Europe’s Defense Stocks Cool. These 2 Are Still Taking Off.
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Aug 07 2025
0mins
Source: Barron's
Current Status of European Defense Stocks: European defense stocks have stabilized after a significant increase, with the Stoxx Europe Aerospace & Defense ETF remaining flat for the past two months.
Recent Performance Overview: The ETF experienced a remarkable surge of two-thirds from January to June before reaching its current plateau.
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Analyst Views on MORN
Wall Street analysts forecast MORN stock price to rise
2 Analyst Rating
2 Buy
0 Hold
0 Sell
Moderate Buy
Current: 177.150
Low
250.00
Averages
285.00
High
320.00
Current: 177.150
Low
250.00
Averages
285.00
High
320.00
About MORN
Morningstar, Inc. is a provider of independent investment insights. The Company's segments include Morningstar Direct Platform, PitchBook, Morningstar Credit, Morningstar Wealth, and Morningstar Retirement. The Morningstar Direct Platform provides investors with data, research and insights, and investment analysis to empower investment decision-making. The PitchBook provides investors with access to data, research, analytics, and artificial intelligence (AI) enabled software across private capital markets, including venture capital, private equity, private credit, bank loans, and mergers & acquisitions (M&A). Morningstar Credit provides investors with credit ratings, research, data, and credit analytics solutions. Morningstar Wealth provides investment products, investor tools, and an advisor platform powered by research and data. The Morningstar Retirement offers products designed to help individuals reach retirement goals.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
ETF Component Trading Dynamics on Friday
- Tesla Trading Status: Tesla traded flat on Friday with over 40.9 million shares exchanged, indicating sustained investor interest despite a lack of significant price movement, which may reflect market stability.
- Charles Schwab Gains: Charles Schwab's stock rose approximately 2.7% on a volume exceeding 5.8 million shares, suggesting increased market confidence in its financial health, potentially attracting more investor attention.
- Birkenstock's Strong Performance: Birkenstock Holding was the best performer on Friday, with a 6.5% increase in stock price, reflecting market recognition of its brand value and growth potential, which could drive further market share expansion.
- Morningstar's Weakness: Morningstar's stock fell about 2.3%, lagging behind other components of the Baron First Principles ETF, indicating market concerns about its future performance, which may impact investor confidence.
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- Capital Expenditure Expectations: SpaceX's capital spending is projected to reach $360 billion by 2030 and rise to $732 billion by 2031, which will exert substantial pressure on the company's cash flow, likely forcing it to rely on capital markets for financing in the coming years.
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- Valuation and Risks: With an initial valuation target of $1.77 trillion, only $370 billion is linked to rockets and space transport, suggesting that the valuation's reasonableness hinges on a single growth catalyst, which, if not executed successfully, could call the valuation into question.
- Capital Expenditure Plans: SpaceX's capital spending is projected to reach $360 billion by 2030 and $732 billion by 2031, primarily aimed at scaling its AI business, which may lead to negative cash flow for the company in the coming years.
- Investor Focus: The AI business is still in its early stages and faces challenges in a highly competitive and capital-intensive environment, making it crucial for investors to monitor SpaceX's ability to sustain its fundraising efforts to evaluate its investment potential.
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- Record-Setting IPO: SpaceX plans to conduct an IPO on June 12, 2026, aiming to raise $75 billion at a valuation of $1.77 trillion, which would make it the largest IPO in history, reflecting immense market interest in the space sector.
- Significant Revenue Growth: SpaceX reported revenues of $10.4 billion in 2023, projected to rise to $14 billion in 2024 and $18.7 billion in 2025, despite a net loss of $4.9 billion in 2025, indicating a strong growth trajectory for the company.
- Diverse Business Segment Performance: The Connectivity segment, including Starlink, generated $11.4 billion in sales and $4.4 billion in operating income in 2025, making it the only profitable segment, while the AI segment faced a $6.4 billion operating loss, highlighting disparities in profitability across divisions.
