US President Donald Trump will meet with Russian President Vladimir Putin in Alaska this Friday in order to talk about a possible resolution of the conflict in Ukraine.
This is the first time the leaders have met in person since Russia invaded the country in full force in 2022.
Although regional defense stocks first declined, they rose on the news of this meeting. Analysts say that the meeting, regardless of its outcome, could strengthen the long-term momentum in Europe’s defence sector.
The meeting was a positive one for Saab, Thales and other key players.
The Trump-Putin Meeting will Benefit European Defense Stocks
European stocks in defense are poised to gain, whether Friday’s meeting ends with a truce or a deadlock.
NATO will be more urgent to bolster its deterrence and replenish weapons if the negotiations fail.
Even a peaceful deal could leave Europe with a strong Russian military, which would prompt sustained investments in infrastructure for defense.
VanEck’s Dmitrii Ponomarev points out that “stockpiles do not magically replenish” and the pivot of spending 5% on defense in this region suggests a shift.
Both scenarios support long-cycle efforts, modernization, and multiyear procurement, making diversified defence firms appealing regardless of short-term volatility.
Here’s a look at why the Swedish-based Saab, and the French-based Thales are particularly attractive as possible investments following the Trump-Putin summit.
Saab AB
Saab, the Swedish defense company, is a major beneficiary of Europe’s rearmament push. Michael Johansson, CEO of Saab told CNBC recently that “governments will not step back and declare it over” even with a truce.
Saab’s portfolio includes air defense, autonomous systems and surveillance. These are areas that are central to NATO’s modernization objectives.
Even if the urgency of the project fades, the company will still be able to generate revenue due to its exposure in long-cycle contracting and maintenance services.
Saab shares are poised to double in value by 2025, and there is a strong interest from institutions. This stock has both strategic and momentum relevance.
Any pullback in the European defense building program should be viewed as an opportunity for investors to gain exposure.
Saab’s shares also pay out a current dividend yield of 0.38 percent.
Thales SA
Thales, a French defense stock, is a standout among European stocks. It offers exposure to cybersecurity, military, and aerospace systems.
Investors have confidence in the long-term potential of this fund, as it is included in VanEck’s Defense ETF worth $6.9 Billion.
Thales is a beneficiary of the European shift towards self-reliance, with government prioritizing digital warfare and modernization. Even if the Trump-Putin Summit is a success, it won’t eliminate the need for strategic upgrades and replenishment – where Thales excels.
The company’s pipeline is robust and its revenue streams are diverse, so it can absorb volatility in the short term and take advantage of multi-year cycles for procurement. For long-term investors, Thales stock remains a compelling play.
At the time this article was written, it did not offer a dividend.
The first to report that the post-Trump-Putin meetings will benefit two European defence stocks was ICD
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