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Rising geopolitical tensions, particularly due to conflicts in Ukraine, Israel, and Sudan, have spurred significant increases in defense spending globally, with the US planning to boost its defense budget to $1.5 trillion by 2027. The MSCI World Aerospace and Defense Index saw a 52.47% return in 2025, benefiting small-cap defense stocks like Firan Technology and Magellan Aerospace, which are well-positioned for growth amidst these developments. Additionally, NATO has committed to increasing member defense spending to 5% of GDP by 2035, while Canada aims to triple its defense budget over the next decade.