Defense Stocks Soar Nearly 100% Amid New Era of Warfare and Rising Budgets

Defense stocks, represented by the State Street SPDR S&P Aerospace & Defense ETF (XAR), have witnessed an impressive surge, nearly doubling since their April 2025 lows. This significant rally is largely attributed to a "new modern age" of warfare, characterized by rapidly increasing global defense budgets and the strategic importance of AI and automation in military applications. Analysts also point to depleted missile stockpiles as a key driver for increased demand. Despite some concerns regarding current valuations, experts believe the sector's ascent is underpinned by robust fundamentals. This suggests the current rally could signify the nascent stages of a prolonged structural upcycle for defense industries.