Why GE Aerospace Remains a High-Conviction Buy Despite Elevated Valuation

The aerospace sector is undergoing a transformative phase, driven by a confluence of long-term demand tailwinds and operational advancements. For investors, GE Aerospace (GEA) stands out as a compelling opportunity despite its current elevated valuation. This thesis rests on two pillars: sustained industry growth and operational execution excellence, both of which are underpinned by robust data and strategic clarity.

Long-Term Demand: A Structural Tailwind

The global aerospace industry is poised for decades of growth, fueled by commercial aviation's recovery and the defense and space sectors' expansion. According to Boeing's Commercial Market Outlook, passenger air traffic is projected to more than double by 2044, outpacing global economic growth. This surge is driven by emerging markets, where an expanding middle class and competitive airline networks are reshaping travel patterns. For instance, China and India alone are expected to account for 30% of new aircraft demand over the next two decades.

GE Aerospace is uniquely positioned to capitalize on this demand. Its commercial engine portfolio, including the CFM LEAP and GE9X, powers a significant share of the next-generation narrow- and wide-body aircraft fleet. A major contract with Emirates for 130 GE9X engines and Flydubai's order of 60 GEnx-1B engines underscore the company's relevance in this growth story. Meanwhile, the defense segment is gaining momentum, with GE's propulsion technologies securing a $283 billion business jet market over the next decade, per Honeywell's 2025 forecast.

Operational Execution: Scaling for Sustained Growth

Beyond demand, GE Aerospace's operational execution is a critical differentiator. The company has invested nearly $1 billion in U.S. manufacturing and supply chain infrastructure in 2025, including facility expansions and supplier upgrades, to address bottlenecks and enhance production capacity. For example, the West Jefferson, North Carolina, facility's 35,000-square-foot expansion is directly tied to scaling LEAP engine production, a key driver for narrow-body aircraft propulsion.

These investments are paying off. In Q3 2025, GE Aerospace reported a 26% year-over-year increase in adjusted revenue, with commercial engine deliveries rising by 15-20%. The company's proprietary FLIGHT DECK operating model-a lean framework integrating technology and process improvements-has streamlined operations, reducing cycle times and boosting margins. As a result, LEAP engine deliveries surged by 40% year-over-year, contributing to a record quarter for commercial engine production.

Moreover, GE's R&D focus on advanced materials like ceramic matrix composites (CMCs) and additive manufacturing is enhancing engine efficiency and durability, aligning with the industry's push for sustainability and cost optimization. These innovations not only strengthen GE's competitive edge but also future-proof its offerings against regulatory and environmental shifts.

Financials and Guidance: A Validation of Strategy
GE Aerospace's financial performance in 2025 validates its strategic bets. For Q3, the Commercial Engines & Services segment generated $8.9 billion in revenue, a 27% increase, while the Defense & Propulsion Technologies segment saw a 26% revenue jump to $2.8 billion according to results. The company raised its full-year 2025 guidance, now projecting high-teens adjusted revenue growth, an adjusted EPS range of $6.00–$6.20, and free cash flow of $7.1–$7.3 billion according to results. Analysts have responded positively, with Susquehanna and Citi setting price targets of $350 and $386, respectively, reflecting confidence in GE's long-term trajectory according to reports.

Addressing Valuation Concerns

Critics may argue that GE Aerospace's valuation-trading at a premium to peers-appears stretched. However, this premium reflects the company's structural advantages: a dominant market position in high-margin aerospace, a robust order backlog, and a track record of operational discipline. With the global fleet expected to nearly double by 2044, GE's ability to scale production and innovate ensures that its earnings power will expand meaningfully.

Conclusion

GE Aerospace's combination of long-term demand visibility and operational excellence makes it a high-conviction buy, even at current valuations. The company is not merely riding a cyclical upturn but is actively shaping the future of aerospace through strategic investments, technological leadership, and disciplined execution. For investors with a multi-year horizon, the risks of under-owning this industrial bellwether may outweigh the near-term valuation debate.