ASX defence stocks in momentum

The defence sector is seeing strong growth because global security spending is rising which has created major opportunities for the following ASX defence stocks that are securing high value contracts and are positioned for significant growth ahead.

Elsight Limited (ASX: ELS) 

has shown exceptional progress lately and is one of the best ASX defence stocks because it benefits from higher global defence spending and rising demand for secure connectivity solutions.

The company in 2025 reported exceptional financial performance as revenue rose to US$22.8 million from US$2.0 million while net profit reached US$7.48 million which shows a clear return to profitability.

Its margins are very strong. Gross margins are around 77% which reflects the high value and mission critical use of its Halo platform.

A strong balance sheet supports the business because it holds US$59 million in cash with no debt which allows flexibility for expansion and product development.

Growth prospects remain strong as defence contracts increase and new products such as Aura enter the market while adoption of autonomous systems rises which could help Elsight deliver strong growth in 2026 and become a key player in next generation defence technology.

DroneShield Limited (ASX: DRO) 

has had a phenomenal growth story so far and is becoming one of the best ASX defence stocks because of massive demand for counter drone and AI based security solutions.

The company in FY2025 reported record financial results with revenue of $216.5 million which was up 276% year-on-year and underlying profit before tax of $33.3 million with a margin of 15%.
A strong balance sheet supports this growth because cash stood at $209.4 million while operating cash flow was positive at $15.9 million which provides flexibility for expansion.

Market performance also reflects confidence as the stock has gained about 8% in the last one week while it has risen 27% over the past one month.

Austal Limited (ASX: ASB) 

is now recognised as one of the best ASX defence stocks because it holds a strong position as a global shipbuilder and has rising exposure to long term defence contracts.

The company in FY26 H1 reported revenue of $1.1 billion which increased 34% while EBIT reached $60.3 million with a rise of 41% and NPAT came in at $30.5 million which shows solid operational performance.

EBIT margins stand at 5.4% which shows improving profitability and the balance sheet remains strong because it is supported by net cash of $241.4 million which allows further investment in expansion.

The future outlook is strong because global defence spending is rising while AUKUS related opportunities and a large naval contract pipeline support long term revenue visibility and growth.

Austal could see steady earnings growth in 2026 and beyond because of its large order backlog along with expanding manufacturing capacity and strong government relationships.

(Source: Company Reports)