Core Viewpoint - The aerospace and defense industry is experiencing significant growth, outperforming the broader market, with the S&P Aerospace and Defense Select Industry Index up 44% in 2025 compared to a 10.3% return for the S&P 500 Index [1] Group 1: Market Performance - The defense sector valuations may appear high due to strong year-to-date performance, but experts believe there is still potential for growth in the aerospace and defense market [2] - The aerospace and defense sector is expected to continue thriving in the second half of 2025, supported by various factors [3] Group 2: Government Funding and Contracts - The OBBB Act allocates over $150 billion for defense funding, covering various areas such as shipbuilding, aircraft, and missile defense [4] - Increased government contracts and rising global defense budgets create a favorable investment environment, alongside a rebound in commercial air travel post-pandemic [5] Group 3: Growth Drivers - Global air traffic is projected to increase by 5.8% in 2025, contributing to both short-term and long-term growth in the aerospace industry [6] - The OBBB federal budget injects $156.2 billion in new funding for national security and defense priorities, available until September 2029 [6] - The U.S. defense spending is projected to exceed $849 billion in 2025, providing a stable financial outlook for the aerospace and defense sectors [6]