Am I the one investor dropping cash on BAE Techniques (LSE: BA) shares? Generally it feels prefer it. The FTSE 100 defence and aerospace producer has had an excellent run, its shares nearly doubling during the last 5 years (plus dividends on high). But after shopping for them in March and Could this yr, I rapidly discovered myself sitting on a double-digit loss. 

I managed to purchase one of many UK’s most prized development shares simply because it misplaced momentum, one thing I typically attempt to keep away from. But within the longer run, I stay optimistic. I plan to carry BAE Techniques for years – and ideally a long time – so short-term setbacks like this finally imply little.

This FTSE 100 development inventory’s combating again

The BAE Techniques share price has climbed on the again of as we speak’s geopolitical uncertainty, as governments ramp up their defence budgets. Want I point out Ukraine, the Center East, Taiwan?

US President Donald Trump’s placing stress on NATO members to spend extra on their militaries, which ought to additional enhance defence spend.

BAE Techniques has been lifted by a string of great contract wins, filling out its already spectacular order e-book. The Tempest fighter jet programme, a collaborative effort between the UK, Italy and Japan, is a biggie. The corporate’s international footprint additionally covers the US, Saudi Arabia, and Australia.

The board now expects to hit its upgraded underlying working earnings development goal of 12-14% this yr, pushing final yr’s £2.7bn determine past £3bn. Debt’s underneath management. Plus it’s shifting into probably profitable new areas, comparable to cyber safety as international locations look to guard their digital infrastructure.

But even defensive shares may be unstable. If Trump drives by a peace deal in Ukraine, or international tensions ease in some unforeseeable manner, the sector may lose a few of its shine.

Additionally there’s a reasonably truthful likelihood NATO members gained’t spend sufficient to please Trump. We’re all tight for money now. Alternatively, a powerful pound may hit the worth of abroad revenues, knocking earnings in sterling phrases. I don’t really feel that’s an enormous danger proper now.

The valuation’s a tad excessive

I feel the principle cause BAE Techniques fell on my watch is that the shares merely turned too costly, buying and selling at round 22 instances earnings. Immediately, they’re a bit of cheaper at 19.5 instances. That’s not excessively costly, nevertheless it’s not a cut price both.

The unhappy reality is that purchasing BAE Techniques shares is a wager on dangerous information. I’d fortunately see my shares tank because the world embraced love, peace and concord, however I can’t see it taking place in my lifetime.

In reality, they’re on the march once more. The BAE System share price has climbed 7.4% to date in 2025. Any individual who invested £10,000 at the beginning of January would have £10,740 as we speak. Over 12 months, they’re up 5%.

My loss is narrowing however what occurs subsequent is dependent upon occasions. Large, lethal, international occasions. I’ll maintain onto my shares by thick and skinny. Except human nature radically modifications – and there’s little signal of that – I can’t see this inventory going out of vogue.