European defence: Strong demand, lower valuations and the next phase of growth
European defence spending continues to translate into strong order intake and revenue growth. Portfolio Manager Stian Ueland discusses valuations, emerging technologies and where opportunities could develop beyond 2030.
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Strong demand is translating into growth
Europe’s defence build-up continues to create a favourable demand environment for the industry. In the webinar, host Jørgen Johan Mørk is joined by Stian Ueland, Lead Portfolio Manager of the DNB European Defence fund, to assess how the investment case has evolved since the fund was launched around 18 months ago. Ueland highlights order growth of up to 80–100% year-on-year for some major defence companies in the first half of 2026. Importantly, these orders are increasingly translating into revenues, with most of the companies presented growing revenues by more than 20% annually.
Looking beyond 2030
While confidence in growth towards the end of the decade has increased, attention is shifting to what happens after 2030. Ueland expects today’s inventory build-up to moderate over time, while capabilities including air defence, electronic warfare, airborne early warning and space become increasingly important. This evolution also raises a broader investment question: can established defence companies innovate quickly enough, or will smaller, more agile specialists capture a greater share of future growth?
Valuations have moved lower
Despite strong fundamental growth, valuations across parts of the sector have declined. Rheinmetall is highlighted as an example, with its P/E multiple falling from above 40 around the fund’s launch to the 20s, while earnings have continued to grow strongly. For Ueland, this disconnect between operational performance and investor sentiment creates a different valuation starting point than 18 months ago.
A broader ecosystem of opportunities
The discussion also explores opportunities among small and mid-cap companies, including component suppliers, electronics manufacturers and communications specialists. Space, IPO activity and consolidation could further reshape Europe’s defence ecosystem, although the fund’s focused exposure also means investors should expect higher volatility than in broader European equity markets. In the webinar, Ueland and Mørk discuss these developments in greater depth and explain how they are influencing the fund’s positioning and outlook.
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DNB European Defence
Invest in companies that contribute to Europe's security and preparedness.