We recently published a list of Why These Defense Stocks Are Declining This Week. In this article, we are going to take a look at where ParaZero Technologies Ltd. (NASDAQ:PRZO) stands against other defense stocks that are declining this week.

European defense stocks have rallied this year as governments faced pressures to increase military spending. During the week of March 3, several stocks registered double-digit growth, with some even recording all-time highs. Investor sentiment picked up after the European Summit in London, where leaders from the EU and NATO met to express their support for Ukraine.

READ ALSO: 13 Best Defense Stocks to Buy According to Billionaires and 10 Best Large Cap Defense Stocks to Buy Now.

The United States has repeatedly called for Europe to spend more on defense, stressing it could no longer foot the bill. EU leaders met in Brussels on Thursday to discuss the ‘ReArm Europe Plan’, which will allow the bloc to mobilize funds up to $860 million through bonds and relaxed rules on borrowing and spending.

Countries are also ramping up defense expenditure on an individual-level. A conservative victory in Germany is also adding to the momentum. Parties in talks to form the nation’s next government are already considering setting up a defense fund. Friedrich Merz, Germany’s next chancellor-in-waiting, has also vowed to relax the country’s strict borrowing rules.

In contrast, the defense sector in the US has been shaky since Trump’s return to the White House, amid mixed statements on military expenditure throughout his campaign and the early days of his second stint. The creation of DOGE is also reshaping investors’ views of the industry.

Defense stocks wobbled over the past week after a contentious meeting at the Oval Office between Trump and Ukrainian leader, Volodymyr Zelensky, as investors hoped for the US-Ukraine minerals deal to be signed. Shares also fell sharply in February after the US President suggested the country could rapidly cut military spending in the future.

Byron Callan, managing partner at Capital Alpha Partners, believes there is a high level of uncertainty in the U.S. defense sector related to current and future programs and the likelihood of severe cuts to government workforces.

According to a report in the Financial Times on February 24, shares of the six largest American defense companies have fallen 4% under Trump’s second term. Whereas, Europe’s top defense groups have returned gains of around 40% during the same period.

Several Korean companies have also emerged as winners as they tapped into Europe’s defense expenditure surge. While the performance of the U.S. defense sector was lagging behind Europe and Asia well before the presidential elections, the gap has widened after Trump’s victory.

Let’s now head over to the list of defense stocks that are declining this week. Please note that the stocks listed are based on one week’s performance. Our analysis does not reflect the prospects of the company. Their share price could go high or low in the future, depending on the external market conditions, industry-specific challenges, and the company’s capabilities. Additional research and caution are advised before making investment decisions.

Methodology

For this article, we went through screeners to see how stocks in the aerospace and defense industry performed over the past week (March 3-7). From there, we picked the top 10 stocks with the highest percentage decline in share price during this period. All data is as of the close of business on Friday, March 7, 2025.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Photo by Thisisengineering Raeng on Unsplash

ParaZero Technologies Ltd. (NASDAQ:PRZO)

Weekly Decline: -17.40%

ParaZero Technologies Ltd. (NASDAQ:PRZO) is an Israel-based aerospace company that provides safety systems for defense Counter UAS systems and commercial unmanned aircraft.

The stock has plunged 66% year-to-date, with a share price decline of 29.05% during the week of February 24, and now another 17.40% slump over the past week. As a result, the company has made the list of declining defense stocks two weeks in a row.

ParaZero Technologies Ltd. (NASDAQ:PRZO) risks another non-compliance warning from NASDAQ with a potential delisting warning, as its minimum bid price has again fallen below the $1 mark.

Moreover, last month, ParaZero Technologies Ltd. (NASDAQ:PRZO) announced preliminary, unaudited results for fiscal 2024, which reflected a weakening liquidity position, with cash and cash equivalents declining by 43% from the previous fiscal year.

Overall, PRZO ranks 2nd on our list of defense stocks that are declining this week. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PRZO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.