Dassault Aviation vs AVIC Chengdu Aircraft: Why Rafale Maker Is Emerging as the Top Defence Stock in 2025

Top Defence Stock: With heightened India-Pakistan tensions and Operation Sindoor in focus, Dassault Aviation is outperforming AVIC Chengdu Aircraft. Here’s why Rafale’s manufacturer is the stronger defence stock in global markets today.

In the wake of escalating tensions between India and Pakistan, global investors are closely tracking the performance of defence stocks—particularly Dassault Aviation and AVIC Chengdu Aircraft. As both nations flex their aerial might, the financial markets are responding rapidly. Dassault Aviation, the French defence giant behind the Rafale fighter jet, has surged in recent sessions, while China’s AVIC Chengdu, producer of the J-10, has been on the decline.

With the Indian Air Force’s recent deployment of Rafales in Operation Sindoor, and Pakistan’s use of J-10 jets in retaliation, the spotlight is firmly on these two aerospace powerhouses. But which one is the better bet for investors today?

Dassault Aviation Stock Soars on Rafale Dominance

Dassault Aviation has delivered a standout performance in 2025, with its stock rallying over 3% in just the last four trading sessions, driven by renewed investor confidence and geopolitical momentum. A key catalyst behind the surge was Prime Minister Narendra Modi’s visit to Adampur Air Base, where he praised the Indian Air Force and its successful execution of Operation Sindoor—a major military campaign targeting terrorist camps across the border.

Equipped with SCALP and HAMMER missiles, the Rafale jets played a decisive role in the mission, reinforcing their strategic importance. As tensions mount, countries are re-evaluating their defence strategies—and that often means turning to battle-tested equipment like the Rafale.

Dassault Aviation has also benefitted from a strong export pipeline. In fact, India recently inked a significant defence agreement with France to acquire 26 Rafale Marine jets for its Navy. This deal has further strengthened Dassault’s market position in Asia.

AVIC Chengdu Falters Amid Geopolitical Headwinds

On the flip side, AVIC Chengdu Aircraft shares have slipped over 10% in the same period. While the company enjoyed strong post-listing gains of over 30%, the current geopolitical scenario has spooked investors. Following Modi’s assertive stance against Pakistan and veiled criticisms of China’s strategic support, many Chinese defence stocks, including AVIC Chengdu, saw broad-based sell-offs.

AVIC Chengdu, a key subsidiary of the state-run AVIC conglomerate, manufactures the J-10 fighter jets used by the Pakistan Air Force. Despite their technical sophistication, the market perception surrounding Chinese military exports remains volatile and heavily influenced by diplomatic narratives.

Stock Performance YTD 2025: Rafale Takes the Lead

So far in 2025, Dassault Aviation shares have climbed a robust 57%, driven by increased global demand and expanding defence partnerships. By contrast, AVIC Chengdu’s year-to-date performance, while still positive, has been marred by inconsistent investor sentiment.

According to Dr. Ravi Singh, SVP – Retail Research at Religare Broking Ltd, “In light of the India-France defence alliance and growing global respect for Rafale capabilities, Dassault Aviation appears fundamentally stronger. Meanwhile, Chinese defence firms are suffering from both external skepticism and internal policy opacity.”

Technical Analysis: Dassault Shows Strength, AVIC in Consolidation

From a technical standpoint, Dassault Aviation is clearly in a bullish phase.

“Dassault’s stock is showing strong momentum with a potential breakout above €316. If it crosses this level, the next target could be around €375,” said Anshul Jain, Head of Research at Lakshmishree Investment and Securities. “On the other hand, AVIC Chengdu is stuck in a consolidation pattern with no clear trend, making it riskier in the short term.”

For investors eyeing long positions, Dassault offers a more favourable risk-reward setup at the current juncture.

Dassault Aviation is the Clear Winner—for Now

In the ongoing battle between Rafale and J-10, both on the battlefield and in the stock market, Dassault Aviation is emerging as the clear winner. Backed by strong geopolitical alignment, rising exports, and technical strength, the French aerospace giant presents a compelling investment case in 2025.

While AVIC Chengdu may still offer long-term potential, especially as China boosts its defence exports, the near-term outlook favours Dassault—particularly amid heightened tensions in South Asia.