Wall Street sees the Venezuelan strike as the latest sign of a tide-change in U.S. foreign military operations under President Donald Trump — and there's implications for defense stocks. Trump on Saturday announced the U.S. captured Venezuelan President Nicolas Maduro and his wife during a strike and was bringing them to the U.S. on charges of narco-terrorism. The U.S. could "run" the South American country until a proper political transition could be completed, Trump said following the military operation. Now, investors are wondering if Trump's actions and statements — in Venezuela, as well as other countries like Iran — portend a change to an aggressive military policy that involves forceful strikes first, followed by diplomacy later. If so, that could lead to an increase in defense spending, in turn boosting stocks in the sector. "The big takeaway for investors is Trump is growing much more comfortable with and confident in the use of military force," Piper Sandler's Andy Laperriere wrote to clients. "His first year in his second term was characterized by boundless energy and risk-taking, and that has been extended to the use of the military." Months before the Venezuela operation, Trump bombed Iran and more recently said the U.S. could "knock the hell" out of the Middle East country if it rebuilds its nuclear program. Trump has for months floated taking over Greenland , which he said this weekend was a key move from a national security standpoint. Additionally, Laperriere noted that Trump launched Christmas Day attacks on Islamic terrorists in Nigeria and has had drones flying over Mexico to track cartel activity. Trump appears interested in shifting back to a Monroe Doctrine-era stance, as well as lessening global importance of countries like Russia, China and Iran, the analyst said. Trump's statements about running Venezuela garnered widespread criticism from political opponents and world leaders. Concern has centered on if the U.S. is engaging in a long-term nation-building exercise rather than a one-off military operation. Evercore ISI Matthew Aks said clients should interpret Trump's statements as a "colorful metaphor and negotiating tactic." Trump may be speaking this way to push Maduro's allies still in power in the nation to give up control, Aks said. "For now, investors are left to navigate a now-familiar landscape of Trump's likely purposeful ambiguity around his next steps," Aks said. "Our instinct is that Trump is generally not interested in full-scale boots-on-the-ground regime change like the Iraq and Afghanistan wars he has long criticized." Positive for defense Following the latest strike, the Street is keeping a close eye on what will happen with military spending. Typically, analysts expect an increase in threats of military action to result in higher budgets, according to Bernstein analyst Douglas Harned. Harned said he was aware of U.S. defense and engineering consulting firms already developing proposals around the future of Venezuela. Trump has said U.S. oil companies will invest billions into the crude-rich nation following Maduro's ouster. It's unclear which governmental organization will oversee U.S. planning, especially following Trump's steep cuts to the U.S. Agency for International Development , Harned said. However, he said some form of U.S.-based spending would likely be required to support Venezuela going forward. That could come directly out of government security budgets or from oil companies looking to get a foothold in the country, he said. But Harned said any spending would likely result in an increase to budgets, with the White House currently unlikely to walk back other initiatives such as the so-called golden dome or increasing shipbuilding . Depending on how or if a plan takes shape, Harned said defense-related stocks CACI International , AECOM , KBR and Parsons could see upside. Global defense stocks broadly advanced in early trading on Monday. The iShares U.S. Aerospace & Defense ETF (ITA) added more than 1% in the session to a new all-time intraday record. The ETF soared more than 47% in 2025, marking its fifth-straight winning year. ITA ALL mountain The ITA ETF, all-time chart "Almost always, when threats of military action increase, defense budgets move higher, leading to positive trends for defense stocks," Harned wrote to clients. The biggest gainers in the ITA ETF Monday included drone plays AeroVironment and Red Cat holdings with the companies making the technology seen as crucial to Trump's new quick and forceful strike policy. AVAV 1D mountain AeroVironment, 1 day Major defense stocks General Dynamics and Lockheed Martin were both up more than 2%. Jefferies analyst Sheila Kahyaoglu noted that foreign military spending was already on the rise when looking at the three-year period between 2023 and 2025 versus 2020 to 2022. The South America region including Venezuela has not historically been a large contributor to that spending, she said. A driver of spending going forward could be tied to operational costs for the U.S. naval fleet, she said. Trump has built up a heavy military presence in the region over recent weeks. As the Street wonders what Trump's latest strike means for various investment classes, traders are increasingly cognizant of what they see as a clear break from his prior behavior on foreign military intervention. Piper Sandler's Laperriere said Trump used such types of force infrequently during his first term and held off on bombing Iran. However, Laperriere said the outcome of the Iran hit may have encouraged Trump to make moves carrying similar risk going forward on smaller targets. "Trump has been a hyperactive president, including in the national security arena, and that energy is now extending to the use of military force," Laperriere said. "Nonetheless, Trump has only used force when the target is no match for [U.S.] military might."
