Industry Overview - The U.S. defense budget continues to increase, with the E.U. also planning a nearly $1 trillion remilitarization program, focusing on artificial intelligence (AI) and drones for military enhancement [1] Company Highlights Dassault Aviation (EPA: AM) - Dassault Aviation, known for the Rafale multirole fighter, has seen its stock rise by 52.94% over the last 12 months, trading at €312.60 ($362.89) as of January 16 [3] - The company is expected to benefit from the E.U.'s rearmament program and has invested $200 million in Harmattan AI to enhance capabilities in electronic warfare, drone interception, and surveillance [6] Howmet Aerospace (NYSE: HWM) - Howmet Aerospace has experienced significant growth, with its stock increasing by 82.81% over the past year, reaching $224.82 [8] - The company's strong performance is attributed to a 14% revenue growth in 2025 and a shift towards higher-margin aftermarkets and critical engine components [9] - The stock rally is expected to continue, especially if the U.S. military budget increases to $1.5 trillion as proposed [10] Mercury Systems (NASDAQ: MRCY) - Mercury Systems specializes in mission-critical processing technologies for defense and aerospace, with its stock rising by 40.99% since the start of 2026, reaching an all-time high of $102.94 [11] - The recent stock surge is driven by a $60 million contract for U.S. strategic and space weapons programs, utilizing Mercury's advanced data processing capabilities [13] - The company is likely to maintain its growth trajectory due to its long-standing government contracts and the duration of the new contract extending through 2031 [14]