According to a White House fact sheet, during his recent visit to Saudi Arabia, President Trump announced Saudi Arabia's $600 billion commitment to invest in the United States, strengthening economic ties between the two nations.
Per Saudi Crown Prince Mohammed bin Salman in the investment conference, as quoted on CNBC, the goal is to elevate the U.S.-Saudi partnership to $1 trillion in combined investments, spanning military, security, economic and technological sectors.
Digging Deeper Into the Defense Commitment
Per the White House, as quoted on CNBC, the agreement between Washington and Riyadh includes a $142 billion defense sales deal, delivering advanced warfighting equipment to the kingdom from leading U.S. defense firms. The defense deal nearly doubles Riyadh’s 2025 defense budget.
This deal marks the largest defense sales agreement in U.S. history and is a major step in strengthening defense and security relations between the United States and Saudi Arabia. Saudi Arabia holds its position as the United States’ leading Foreign Military Sales partner, with ongoing deals surpassing $129 billion in value.
Targeted areas include air and missile defense, air force and space innovation, maritime security and communication systems upgrade, per the fact sheet. Several sector-specific initiatives were included in the investment partnership announcement, with $5 billion New Era Aerospace and Defense Technology Fund among others.
The White House fact sheet also mentioned that the agreement includes broad training and capacity-building support for the Saudi military, including upgrades to service academies and military healthcare.
Rising Military Spending Already Fueling Industry Momentum
The increase in military spending by global economies gives a significant boost to the U.S. Aerospace – Defense Industry. According to Statista, between 2020 and 2024, the United States commanded about 43% of the global market share, maintaining its position as the world's largest exporter of major weapons.
Global military spending rose to $2.72 trillion in 2024, marking a 9.4% increase over 2023, the sharpest annual rise since the end of the Cold War, according to Reuters. Escalating geopolitical tensions in Asia should also boost the prospects of the Aerospace and Defense players of the United States.
ETFs to Consider
Below, we highlight a few Aerospace and Defence ETFs for investors to consider.
iShares U.S. Aerospace & Defense ETF ITA, Invesco Aerospace & Defense ETF PPA, SPDR S&P Aerospace & Defense ETF XAR, Global X Defense Tech ETF SHLD and U.S. Global Technology and Aerospace & Defense ETF WAR are some top funds.
Regarding charging annual fees, XAR is the cheapest option, charging 0.35%, and is more suitable for long-term investing.
With a one-month average trading volume of about 790,000 shares, SHLD is the most liquid option, offering investors easier entry and exit, ideal for active trading strategies.
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Global X Defense Tech ETF (SHLD): ETF Research Reports iShares U.S. Aerospace & Defense ETF (ITA): ETF Research Reports Invesco Aerospace & Defense ETF (PPA): ETF Research Reports SPDR S&P Aerospace & Defense ETF (XAR): ETF Research ReportsThis article originally published on Zacks Investment Research (zacks.com).
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