AllianceBernstein reveals its top defense stock pick as Europe's military manufacturers retreat

AllianceBernstein is backing German global tank parts and transmissions maker Renk as a standout opportunity amid a sharp retreat in European defense stocks. Marcus Morris-Eyton, a portfolio manager at AllianceBernstein, said the sector's recent selloff has created more attractive entry points into long-term military spending themes. European defense names were among the key winners in 2025. The Stoxx Europe Total Market Aerospace and Defense Index closed the year up 56.5%, boosted by the commitment by NATO members to increase their defense spending to 5% of GDP. But investor excitement around the continent's defense "mega-trend" has since soured, with some names off between 20% and 30% from last year's highs. "You've seen growing investor questions around the execution risk of that growing defense spending," Morris-Eyton told CNBC's "Squawk Box Europe" on Wednesday. Defense and national security remain a cornerstone of Germany's landmark fiscal expansion, with Berlin pledging to ramp up military spending to at least 1% of its total GDP. Yet "inevitable" budget delays and "procurement bureaucracy" have hindered the progress of defense contracts there, Morris-Eyton said. As a result, certain German defense stocks that traded on "mid-to-high 30s" P/E multiples have reversed course and are now in the low-20s, he explained. That's now throwing up attractive individual trades within the sector. …