Quick Read – EUAD has surged 8% in a month to $43, returning to positive 2026 territory, but gains hinge on European defense budgets converting to signed contracts. – ITA returned roughly 17% in 2025 while EUAD surged 55%, making the two ETFs opposite expressions of U.S. versus…
ropean defense spending trades. – A book-to-bill above 1.2x at Airbus, BAE Systems, or Rheinmetall signals the rearmament cycle expanding; below 1.0x means announced budgets aren’t converting to orders. – The Select STOXX Europe Aerospace & Defense ETF (NYSEARCA:EUAD) has snapped back hard after a sluggish start to the year. Shares sit near $43 after a 8% gain over the past month, pulling EUAD back into positive territory for 2026 at roughly 1% year to date
That recovery follows a 5% April drawdown and a moment of doubt about whether last year’s blistering 55% surge in 2025 had pulled too much future return forward. For investors holding EUAD now, the live question is whether procurement budgets convert into signed contracts fast enough to justify current multiples. The European budget cycle is the only macro that matters EUAD is a pure expression of one trade: that Europe spends what it has promised on defense.
The EU’s €800 billion ReArm Europe program and Germany’s loosened debt brake set the ceiling. Actual national defense budgets set the floor. The single number to watch over the next 12 months is the share of NATO members hitting and exceeding the 2% of GDP spending threshold, and how many move toward the higher targets being debated for the alliance’s 2026 summit.