Aerospace and defense companies design, manufacture, and service military weapons systems, aircraft, spacecraft, and defense electronics. The sector benefits from multi-year, non-cancelable government contracts that provide revenue visibility unmatched in other industries. Escalating geopolitical tensions in Europe and Asia Pacific have driven NATO members to increase defense budgets toward the 2% GDP target, creating a generational tailwind for defense contractors. Commercial aerospace is recovering as Boeing and Airbus ramp production to clear massive backlogs.
US defense budget topline and program-specific funding levels in the NDAA. Backlog growth as a multiple of annual revenue indicates revenue visibility. F-35 production rates and sustainment contract awards are Lockheed bellwethers. Boeing 737 MAX and 787 monthly delivery rates signal commercial recovery.