Looking back on defense contractors stocks’ Q4 earnings, we examine this quarter’s best and worst performers, including Parsons (NYSE: PSN) and its peers.

Defense contractors typically require technical expertise and government clearance. Companies in this sector can also enjoy long-term contracts with government bodies, leading to more predictable revenues. Combined, these factors create high barriers to entry and can lead to limited competition. Lately, geopolitical tensions–whether it be Russia’s invasion of Ukraine or China’s aggression towards Taiwan–highlight the need for defense spending. On the other hand, demand for these products can ebb and flow with defense budgets and even who is president, as different administrations can have vastly different ideas of how to allocate federal funds.

The 14 defense contractors stocks we track reported a satisfactory Q4. As a group, revenues beat analysts’ consensus estimates by 2.1% while next quarter’s revenue guidance was 0.8% below.

While some defense contractors stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 4.6% since the latest earnings results.

Parsons (NYSE: PSN)

Delivering aerospace technology during the Cold War-era, Parsons (NYSE: PSN) offers engineering, construction, and cybersecurity solutions for the infrastructure and defense sectors.

Parsons reported revenues of $1.60 billion, down 7.5% year on year. This print fell short of analysts’ expectations by 4.1%. Overall, it was a softer quarter for the company with full-year revenue guidance missing analysts’ expectations and a significant miss of analysts’ revenue estimates.

CEO Commentary“2025 was a successful year despite a dynamic federal government macroenvironment. We achieved double-digit revenue growth excluding our confidential contract, delivered record adjusted EBITDA and adjusted EBITDA margin, exceeded our cash flow expectation, and secured fifteen contract wins valued at over $100 million for the full year, matching last year's record. These accomplishments validate the strength and resilience of our diversified portfolio. Additionally, we achieved high win rates, maintained strong hiring and record retention rates, were recognized as the number one program manager in the world by Engineering News-Record, and continued to efficiently deploy capital through three accretive acquisitions and increased share repurchases, all while maintaining a strong balance sheet,” said Carey Smith, chair, president and chief executive officer.

Parsons delivered the weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 19.5% since reporting and currently trades at $56.53.

Read our full report on Parsons here, it’s free.

Best Q4: Leonardo DRS (NASDAQ: DRS)

Developing submarine detection systems for the U.S. Navy, Leonardo DRS (NASDAQ: DRS) is a provider of defense systems, electronics, and military support services.

Leonardo DRS reported revenues of $1.06 billion, up 8.1% year on year, outperforming analysts’ expectations by 7%. The business had an exceptional quarter with an impressive beat of analysts’ revenue and EBITDA estimates.

The market seems happy with the results as the stock is up 22% since reporting. It currently trades at $46.54.

Is now the time to buy Leonardo DRS? Access our full analysis of the earnings results here, it’s free.

Weakest Q4: AeroVironment (NASDAQ: AVAV)

Focused on the future of autonomous military combat, AeroVironment (NASDAQ: AVAV) specializes in advanced unmanned aircraft systems and electric vehicle charging solutions.

AeroVironment reported revenues of $408 million, up 143% year on year, falling short of analysts’ expectations by 14.6%. It was a softer quarter as it posted full-year revenue and EBITDA guidance missing analysts’ expectations significantly.

AeroVironment delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. As expected, the stock is down 12.1% since the results and currently trades at $194.83.

Read our full analysis of AeroVironment’s results here.

BWX (NYSE: BWXT)

Contributing components and materials to the famous Manhattan Project in the 1940s, BWX (NYSE: BWXT) is a manufacturer and service provider of nuclear components and fuel for government and commercial industries.

BWX reported revenues of $885.8 million, up 18.7% year on year. This result beat analysts’ expectations by 5.3%. It was a very strong quarter as it also logged a solid beat of analysts’ revenue and EPS estimates.

The stock is up 21% since reporting and currently trades at $240.00.

Read our full, actionable report on BWX here, it’s free.

Leidos (NYSE: LDOS)

Formed through the split of IT services company SAIC, Leidos (NYSE: LDOS) offers technology and engineering solutions such as military training systems for the defense, civil, and health markets.

Leidos reported revenues of $4.21 billion, down 3.6% year on year. This number lagged analysts' expectations by 2.5%. Taking a step back, it was a mixed quarter as it also logged a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ revenue estimates.

The stock is down 11.1% since reporting and currently trades at $156.80.

Read our full, actionable report on Leidos here, it’s free.

Market Update

Late in 2025 into early 2026, there was hand wringing around artificial intelligence. For software companies, the fear was that AI would erode pricing power and compress margins as new tools made it easier to replicate what once required expensive enterprise platforms. Crypto investors had their own version of the same anxiety: if AI agents could trade, allocate capital, and manage wallets autonomously, what exactly was the long-term value of today’s crypto infrastructure?

These concerns triggered a noticeable rotation away from these sectors and into safer havens. But markets rarely dwell on one narrative for long. Spring 2026 came, and the focus shifted abruptly from technological disruption to geopolitical risk. The US’ conflict with Iran became the dominant driver of market psychology, and when geopolitics takes center stage, the script changes quickly. Investors stop debating growth rates and start worrying about oil supply, inflation, and global stability.

Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Growth Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.