- Valuation Challenges: Despite a staggering market cap of $1.77 trillion, equivalent to 95 times its 2025 sales, Morningstar values SpaceX at $780 billion, suggesting a significant divergence in market expectations regarding its future profitability.
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- IPO Valuation Analysis: SpaceX is targeting a $1.77 trillion valuation for its IPO on June 12, despite only generating $18.7 billion in sales in 2025, which translates to a staggering 95 times its sales, reflecting both high market expectations and inherent risks.
- Segment Performance Disparity: Among its three business segments, Starlink stands out as the only profitable one, generating $11.4 billion in sales and $4.4 billion in operating income in 2025, while the AI segment faces a significant operating loss of $6.4 billion, highlighting the varied profitability across its operations.
- Market Outlook and Risks: Although Starlink's revenue grew by 49.8% year-over-year, SpaceX remains unprofitable overall, reporting a net loss of $4.9 billion in 2025, prompting investors to carefully assess the potential returns post-IPO, especially given the anticipated market volatility.
- Investor Return Expectations: In an optimistic scenario, SpaceX could achieve annual returns of 25% to 30% by 2030, with a market cap reaching $5 trillion; however, the more likely outcome is modest returns or losses, as Morningstar values the company at $780 billion, significantly below the expected valuation.
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- Regulatory Concerns: Senator Warren sent a letter to Nasdaq, S&P Dow Jones, and other index firms questioning whether rule changes influenced by lobbying from Musk and others could allow SpaceX to enter indexes without adequate investor protections, potentially destabilizing markets.
- Market Risks: She highlighted that fast-tracking newly listed companies into top indexes could pose significant risks to American investors, particularly retirees who rely on index funds for their savings, jeopardizing their financial security.
- SpaceX IPO Outlook: SpaceX is set to begin trading on Friday with a valuation of approximately $1.8 trillion, making it one of the largest public offerings in history, which could trigger market volatility and increase investor anxiety.
- SEC Investigation Call: Warren urged the SEC to delay SpaceX's offering, arguing that the agency has not conducted due diligence in protecting investors and maintaining market integrity, which could lead to greater market risks.
See More
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- Tesla Trading Status: Tesla traded flat on Friday with over 40.9 million shares exchanged, indicating sustained investor interest despite a lack of significant price movement, which may reflect market stability.
- Charles Schwab Gains: Charles Schwab's stock rose approximately 2.7% on a volume exceeding 5.8 million shares, suggesting increased market confidence in its financial health, potentially attracting more investor attention.
- Birkenstock's Strong Performance: Birkenstock Holding was the best performer on Friday, with a 6.5% increase in stock price, reflecting market recognition of its brand value and growth potential, which could drive further market share expansion.
- Morningstar's Weakness: Morningstar's stock fell about 2.3%, lagging behind other components of the Baron First Principles ETF, indicating market concerns about its future performance, which may impact investor confidence.
See More
SpaceX IPO: Market Potential and Risks Ahead
- Market Potential Assessment: SpaceX claims in its IPO prospectus that its total addressable market is valued at $28.5 trillion, with $26.5 trillion stemming from its artificial intelligence segment, highlighting significant future tech potential.
- IPO Valuation Analysis: With an initial valuation target of $1.77 trillion, investors must carefully evaluate the reasonableness of this figure, especially since only $370 billion is linked to rockets and space transport solutions.
- Capital Expenditure Expectations: SpaceX's capital spending is projected to reach $360 billion by 2030 and rise to $732 billion by 2031, which will exert substantial pressure on the company's cash flow, likely forcing it to rely on capital markets for financing in the coming years.
- AI Business Risks: Acknowledging that its AI business is still in its early stages, SpaceX faces high competition and capital-intensive challenges, making its future success critical to how IPO proceeds will be utilized and the overall financial health of the company.
