iShares US Aerospace & Defense ETF

ITA

Market cap $14.2B

Lockheed Martin is the largest defense company, with diversified and lucrative operations. Northrup Grumman is also immense, specializing in, among other things, military drones.

Global defense spending hit $2.63 trillion in 2025, up from $2.48 trillion in 2024, and the momentum is accelerating.

The U.S. defense sector is entering a new AI-driven revolution, with $1.5 trillion in proposed 2027 spending and $13.4 billion for autonomous systems. Rapid advances in cheap, smart, and autonomous weapons are fundamentally changing warfare economics and driving massive investment inflows into defense technology.

Defense ETFs like ITA gain traction as Middle East tensions persist, boosting demand for missiles, air defense systems and military production.

Major U.S. defense stocks failed to outperform during the Iran conflict, tracking the S&P 500's negative performance instead. In this article, I explore several reasons for their apparent failure to serve as a meaningful hedge during wartime.

The White House just proposed a $1.5 trillion defense budget for fiscal year 2027, a roughly 44% increase over current Pentagon spending.

NATO's "5% of GDP" defense spending target by 2035 will send investment into this sector soaring. The U.S. Department of Defense's budget proposal for 2027 is likely to exceed $1 trillion.

Rising geopolitical tensions and Trump's defense push are fueling a long-term rearmament trend. One can explore ETFs to benefit from this outlook.

March jobs data highlights sector winners -- Healthcare, Transport & Construction ETFs gain as hiring rebounds and steady demand supports growth.

US President Donald Trump has proposed a huge increase in defence spending, alongside a 10% cut in non-defence spending, for the 2027 fiscal year.