Defense Stocks Surged 100% Since Trump's Tariff Shock: Is The Rally Over?

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Defense stocks, tracked by the State Street SPDR S&P Aerospace & Defense ETF (XAR), have nearly doubled since April 2025 lows, prompting questions about the sustainability of the rally. Analysts attribute this surge to a “new modern age” of warfare, rapidly increasing global defense budgets, depleted missile stockpiles, and the growing importance of AI and automation in military applications. Despite valuation concerns, the rally appears to be grounded in strong fundamentals, leading some to believe it’s the early phase of a structural upcycle.

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