DroneShield Ltd (ASX: DRO) shares are spiking higher again in Wednesday lunchtime trade.
The uptick isn't too surprising, given that the counter-drone technology company is one of many ASX defence stocks in the spotlight right now.
Tensions in the Middle East have seen heavy government defence spending as many nations around the world realise that global volatility could well continue, or even escalate further.
At the time of writing, DroneShield shares are up 0.7% to $3.64 a piece. The shares are now up nearly 10% year to date and are 172% higher than this time 12 months ago.
While DroneShield presents a great success story, it hasn't been a smooth ride. After soaring to an all-time high of $6.60 in October last year, DroneShield shares have swung anywhere between $1.16 to $4.74 a piece.
Analysts still tip more upside, around 22%, to an average target price of $4.40 at the time of writing.
The upside is impressive, but there are a few other ASX defence stocks I'd rather buy instead.
Image source: Getty Images
Electro Optic Systems Holdings Ltd (ASX: EOS)
EOS shares are up 1.13% at the time of writing, to $9.81 each. It's a 1.5% decline for the year-to-date, but an enormous 691% higher than a year ago.
The Aussie defence company develops and produces advanced electro-optic technologies, so it has benefited from surging demand for exposure to the defence sector in 2026.
The company has won several major contracts over the past few months, helping build investor confidence, keeping the share price hovering around an all-time high.
Analysts are very bullish on the EOS share price, expecting further upside. All four analysts on TradingView data have a strong buy consensus.
The maximum target price is $16, which implies a potential 63% upside at the time of writing. Even the average $12.79 target price represents a potential upside of 31% from here.
Titomic Ltd (ASX: TTT)
I also like the look of the lesser-known defence stock, Titomic. The company is a high-tech manufacturing company that uses advanced technology to print 3D metal parts on an industrial scale.
These are mainly used in defence, aerospace, mining, and oil & gas to produce things like satellite structures, hypersonic shielding, drone parts, and large structural components.
The company posted its latest quarterly update in January, revealing global expansion plans, new defence contracts, and strong cash reserves.
Titomic also recently announced plans to relocate its corporate headquarters to the US as part of its strategy to grow its defence and aerospace business.
It looks like there is plenty of growth ahead for the ASX defence stock. At the time of writing, Titomic shares are down 3.45% to 28 cents per share. But the shares are still up 14% for the year-to-date and 19% over the year.
Analysts tip a 75% upside to 50 cents per share over the next 12 months.
Austal Ltd (ASX: ASB)
Austal is an Australian-based global shipbuilding company. The company designs and constructs naval vessels, defence surface warfare combatants, high-speed support vessels, law enforcement patrol boats, offshore vessels, and even passenger and vehicle ferries.
The company has secured some big contract wins recently, including a $4 billion contract with the Australian Government in February.
Austal also posted its first-half FY26 results in the same month, revealing a 34.4% year-on-year increase in revenue. Its EBIT also climbed 41.3%, and net profit climbed 21.4%.
Analysts are bullish that the shipbuilding company can keep growing this year. TradingView data shows that three out of six analysts have a strong buy rating on the defence stock. Another two have a hold rating.
The average target price of $6.69 implies a potential 55% upside at the time of writing. Although some think the shares could jump up to 79% higher to $7.71 each.
