General Dynamics Corporation (GD): A Bull Case Theory

We came across a bullish thesis on General Dynamics Corporation on The Boring Finance Guy’s Substack. In this article, we will summarize the bulls’ thesis on GD. General Dynamics Corporation's share was trading at $349.95 as of January 29th. GD’s trailing and forward P/E were 23.09 and 20.75 respectively according to Yahoo Finance.

General Dynamics Corporation operates as an aerospace and defense company worldwide. GD enters 2026 with exceptional operational momentum, supported by a powerful combination of Gulfstream’s G700-driven aerospace surge and a record $109.9 billion defense backlog. The company is generating dramatically stronger cash flow—$3.0 billion in FCF through the first nine months of 2025 versus $1.39 billion a year earlier—while every major segment is contributing, from the high-margin aerospace division to steady submarine, tank, and munitions programs.

GD’s moat is widening across both business jets and defense platforms, and the potential end of ESG-based restrictions on defense holdings (“the Norway Signal”) introduces a major structural catalyst by unlocking new institutional capital that could support higher long-term valuation floors. Leadership under Phebe Novakovic continues to emphasize disciplined capital allocation, demonstrated by dividend growth, accelerated buybacks, and meaningful debt reduction, while execution on the G700 certification recovery reinforces management credibility. However, despite the company firing on all cylinders, valuation remains the limiting factor.

Trading around 20x forward earnings and a PEGY of 1.7, the stock embeds an optimistic assumption that the aerospace up-cycle is sustained rather than cyclical, placing GD in the “great company, fully priced” category relative to peers like Lockheed Martin and Northrop Grumman. Near-term risks—including potential U.S. government funding disruptions and sensitivity in business jet demand—temper the upside unless earnings materially exceed expectations. With scenario outcomes ranging from $260–280 in a recessionary pullback to $390–410 if institutional inflows rerate the sector, GD stands out as a high-quality stalwart best held by existing investors while new buyers wait for a more compelling entry point around the $300 level.

Previously we covered a bullish thesis on General Dynamics Corporation by jagger in September 2024, which highlighted Gulfstream’s strengthening product cycle, the durability of GD’s defense backlog, and its consistent capital deployment strategy. The company’s stock price has appreciated approximately by 21.41% since our coverage. This is because the aerospace acceleration continued as expected. The thesis still stands as GD’s core fundamentals remain strong. The Boring Finance Guy shares a similar view but emphasizes the cash flow surge and the “Norway Signal.”

General Dynamics Corporation is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 61 hedge fund portfolios held GD at the end of the second quarter which was 46 in the previous quarter. While we acknowledge the risk and potential of GD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GD and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.