ASX defense stocks have been experiencing a remarkable surge, as investors eagerly seek to capitalize on the sector's momentum.

ASX Defense Stocks on the Rise

In just the past month, shares of DRONESHIELD LTD have escalated by 76.99%, reaching $5.77 per share at present. Over the year, this counter-drone technology company's stock has skyrocketed by 394.83%.

While DroneShield stands out, other ASX-listed defense stocks have also witnessed significant share price increases this year.

ELECTRO OPTIC SYSTEMS HOLDIN is another strong performer. Though its share price has dipped 4.33% to $7.00 over the last month, it has still surged by 335.4% over the past year.

Meanwhile, shares of TITOMIC LTD have climbed 12.96% in the past month, now up 117.86% for the year. Currently, Titomic's share price is 30 cents per share.

AUSTAL LTD , a global shipbuilding company based in Australia, saw its share price fall by 12.47% to $7.03 over the past four weeks. Despite this, it remains 130.49% higher for the year.

Vaneck Global Defence Etf shares rose by 5.91% over the last month, now standing at 82.52% higher than this time last year, trading at $39.06 per share.

Currently, ARMR is priced at $26.07, increasing by 1.47% over the month and 67.44% for the year.

The question remains: what is driving this sudden popularity surge?

Reasons Behind the Momentum

Key among the reasons is ongoing geopolitical uncertainty. Heightened global tensions largely stem from trade relationships, with potential disruptions to supply and demand chains.

The US trade tariffs have escalated global trade tensions. Meanwhile, China's status as both Australia's largest trading partner and significant competitor introduces direct geopolitical risks. Australia's involvement in Indo-Pacific tensions could further impact trade routes and defense assets.

Governments are thereby compelled to increase defense spending, investing in drone technology, AI, electronic warfare capabilities, and equipment like missiles and submarines.

Earlier this year, Australia's government announced an additional $50.3 billion investment in the Australian Defense Force, promising a steady revenue stream for companies in the sector, benefitting investors.

Will ASX Defense Shares Continue Their Upward Trajectory?

Analysts believe so.

Bell Potter recently highlighted Droneshield shares as a top buy, citing its strong position in a flourishing industry.

The brokerage has also revised its price target on EOS shares to $11.20, suggesting a potential 60% upside for investors. Similarly, Bell Potter forecasts a 66.7% increase for Titomic shares over the next year, to 50 cents a share.

Macquarie maintains a $7.95 target price and a neutral rating on Austal shares, representing a possible 13.1% upside over the coming year.

Both the DFND and ARMR ETFs were recently underscored by a fellow industry writer as strategic defense ETF choices for investors.

These ETFs focus on companies headquartered in NATO or allied nations, giving investors access to core businesses within the global defense supply chain, encompassing both traditional hardware like fighter jets and advanced platforms in software, space, and next-gen intelligence.