A New Transatlantic Play: How Canada-EU Defense Pact Fuels Tech & Military Growth

The world of defense and tech investing is about to get a massive shot in the arm—and it's all thanks to a little-known pact between Canada and the European Union. This isn't just about tanks and fighter jets; it's about $150 billion in funding, cutting-edge AI, and a geopolitical shift that's leaving U.S. reliance in the rearview. If you're not paying attention, you're missing the next big boom. Let's dive in.

The Strategic Shift: Canada Joins the EU's Defense Club

The Canada-EU defense pact, signed this month, isn't just a handshake—it's a full-blown alliance. For the first time, Canada gains access to the EU's €150 billion Security Action for Europe (SAFE) fund, which pools resources for joint procurement of military tech like air defense systems, AI-driven logistics, and cybersecurity tools. Why does this matter? Because it's a direct answer to two threats: Russia's aggression and China's tech dominance.

The pact also forces the EU and Canada to cut reliance on U.S. suppliers—75% of Canada's defense spending currently goes to American firms. That's about to change. The EU's “European preference” rule requires 65% of military tech to come from EU or partner nations, creating huge opportunities for Canadian firms and EU stocks alike.

The Tech Gold Rush: Who Wins?

Let's break down the sectors and companies set to profit:

1. Defense Contractors: The Frontline Winners

• CAE (TSX: CAE): This Canadian sim tech giant is already embedded in Europe's next-gen fighter jet programs, including the Franco-German-Mexican Tempest project. Its 30% stake in Tempest gives it access to billions in R&D spending.
  
• Thales (EPA: THLFP)**: A European leader in radar systems and cybersecurity, Thales is a lock to supply air defense tech under the SAFE fund. Its stock has already risen 18% YTD.

2. Cybersecurity & AI: The Silent Warriors

• BlackBerry (NYSE: BB): Its cybersecurity division is the go-to for governments protecting critical infrastructure. With EU-Canada collaboration on hybrid threats, BlackBerry's military-grade tools are a must-have.
• Cybercom (STO: CYBER): This Swedish firm supplies NATO's cyber defense hubs. The EU-Canada pact's focus on “countering hybrid threats” (read: Russian hacking) is its sweet spot.

3. Materials & Logistics: The Unsung Heroes

• Rio Tinto (NYSE: RIO): Its Canadian titanium and niobium mines are critical for aerospace alloys. The EU's demand for locally sourced materials means mines in Canada are now geopolitical assets.
• Hexcel (NYSE: HXL): A U.S.-based carbon fiber leader, Hexcel's composites are used in fighter jets. With the EU-Canada pact driving demand for advanced materials, its stock is primed to soar.

The ETF Play: Diversify Without the Homework

For those who want exposure without picking individual stocks, the iShares Global Aerospace & Defense ETF (NYSE: ITA) is your ticket. It holds Boeing, Airbus, and CAE—giving you a slice of the transatlantic boom.

The Risks? Manageable—If You're Picking the Right Stocks

Sure, there are speed bumps. Russia could retaliate. The EU's “65% local content” rule might strain trade deals. But consider this: the EU's ReArm Europe plan aims to mobilize €800 billion in defense spending by 2030. That's a decade-long tailwind, not a passing storm.

Bottom Line: Buy Now—Before the Procurement Floodgates Open

The first SAFE fund procurements are coming in late 2025. That means valuation gaps are closing fast. Here's your roadmap:
1. Allocate 5–7% of your portfolio to defense and tech stocks.
2. Focus on cybersecurity and materials: BlackBerry, Cybercom, and Hexcel have asymmetric upside.
3. Go long on CAE: Its role in the Tempest project is a moonshot opportunity.

The U.S. may still be the world's military titan, but the Canada-EU pact is proof that geopolitics is going bilateral. This isn't just about defense—it's about tech dominance, supply chain resilience, and a new era of transatlantic power. Don't miss the train.

Cramer's Call: Act now—before the rest of Wall Street catches on. This is the next big thing.