Defense Repositioned: Investing Amid Geopolitical Fragmentation and Rising Security Spend

In this June 2025 commentary, the BlackRock Investment Institute examines how deepening geopolitical rifts are reshaping capital flows and sector leadership, with a growing emphasis on defense, AI, and infrastructure.

• Rising geopolitical fragmentation and the emergence of global blocs are fueling record-high defense spending—set to surpass 3.5% of GDP in Europe post-NATO Summit.

• The U.S. remains central, both as the largest defense spender and home to key defense tech innovators, offering relative stability and opportunity.

• Selective exposure to defense equities, private infrastructure, and AI-linked tech is advised, given sector rallies and fiscal constraints.

Explore the full report for granular regional views and positioning strategies that align with this evolving mega force.