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Defense Stocks Head Into Earnings At Record Highs — Is The Boom Just Beginning?

The defense sector is on fire in 2025, and investors are watching earnings season for signs the rally can continue.

The iShares U.S. Aerospace & Defense ETF (NYSE:ITA) is up 33% year-to-date through July 16, on track for its best annual return since 2013.

The fund gained 25% in the first half alone, outperforming both the Vanguard S&P 500 ETF (NYSE:VOO) and the Invesco QQQ Trust (NASDAQ:QQQ) by double-digit margins.

See Also: Lockheed Martin Tops Defense Peers In Capital Efficiency, But Market Isn’t Impressed

Washington Fueled The Rally—Now Investors Want Results

Investors have already bought the rumors—now they want the facts. The explosive rally in defense stocks has been fueled by a fundamental shift in Washington's priorities and the rising tide of global tensions.

On July 4, President Donald Trump signed the "One Big Beautiful Bill Act," a sweeping defense package that injects $156.2 billion into the Pentagon—the largest single-year boost in over a decade.

The bill directs tens of billions toward areas that could redefine the future of warfare and defense contracting. Shipbuilding alone receives $29.2 billion, while $24.4 billion is allocated to integrated air and missile defense—what the administration has dubbed the "Golden Dome" initiative.

Another $25.4 billion is earmarked to strengthen munitions production and shore up supply chain resilience, and $16 billion will go toward scaling low-cost weapons systems.

The budget also includes $10.8 billion to modernize the U.S. nuclear arsenal and $8.6 billion to support new air superiority projects.

Q2 2025 Defense Earnings Preview: Who Reports and When

Defense stocks slated to report earnings by the end of July include: ...