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Just For You Why This Defense ETF Could Keep Rallying as the Iran Conflict EscalatesAuthor: Jordan Chussler. Posted: 3/10/2026. 
At a Glance - Military operations are costing U.S. taxpayers nearly $1 billion per day, with incidents like the accidental downing of three U.S. F-15s by Kuwaiti friendly fire adding hundreds of millions.
- In the first week of the war with Iran, the U.S. fired more than 800 Patriot interceptor missiles, totaling at least $3.2 billion in munition costs.
- The iShares U.S. Aerospace & Defense ETF has been outperforming the S&P 500, and bolstered by ongoing war costs, is likely to continue doing so.
Beyond operations, unforeseen costs—like the friendly-fire incident last week that involved the shooting down of three U.S. F-15s in Kuwait —have added to those woes. The replacement costs for just those three U.S. Air Force jets are estimated to be around $100 million each. Meanwhile, on March 3, just days after the conflict began, President Donald Trump wrote on his social media platform, Truth Social, that the United States has a “virtually unlimited supply” of weapons, adding that “Wars can be fought ‘forever.’” Louis Navellier's Stock Grader system helped him flag Nvidia before its 82,000% run and has identified the top S&P 500 stock for 12 years running—and today, he's giving away his #1 AI stock pick for 2026, free. This company's sales are up 28% year over year, it holds over 30,000 patents in wireless and video technology, and it just earned an A-rating in his proprietary Stock Grader system that has cost him $9 million to build and maintain. Get the name and ticker of Louis Navellier's #1 AI stock free As a result, stocks in the aerospace and defense industry are getting a boost. As a subsector of the industrials sector, government contractors have helped push that group to a year-to-date (YTD) gain of 9.55%, good for fourth among the S&P 500's 11 sectors. That strong YTD performance in 2026 follows a 19.40% gain in 2025. And for shareholders of the iShares U.S. Aerospace & Defense ETF (BATS: ITA)—formerly the iShares Dow Jones U.S. Aerospace & Defense Index Fund—the ongoing conflict in the Middle East could mean further gains. The World’s Largest Aerospace and Defense ETF The ITA has amassed nearly $11 billion in market value and more than $16 billion in assets under management, making it the world’s largest aerospace and defense ETF. The ETF seeks to mirror the investment results of the Dow Jones U.S. Select Aerospace & Defense Index, which measures the performance of the aerospace and defense sector of the U.S. equity market. That index includes companies that manufacture, assemble, and distribute military aircraft and aircraft parts, radar equipment, drones and counter-drone technology, as well as other weapons and equipment for the defense industry. So far this year, the fund has gained nearly 8% compared to the broad S&P 500’s loss of 2.22%. Much of that interest is directly attributable to the defense contractors that make up the ITA’s holdings, which, for a number of reasons, have become household names over the past few decades. A Basket of Premier Defense Contractors The fund offers investors a basket of aerospace and defense stocks that includes, by weighting, GE Aerospace (NYSE: GE); RTX (NYSE: RTX), formerly Raytheon; Boeing (NYSE: BA); Lockheed Martin (NYSE: LMT); Northrop Grumman Corporation (NYSE: NOC); L3Harris Technologies (NYSE: LHX); and General Dynamics (NYSE: GD) among its more than 41 holdings. Individually, those stocks have shown mixed YTD performances. GE, for instance, is down 1.28% YTD compared to RTX’s 11.75% gain. Boeing is down more than 2% while Lockheed Martin is up more than 35%. Overall, gains have outweighed losses, and lagging names could see catch-up appreciation if the conflict with Iran continues. Take, for instance, the Patriot Advanced Capability-3 (PAC-3) interceptor missiles produced by Lockheed Martin. Each missile costs about $4 million. In the first week of hostilities alone, the United States fired more than 800 Patriot interceptor missiles, amounting to a cost of at least $3.2 billion. Meanwhile, RTX produces guidance systems and other variants of the Patriot missile, such as the GEM-T. A full Patriot battery system—including launchers, radar, and a control station—costs over $1 billion, with the missiles alone accounting for roughly $690 million of that total. As for industry exposure, nearly 92% of the ETF’s allocation is to aerospace and defense, while 3.4% is in metals and mining—a sector that has benefited since rare earth elements became a national security priority under the Trump administration. The companies in the ITA include some of the largest recipients of U.S. federal contracts. Lockheed Martin, for example, received more than $65 billion in U.S. government contract awards last year. At present, the U.S. Department of Defense has over $48 billion in obligations to Lockheed Martin, of which more than 49% is earmarked for the Department of the Navy, nearly 24% for the U.S. Army, more than 20% for the Air Force, and nearly 3% for the Missile Defense Agency. How Wall Street Feels About the ITA Based on 395 analyst ratings issued over the past 12 months covering 24 companies in the ITA’s holdings, the fund receives a Moderate Buy rating. Fueled by the Trump administration’s hawkish foreign policies, the ITA has been particularly attractive to institutional investors, with institutions adding more than $3 billion over the past 12 months compared with outflows of just over $613 million.
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