GE Aerospace Soars Past Estimates as Aftermarket Demand and Defense Spending Propel Q1 Results

General Electric’s aerospace division delivered a robust first-quarter performance, exceeding Wall Street expectations with adjusted earnings of $1.49 per share—17% above the FactSet consensus of $1.27. Revenue hit $9 billion, marking an 11% year-over-year increase and defying earlier projections of a steep decline. The results highlight GE’s resilience in a challenging macroeconomic environment, driven by aftermarket services, defense spending, and strategic cost management.

Financial Fortitude Amid Headwinds
GE Aerospace’s Q1 success stemmed from two core strengths: its dominant position in aftermarket services and the surge in global defense spending. The commercial engines division, which accounts for over 70% of revenue from parts and maintenance for older aircraft, benefited from airlines extending the life of existing fleets. This trend, accelerated by delays in Boeing and Airbus deliveries, bolstered aftermarket demand—a segment projected to grow at 5% annually through 2027, according to industry analysts.

The defense and propulsion division also thrived, with additive manufacturing advancements and demand for military systems contributing to its outperformance. However, supply chain bottlenecks—including raw material shortages and labor constraints—remained a drag, delaying engine deliveries and risking production timelines. Airbus recently criticized CFM International, GE’s joint venture with Safran, for being “significantly behind the curve” in engine deliveries, a challenge that could pressure near-term results.

The stock’s 9% rise year-to-date reflects investor optimism about the company’s long-term strategy. CEO Larry Culp emphasized trade program utilization and operational discipline as tools to mitigate macroeconomic risks, such as U.S.-China trade tensions and tariffs.

Analyst Sentiment and Risks Ahead
Despite the Q1 win, analysts caution that execution remains critical. Wells Fargo’s Matthew Akers noted that while the aftermarket “provides a stable base,” renewed aircraft deliveries could shift demand dynamics. Meanwhile, Citi’s Jason Gursky highlighted margin pressures from supply chain costs but maintained a bullish stance on defense spending trends.

The company’s reaffirmed 2025 guidance—adjusted EPS of $5.10 to $5.45 and low double-digit revenue growth—assumes no further tariff hikes or a global recession. Yet risks persist. China’s pause on Boeing deliveries, which could impact GE’s engine sales, and the lingering CFM production delays underscore the need for swift operational improvements.

Conclusion: A Balancing Act Between Opportunity and Uncertainty
GE Aerospace’s Q1 results demonstrate its ability to capitalize on cyclical demand while navigating structural challenges. The $9 billion revenue milestone, 11% higher than 2024’s first quarter, underscores the power of its aftermarket business—a segment that now contributes over two-thirds of commercial engine revenue. With defense budgets swelling and additive manufacturing reducing production costs, the company is positioned to sustain growth in the mid-term.

However, the path forward hinges on resolving supply chain bottlenecks and CFM’s delivery delays. The stock’s average price target of $230.67, implying a 27% upside from April’s levels, reflects investor confidence in GE’s long-term strategy. Should the company meet its 2025 guidance, it could solidify its status as a leader in both commercial aviation and defense propulsion—a dual mandate that, if executed well, could propel shares to new heights.

As airlines and militaries continue to invest in aging and advanced systems alike, GE’s Q1 performance signals that its diversified portfolio is a strategic advantage in an uneven recovery. The next quarter will test whether its operational challenges can be overcome—or whether the headwinds will persist, reshaping investor expectations.