Trump’s Venezuela Strike Puts These 3 ASX Defence Stocks in Focus

ASX Defence Stocks in focus after Venezuela raid

The world woke up to a different geopolitical reality this weekend. US forces captured Venezuelan President Nicolás Maduro in a surprise military operation, the kind of bold move that hasn’t happened in decades.

President Trump declared America would ‘run’ Venezuela, though Secretary of State Marco Rubio later clarified the US would run ‘policy’ rather than govern directly, using an oil blockade as leverage to press for changes. This signals a more aggressive US foreign policy stance, and that’s good news for companies making defence equipment.

DroneShield (ASX: DRO), Electro Optic Systems (ASX: EOS), and Austal (ASX: ASB) are three ASX defence stocks already riding a wave of record military spending. The Venezuela action adds another reason for governments worldwide to keep their defence budgets growing.

What are the Best ASX Defence Stocks to invest in right now?

Check our buy/sell tips

Why Defence Spending Is Unlikely to Slow Down

Global military spending hit US$2.7 trillion in 2024, the biggest jump since the Cold War ended. Every single NATO country increased its defence budget last year, and all 32 members are now expected to meet the 2% of GDP spending target in 2025 for the first time ever.

But here’s what matters for ASX investors: NATO has agreed to push the target to 3.5% of GDP by 2035. That means years of contract opportunities ahead. Counter-drone systems, remote weapons, and naval vessels are all in high demand, exactly what these three Australian companies specialise in.

3 ASX Defence Stocks in Focus

DroneShield (ASX: DRO): High Growth, High Expectations

DroneShield shares extended their New Year rally, surging 15% on January 6 to A$3.82, as investors bet the US-Venezuela situation could lift demand for counter-drone solutions. The counter-drone specialist enters the year with A$97.7 million in confirmed orders, its biggest-ever starting backlog. Management says there’s another A$2.5 billion in potential deals they’re working to close.

Bell Potter has a buy rating with a A$4.40 target, suggesting 33% upside. The catch? DroneShield trades at 28 times sales versus an industry average of about 5 times. That premium valuation means the company needs to keep winning contracts to justify the price.

Electro Optic Systems (ASX: EOS): The Turnaround Story of 2025

Electro Optic Systems might be the most impressive transformation among ASX defence stocks. A year ago, the company had A$136 million in orders. Today, that number has tripled to over A$400 million.

December was massive for EOS. The company landed roughly A$185 million in new contracts, including a US$22 million deal with General Dynamics to supply weapons systems for US Army vehicles. That’s a breakthrough into the world’s largest defence market. The stock rose by over 100% in recent weeks as investors recognised the backlog growth.

Austal (ASX: ASB): Steady Returns With AUKUS Backing

Not every investor wants the volatility that comes with smaller defence plays. Austal offers a different profile: a A$13.1 billion order book stretching 10 years, 503% profit growth in FY25, and direct exposure to the AUKUS submarine program.

The shipbuilder was named Australia’s Strategic Shipbuilder in August 2025 and has 51 vessels under construction. With A$584 million in cash, Austal provides defence exposure without the wild share price swings.

The Investor’s Takeaway

The Venezuela operation won’t single-handedly drive these stocks higher. But it reinforces a bigger trend: governments are spending more on defence, and that spending looks set to continue for years.

DroneShield offers the highest growth potential but demands execution. EOS has proven it can win contracts and enter new markets. Austal delivers steadier returns backed by long-term government work. With NATO committed to higher spending and counter-drone tech in global demand, ASX defence stocks look well-positioned for 2026.