GE's Aerospace Engine Roars to Life in Q1—But Can It Stay Ahead of the Storm?

Investors, buckle up! General Electric just dropped a report that’s a mix of roaring engines and cautionary red flags. Let’s dive into the numbers—because while GE’s aerospace division is firing on all cylinders, the skies ahead aren’t entirely clear.

The Good News: Orders Are Sky-High, and Profit Margins Are Taking Flight
GE Aerospace’s Q1 results are a reminder of why this company has been a titan in the skies for over a century. Orders hit $12.3 billion, up 12% year-over-year, with both commercial and defense sectors humming. Commercial engines like the LEAP and GEnx are in hot demand—ANA, Malaysia Aviation Group, and Korean Air are all locking in deals for Boeing and Airbus aircraft. Defense contracts? The U.S. Air Force just handed GE a $5 billion order for F110 engines, and the T901 and XA102 engines are making strides toward becoming game-changers.

Profit margins are expanding too. GAAP margins hit 22.6%, up 40 basis points, while operating margins surged to 23.8%, a staggering 460-basis-point jump. And let’s not forget the EPS: $1.49 adjusted EPS blew past estimates of $1.25. This isn’t just a blip—it’s a sign of a company getting leaner and smarter.

But here’s where the plot thickens.

The Bad News: Tariffs, Supply Chains, and a Conservative Forecast
GE’s management isn’t popping champagne just yet. Tariffs are a $500 million headwind this year, and supply chain snarls are still causing turbulence. Engine deliveries dropped 6% year-over-year, with LEAP engines down 13%—a problem when airlines are desperate for more planes. Spare parts delays doubled, and management is so cautious they’ve baked slower growth into their 2025 guidance.

The numbers back this worry: free cash flow fell 14%, and while revenue guidance remains “low double-digit,” that’s a far cry from the high teens growth we’ve seen in past recoveries. The company is also assuming low-single-digit passenger growth, a downgrade from earlier hopes—and that’s before any recession hits.

Why Investors Should Still Be Excited (and Skeptical)
Let’s start with the positives:
- Backlog is bulletproof: $170 billion in orders, including $140 billion in commercial services. That’s years of work.
- Strategic bets are paying off: GE is plowing nearly $1 billion into U.S. factories and tech, creating 5,000 jobs. The RISE program’s turbine blade tests could cut fuel use by 25%—a game-changer for an industry desperate to cut costs.
- The stock is screaming: Shares jumped nearly 5% premarket after Q1—analysts are already boosting estimates.

But here’s the catch: tariffs and trade wars aren’t going away. GE’s mitigation efforts—like trade programs and price hikes—are only offsetting part of the pain. And if supply chains don’t improve? Those delayed engines and spare parts could turn a hiccup into a headache.

The Bottom Line: Buy GE, But Keep an Eye on the Horizon
GE is a classic “buy the dip” story right now. The aerospace division is dominant, the backlog is loaded, and management is making bold bets on the future. But this isn’t a “set it and forget it” stock.

Investors need to monitor two key things:
1. Supply chain fixes: If GE can stabilize engine deliveries and reduce spare parts delays, margins could soar further.
2. Tariff trends: If the $500 million headwind grows—or if a recession hits—the conservative guidance might still be too optimistic.

At $187 a share, GE is pricing in a lot of optimism. But with a backlog that’s 10 times its annual revenue, and a product lineup that’s rewriting the rules of aviation, this stock has the fuel to keep climbing—if it can navigate the storms ahead.

Final Take: Buy GE for the long haul, but don’t be shy about trimming if supply chain issues linger or tariffs explode. This isn’t just a stock—it’s a bet on the future of flight. And right now, that future’s looking bright… with a few clouds on the radar.