Why RTX Corporation (RTX) Is the Steady Hand in a Shaking World of AI Speculation

In a market fixated on AI's flashy promises, RTX Corporation (NYSE: RTX) quietly builds a fortress of cash flows, geopolitical relevance, and institutional trust. While speculative AI stocks chase moonshots, RTX is the bedrock of 21st-century defense spending—a sector where governments spend now, not later. Let's dissect why RTX isn't just a play on defense—it's a hedge against global instability and a safer bet than chasing AI's hype cycle.

Financial Fortitude: Backlog Growth & Cash Flow Dominate

RTX's 2024 results are a masterclass in execution. Sales hit $80.8 billion—a 9% rise—with organic growth of 11% (excluding divestitures). Defense backlog? It's now a staggering $93 billion—a 20% jump from $78 billion in 2023. This isn't just numbers on a page: every dollar in backlog represents guaranteed future revenue.

The defense segment's fourth-quarter sales rose 10% (excluding divestitures), fueled by land/air defense systems like the Global Patriot and NASAMS, as well as classified contracts with Middle Eastern allies. Operating profit in defense surged 36% to $824 million, proving RTX can scale profitably.

With $4.5 billion in free cash flow in 2024 and a $7.0–$7.5 billion target for 2025, RTX isn't just surviving—it's thriving. Compare this to AI stocks like CRWD or NVDA, which face margin pressures and uncertain revenue streams. RTX's backlog and cash flow are the antithesis of speculation.

Institutional Hedge Funds Are All-In

Institutional ownership of RTX sits at 102.17% of shares outstanding (Q1 2025)—a figure so high it suggests every major fund is already on board. Vanguard, BlackRock, and State Street aren't just holders; they're scaling up. BlackRock increased its stake by 3.79%, while Capital Research Global Investors added 12.02% in shares. Even as some funds trimmed positions (e.g., Vanguard -0.09%), the overall message is clear: RTX is a core holding for long-term capital.

This isn't a fad. RTX has returned $33 billion to shareholders since its merger, with 2024's $3.7 billion in buybacks and dividends underscoring management's discipline. Unlike AI stocks fueled by short-term bets, RTX's stability attracts investors who want guaranteed payouts, not lottery tickets.

Geopolitical Tailwinds: Defense Isn't a Cycle, It's a Permanent Updraft

The AI narrative hinges on replacing human jobs. RTX's narrative? Protecting nations from threats real and existential. With Russia's aggression, China's military modernization, and Middle Eastern tensions, governments aren't cutting defense budgets—they're doubling down.

RTX's F135 engines ( powering F-35s) and Patriot missile systems are not “disruptive innovations.” They're mission-critical. When countries spend on defense, they buy RTX's products. And with a 2025 sales target of $83–84 billion—up 3% YoY—this isn't a one-year blip.

Valuation: Is RTX Overpriced? No—It's the Best Value

Critics point to RTX's P/E ratio of ~25x (based on 2024 EPS of $5.73) and argue it's pricey. But compare it to AI stocks trading at 50–100x sales with no profit in sight. RTX's free cash flow yield of ~5% and 9% organic sales growth make it a steal.

Moreover, RTX's backlog-to-sales ratio of ~2.7x means it's already “pre-sold” 2025's revenue. This isn't a gamble—it's a math problem. Every dollar in backlog is a dollar RTX will earn, with margins expanding as it scales.

The AI Mirage vs. RTX's Reality

While AI stocks like NVIDIA or C3.ai chase hypothetical future profits, RTX is cashing checks today. Here's why RTX wins:
1. Tangible Contracts: $93B in defense backlog vs. AI's “potential” revenue.
2. Stable Cash Flows: $7.5B free cash flow target vs. AI's burn rates.
3. Institutional Backing: 100%+ ownership vs. retail-driven AI manias.
4. Geopolitical Safety: Defense spending is recession-proof—AI isn't.

Final Call: Buy RTX—Now

RTX isn't just a defense stock—it's a portfolio anchor in turbulent markets. With geopolitical risks soaring and AI valuations detached from reality, RTX offers:
- Predictable growth (20% backlog growth, 13% EPS rise).
- Institutional credibility (BlackRock, Vanguard are not speculators).
- A moat no AI can breach: governments need RTX's tech to survive.

The market may chase AI's “next big thing,” but RTX is the only thing that matters when the world feels unsafe. Buy RTX now—before the next crisis makes it too late.

Disclaimer: Past performance does not guarantee future results. Consult a financial advisor before making investment decisions.