See More
SpaceX IPO Analysis: Massive AI Market Potential
- Market Size Estimate: SpaceX claims in its IPO prospectus that its quantifiable total addressable market is $28.5 trillion, with $26.5 trillion stemming from its AI business, indicating a massive market opportunity but also highlighting risks associated with its IPO valuation.
- Valuation and Risks: With an initial valuation target of $1.77 trillion, only $370 billion is linked to rockets and space transport, suggesting that the valuation's reasonableness hinges on a single growth catalyst, which, if not executed successfully, could call the valuation into question.
- Capital Expenditure Plans: SpaceX's capital spending is projected to reach $360 billion by 2030 and $732 billion by 2031, primarily aimed at scaling its AI business, which may lead to negative cash flow for the company in the coming years.
- Investor Focus: The AI business is still in its early stages and faces challenges in a highly competitive and capital-intensive environment, making it crucial for investors to monitor SpaceX's ability to sustain its fundraising efforts to evaluate its investment potential.
See More
SpaceX Plans Historic $75 Billion IPO
- Record-Setting IPO: SpaceX plans to conduct an IPO on June 12, 2026, aiming to raise $75 billion at a valuation of $1.77 trillion, which would make it the largest IPO in history, reflecting immense market interest in the space sector.
- Significant Revenue Growth: SpaceX reported revenues of $10.4 billion in 2023, projected to rise to $14 billion in 2024 and $18.7 billion in 2025, despite a net loss of $4.9 billion in 2025, indicating a strong growth trajectory for the company.
- Diverse Business Segment Performance: The Connectivity segment, including Starlink, generated $11.4 billion in sales and $4.4 billion in operating income in 2025, making it the only profitable segment, while the AI segment faced a $6.4 billion operating loss, highlighting disparities in profitability across divisions.
- Valuation Challenges: Despite a staggering market cap of $1.77 trillion, equivalent to 95 times its 2025 sales, Morningstar values SpaceX at $780 billion, suggesting a significant divergence in market expectations regarding its future profitability.
See More
SpaceX Targets $1.77 Trillion Valuation for IPO
- IPO Valuation Analysis: SpaceX is targeting a $1.77 trillion valuation for its IPO on June 12, despite only generating $18.7 billion in sales in 2025, which translates to a staggering 95 times its sales, reflecting both high market expectations and inherent risks.
- Segment Performance Disparity: Among its three business segments, Starlink stands out as the only profitable one, generating $11.4 billion in sales and $4.4 billion in operating income in 2025, while the AI segment faces a significant operating loss of $6.4 billion, highlighting the varied profitability across its operations.
- Market Outlook and Risks: Although Starlink's revenue grew by 49.8% year-over-year, SpaceX remains unprofitable overall, reporting a net loss of $4.9 billion in 2025, prompting investors to carefully assess the potential returns post-IPO, especially given the anticipated market volatility.
- Investor Return Expectations: In an optimistic scenario, SpaceX could achieve annual returns of 25% to 30% by 2030, with a market cap reaching $5 trillion; however, the more likely outcome is modest returns or losses, as Morningstar values the company at $780 billion, significantly below the expected valuation.
See More
Senator Warren Raises Concerns Over SpaceX IPO Index Rules
- Regulatory Concerns: Senator Warren sent a letter to Nasdaq, S&P Dow Jones, and other index firms questioning whether rule changes influenced by lobbying from Musk and others could allow SpaceX to enter indexes without adequate investor protections, potentially destabilizing markets.
- Market Risks: She highlighted that fast-tracking newly listed companies into top indexes could pose significant risks to American investors, particularly retirees who rely on index funds for their savings, jeopardizing their financial security.
- SpaceX IPO Outlook: SpaceX is set to begin trading on Friday with a valuation of approximately $1.8 trillion, making it one of the largest public offerings in history, which could trigger market volatility and increase investor anxiety.
- SEC Investigation Call: Warren urged the SEC to delay SpaceX's offering, arguing that the agency has not conducted due diligence in protecting investors and maintaining market integrity, which could lead to greater market risks.
See More
