During his Middle East tour, former President Donald Trump secured a historic $142 billion arms deal with Saudi Arabia, which the White House described as the largest defense sales agreement in history. The agreement covered state-of-the-art warfighting equipment and services across five broad categories: air force and space capabilities, air and missile defense, maritime and coastal security, border security and land forces modernization and information and communication systems upgrades.
Additionally, Saudi Arabia committed to a $600 billion investment in various U.S. industries, including defense, energy, technology and infrastructure. This deal further strengthened the defense relationship between the United States and Saudi Arabia, which already had active military sales valued at more than $129 billion.
The One Big Beautiful Bill Act includes $150 billion for the Defense Department. This funding covers a range of military priorities, including $34 billion for shipbuilding, $25 billion for the Golden Dome missile defense system and $8.5 billion for military quality-of-life improvements like barracks maintenance and healthcare. The bill is part of a broader effort to push total defense spending to $1 trillion in fiscal year 2026.
The fresh spending binge from both domestic and foreign allies has put a strong bid under the iShares U.S. Aerospace & Defense ETF (ITA) that traded to a new all-time high this past week. It is home to the world’s leading makers of military hardware, weapon systems, reconnaissance technology and defense infrastructure.
The top 10 holdings in ITA account for 76% of total holdings, and make for smart way for investors to own a diversified position in what is one of the market’s premier sectors, both from a fundamental and technical standpoint. The bullish money flow into this space and investors should use pullbacks to considering adding ITA to portfolios.
Being it is Memorial Day, I want to pay tribute to all the families of fallen loved ones that gave their best in defense of the United States as dutiful men and women of our beloved armed forces. Thank you for your service for all those serving today. May God Bless America!
