Shares of a small Swedish company are leading the European defense sector. Should you buy them?

Shares of Mildef Group, a small Swedish company, became Europe’s highest-performing defense stock in 2026, Bloomberg noted. The company’s CEO attributes this growth to a “third wave” of military spending, which is focused on computer systems and drones rather than tanks and ammunition.

Shares of Mildef, which manufactures ruggedized laptops, servers, and monitors for armored vehicles, have risen 73% since the start of the year amid rising military spending in Europe. While the upward trend in the stock prices of defense giants such as Rheinmetall and Saab has stalled this year, Mildef’s price growth has only accelerated. Rheinmetall’s stock has fallen 26% since the start of the year, after gaining 150% in 2025. Saab’s stock has risen 23%, whereas in 2025 it surged by approximately 160%.

Geopolitical uncertainty and high valuations in the defense sector are driving volatility in those stocks, Bloomberg notes. This week, Mildef shares fell about 9% amid a broad market decline, although the company still remained the sector’s top performer.

“The first wave following Russia’s invasion of Ukraine in 2022 was an emergency mobilization to meet immediate needs: ammunition, soldiers’ boots, and fuel for tanks,” Mildef CEO Daniel Junggren said in an interview with Bloomberg. This was followed by a series of major contracts signed with leading companies, he added. “We are in the third wave, at the next level of this ecosystem,” Junggren noted.

In recent months, Mildef has received several major orders. In July, the company announced two seven-year framework agreements: one to supply command and communications systems to the Swedish Armed Forces worth up to 1.5 billion Swedish kronor ($160 million), and the other —with the German Armed Forces—worth up to €527 million.

As the focus shifts from traditional military equipment to drones and drone control technologies, rising defense spending is also benefiting other players. Shares of defense technology companies Kongsberg Gruppen and Cohort have risen 48% and 37%, respectively, since the beginning of the year, even though they lagged behind their competitors last year. Senior, a supplier to the aerospace industry, is also among the top performers, with its shares up 51% since January. Exail Technologies, a manufacturer of underwater drones, has increased its market capitalization by approximately 50%: the threat of mining in the Strait of Hormuz has boosted demand for its products. In early July, Thales signed a binding agreement to acquire Exail. Shares of submarine manufacturer TKMS, which received major orders from Germany and Canada, rose 38.6%.

On August 11, Barclays analysts led by Afonso Osório gave a positive assessment of the sector’s outlook, initiating coverage of several major players, but advised taking a selective approach. Osório stated that he expects “greater differentiation as business predictability, order book quality, and companies’ ability to execute their stated plans become increasingly important factors for investors.”

On July 22, analysts at DNB Carnegie raised their price target for Mildef shares from 200–250 kroner to 230–285 after the company secured a record-breaking contract in Germany, according to MarketScreener. This target implies a 9.6–35.8% increase in the stock price relative to the latest closing price.

According to DNB Carnegie, the seven-year framework agreement with the Bundeswehr, combined with previously announced contracts, increases the transparency of the company’s order portfolio. Deliveries under the first contract are scheduled to be completed in 2027.

Three analysts are tracking Mildef shares, and all of them recommend buying them.

This article was AI-translated and verified by a human editor