4 Best ASX Defence Stocks for 2025: Built for Global Demand and Long-Term Growth
While not as hyped as tech or energy, defence stocks are powering into 2025 on the back of surging military budgets, intensifying global conflicts, and rapid advances in drone and autonomous warfare. With Australia no longer a passive player, local defence innovators are gaining traction with NATO allies and tech-savvy militaries alike.
Here are four ASX-listed defence standouts investors should watch closely, each with a unique edge in the evolving battlefield.
Pure-play counterdrone leader riding global demand surge
No other ASX-listed defence stock screams momentum like DroneShield. With over $161 million in secured revenue for 2025 in just six months, the company is expanding into Europe, the U.S., and Latin America. Its products like the DroneGun, RfPatrol, and DroneSentry-C2 are used by elite military forces to detect and disable hostile drones using AI and smart jamming tech.
The company is investing $13 million in new R&D and manufacturing facilities, tripling its production capacity. With a pipeline worth A$2.41 billion and the biggest contract in its history already secured, DroneShield is not just keeping pace, it is defining the next generation of electronic warfare.
2. Elsight (ASX: ELS)
Unmanned system connectivity for the modern battlefield
Elsight has become the go-to solution for secure, always-on connectivity in autonomous defence platforms. Its AI-powered Halo device bonds cellular, RF, and satellite links into one seamless pipeline, enabling reliable, encrypted control of drones and vehicles even in contested environments.
In 2025 alone, Elsight secured over US$14.7M (A$22.8M) in contracts with a European defence OEM, a 600 percent increase over 2024 revenue. With more than 100 customers, thousands of units in the field, and Lockheed Martin among its design partners, Elsight is positioning Halo to become the standard connectivity backbone for unmanned warfare.
3. Electro Optic Systems (ASX: EOS)
Next-gen remote weapon systems with AI and laser tech
EOS is doubling down on its high-tech portfolio from counter-drone systems and remote weapon stations (RWS) to space surveillance and high-energy laser weapons. After a successful turnaround in 2024, the company now boasts a $136 million contract backlog and over $500 million in opportunity pipeline.
Its latest system, the R500, integrates AI for autonomous target tracking, dual-weapon mounts, and networked warfare. Deployed already in Ukraine and under negotiation in the Middle East, EOS is evolving from a product manufacturer into a global counter-drone platform provider with space control and laser weapons as its next frontiers.
4. Austal (ASX: ASB)
Australia’s global shipbuilding ace attracting takeover interest
Austal builds warships for the U.S. and Australian navies, with operational yards across the U.S., Philippines, Vietnam, and Australia. Its scale and geopolitical footprint have made it an irreplaceable partner in Indo-Pacific maritime strategy.
In 2025, analysts upgraded Austal after its rumoured tie-up with South Korea’s Hanwha, a major global defence contractor. With inclusion in the ASX 200, potential index fund inflows, and defence orders rising, Austal offers a rare blend of dividend-paying stability and takeover speculation. It is a compelling play for conservative investors eyeing the defence boom.
Final Take: Defence Is Quietly Booming
While the glamour sectors swing wildly, defence is where the real money is mobilizing. With a global defence spend expected to hit 3.5 percent of GDP by 2030, Australia’s key players like DroneShield, Elsight, EOS, and Austal are strategically positioned at the intersection of innovation and security.
Each offers exposure to a different part of the defence value chain, from detection and response to autonomy and logistics. Together, they form a strong foundation for any investor looking to capitalise on the new arms race of the 21st century.
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