite a grim outlook, Citi analyst, Jason Gursky, is urging investors that this is the right time to buy American defense stocks. He argues that as long as the global threat environment remains and the United States maintains its leadership role, regardless of whether it is as a sole superpower or as a power in multi-polar world order, defense spending is expected to remain robust, which would benefit stocks in the sector.
With that said, let’s now head over to the list of defense stocks that are declining this week. Please note that the stocks listed are based on one week’s performance. Our analysis does not reflect the prospects of the company. Their share price could go high or low in the future, depending on the external market conditions, industry-specific challenges, and the company’s capabilities. Additional research and caution are advised before making investment decisions.
A rocket on its way to the sky, representing the power of the company's unmanned aircraft systems.
Methodology
For this article, we went through screeners to see how stocks in the aerospace and defense industry performed over the past week (March 17-21). From there, we picked the top 10 defense stocks with the highest percentage decline in share price during this period. All data is as of the close of business on Friday, March 21, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
AeroVironment, Inc. (NASDAQ:AVAV) designs and manufactures unmanned aerial vehicles, ground robot systems, and loitering munition systems. It is among the defense stocks that are declining this week, with a dip of 3.43% during the period.
The stock has slumped by 19.24% over the past month, with a major fall after the announcement of third-quarter results for fiscal 2025 on March 4. AeroVironment, Inc. (NASDAQ:AVAV) reported a net revenue of $167.6 million, down 10% from last year. It also recorded a net loss of $1.8 million for the quarter, compared to a net income of $13.9 million in the prior year’s period.
Following the earnings call, Baird lowered AeroVironment, Inc. (NASDAQ:AVAV)’s price target to $146 per share from $210. Jefferies also revised the stock’s price target from $230 to $190.
Overall, AVAV ranks 9th among the defense stocks that are declining this week. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVAV but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
