The Zacks Aerospace-Defense industry is drawing renewed investor attention as rising geopolitical tensions, higher military budgets, and sustained air-travel demand reshape the sector’s outlook.
Governments around the world are accelerating defense modernization programs, investing in advanced weapons systems, and expanding long-term procurement contracts that give defense contractors greater earnings stability.
Despite these tailwinds, the industry continues to battle persistent supply-chain constraints, labor shortages, limited aircraft availability, and elevated operating costs that weigh on production and deliveries.
Three companies standing out within this environment are GE Aerospace (GE), RTX Corp. (RTX), and Howmet Aerospace (HWM), each carrying a Zacks Rank #2 (Buy) heading into the final quarter of 2026.
According to a Markets and Markets report, the Military Platforms market was estimated at $38.75 billion in 2025 and is expected to reach around $76.25 billion by 2032, registering a CAGR of about 10.2% during the period.
The International Air Transport Association reported that global air passenger demand is expected to grow 2.1% year over year in 2026, with the global passenger load factor holding at a resilient 85.2%.
The Zacks Aerospace-Defense industry currently carries a Zacks Industry Rank of #179, placing it in the bottom 28% of more than 247 Zacks industries, with the industry’s bottom-line estimate for the current fiscal year falling 0.5% to $3.86 since July 31.
Over the past year, stocks in the industry have collectively lost 14.3%, lagging both the Zacks Aerospace sector’s decline of 12.3% and the Zacks S&P 500 composite’s gain of 16.9%.
GE Aerospace, headquartered in Evendale, Ohio, announced a $225 million investment to modernize its Research Center in Niskayuna, NY, supported by $8.4 million in state tax credits and $5.3 million in local incentives, with the Zacks Consensus Estimate for GE’s 2026 EPS pointing to year-over-year improvement of 24.2%.
On September 21, 2026, Kratos Defense and GE Aerospace successfully ignited the GEK800 turbofan propulsion system for a cruise missile at the X-58 test facility, achieving a 100% success rate and keeping the program on schedule.
Howmet Aerospace (HWM), based in Pittsburgh, reported a strong second-quarter 2026, with revenues rising 24% year over year to $2.55 billion and adjusted EPS jumping 46% to $1.33, reflecting broad demand across commercial aerospace, defense, and gas turbines.
During that quarter, HWM generated $479 million in free cash flow, repurchased $300 million of shares, and completed the approximately $1.8 billion CAM acquisition, with the Zacks Consensus Estimate for 2026 EPS calling for a 40.3% year-over-year increase.
RTX (RTX), based in Waltham, Massachusetts, saw its Raytheon unit announce plans on September 28, 2026, to accelerate AMRAAM missile production to record levels under a five-year multiyear contract valued at up to $20.7 billion.
The contract was awarded as part of the Department of War’s Arsenal of Freedom initiative, strengthening RTX’s defense backlog and enabling further investment in manufacturing capacity, workforce, and supply chain.
The Zacks Consensus Estimate for RTX’s 2026 sales calls for an increase of 8.4% year over year, with 2026 EPS expected to rise 14.8% year over year, making it a compelling pick for investors seeking defense sector exposure.
