Global defense companies posted a record $700 billion in combined defense revenue in 2025, up from $629 billion the previous year, as higher military spending in the United States and Europe coincided with production bottlenecks becoming a key problem for NATO countries. The figures are reported in the latest Defense News Top 100, while the accompanying Defense News report describes manufacturing constraints across Western nations.

U.S. companies held the top four positions in the ranking. Lockheed Martin led with $72.1 billion in annual defense revenue, followed by RTX at $46 billion, General Dynamics at $39.4 billion and Northrop Grumman at $37 billion. BAE Systems, based in Britain and with a sizable U.S. operation, ranked fifth with $36 billion.

Boeing’s defense segment rose to sixth place with $35.7 billion, while L3Harris moved to eighth with $17.4 billion. China’s Aviation Industry Corporation of China ranked seventh with $32.3 billion. European companies also appeared among the leading firms, with Leonardo, Airbus and Thales placing ninth, 10th and 12th, respectively. Germany’s Rheinmetall reported $11.2 billion in 2025 annual revenue, up from $8.3 billion a year earlier, and climbed to 15th place from 18th.

The spending increase is especially significant in the United States. The 2025 Reconciliation Act is expected to direct most of its $156 billion toward acquisition, in addition to a regular defense budget of about $900 billion. Mark Cancian, a senior adviser in the defense analysis program at the Center for Strategic and International Studies, said the enacted money could take years to reach companies’ financial statements but would provide “a big boost for many companies.”

European military spending has risen sharply since Russia’s full-scale invasion of Ukraine in February 2022. National budget increases and growing European Union involvement in financing and brokering joint procurement have increased defense-industry revenue, while many governments have favored equipment made within Europe. Rheinmetall’s growth reflects that broader trend, alongside the company’s work across land, air, naval, space, cyber and unmanned systems and in explosives and ammunition.

Demand for artillery shells, missiles and air-defense interceptors has grown across NATO countries, but supply remains uneven. Defense companies have expanded production arrangements for artillery shells, while interceptor missiles and drones remain insufficient for defending Ukrainian cities against Russian missile attacks. The Patriot air-defense system remains associated with U.S. firms, prompting European and Ukrainian officials to consider alternatives involving Israeli companies, pan-European MBDA and Germany’s Diehl. Diehl rose to 58th place in the ranking from 82nd the previous year.

Naval shipbuilders are also benefiting from large modernization programs. Huntington Ingalls rose to 13th place from 16th, with $12.3 billion in annual revenue, while South Korea’s Hanwha moved to 16th from 22nd, with $10.4 billion. The U.S. Reconciliation Act allocated $29 billion to shipbuilding alone, while order books have extended into the 2030s or beyond. Cancian said the government has committed more shipbuilding money than the industry can currently absorb and is discussing another shipyard to expand capacity.

The combination of higher revenue and constrained manufacturing capacity is pushing companies and governments to seek new production arrangements. In Europe, some automotive companies and rail-car makers have converted factory floors to produce drones and counter-drone equipment. The developments underscore the central challenge accompanying the defense industry’s 2025 growth: securing sufficient manufacturing capacity to deliver equipment as military spending continues to increase.