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The next generation of defense winners could increasingly resemble software and AI companies instead of conventional arms manufacturers Recent weakness in European defense stocks reflects both a rotation into AI stocks and more selective investors, according to market watchers.

Italian defence group Leonardo is preparing to ‌increase its stake in the company that manages cloud services for Italy's public administration by acquiring an additional 10% from state-owned IT company Sogei, sources told Reuters.

Italian defence and aerospace group ​Leonardo said on ‌Monday it received from Avincis, Europe's largest ​provider of emergency ​air services, an order ⁠for 15 helicopters.

Italian aerospace and defence group ‌Leonardo left its 2026 guidance unchanged on Wednesday, despite a 33% rise in first-quarter core earnings, as the outgoing CEO said any revision should be decided by the incoming management.

Leonardo remains a Buy with a new $70.57 price target, implying 15% upside based on a refined 3-year EV/EBITDA valuation. Leonardo exceeded 2025 guidance, posting 10.9% revenue growth, 18.2% EBITA growth, and 20.5% free cash flow growth, with strong order momentum across segments. Margin expansion is underway, with EBITDA margins expected to rise steadily and free cash flow inflecting in 2027; net cash position…