These 3 Defense Giants Beat Q1 Estimates—So Why Did Their Stocks Still Fall?

As the Iran conflict nears its ninth week, estimates pinned the cost of the conflict at roughly $1 billion to $2 billion per day prior to the ceasefire announcement. And while U.S. taxpayers are footing the bill, a select group of companies has seen heightened demand for their implements of war.

This week, aerospace and defense contractors began reporting Q1 2026 earnings. With the latest bout of geopolitical unrest in the Middle East having started on Feb. 28, the conflict has affected the top and bottom lines of companies like GE Aerospace (NYSE: GE), Northrop Grumman (NYSE: NOC), and RTX (NYSE: RTX).

For investors looking for insights into how much potential upside—if any—remains for those stocks, and how an expeditious and peaceful end to the conflict could impact their prices, here are some clues.

GE Aerospace: Double-Beat Included a 25% Increase in Revenue

GE Aerospace provides best-in-class propulsion solutions for a range of clients, including defense customers.

The U.S. military is one, and it has awarded the company with numerous multi-billion-dollar contracts.

Recent agreements include a $5 billion contract for F110 engines in 2025, a $1.4 billion contract for CH-53K helicopter engines in January 2026, and a $14.16 million, four-year U.S. Air Force contract for fuel control systems that lasts through June 2029.

While those deals were already on GE Aerospace’s books prior to the start of the Iran war, they still contributed to Q1 revenue. When the company reported on Tuesday, April 21, it announced revenue of $11.61 billion, beating analyst estimates and marking a 24.6% year-over-year (YOY) increase. Earnings per share (EPS) came in at $1.86, also above the consensus of $1.81, marking the company’s 14th consecutive beat.

In his earnings call comments, CEO Larry Culp addressed the conflict in the Middle East from his very first sentence, noting that the “dynamic geopolitical environment our industry is navigating” contributed to an 87% YOY increase in orders. Culp added that operating profit increased 18% YOY, EPS increased 25% YOY, and free cash increased 14% YOY. Total engine deliveries were up 43% YOY.

Nonetheless, GE shares slid more than 5% on the day as the market reacted negatively to management failing to raise full-year guidance. Valuation concerns remain as well. The stock's forward price-to-earnings (P/E) is around 37x, which contributed to profit-taking after Q1 financials were released.

Northrop Grumman: Top and Bottom Line Beats With B-21 Orders Nearing Delivery

Northrop Grumman is designing the B-21 Raider—a nuclear-capable subsonic stealth strategic bomber—as part of a $4.5 billion production deal with the U.S. Air Force.

As of April 2026, there are two B-21 Raiders undergoing flight testing at Edwards Air Force Base, with more in various production stages at Plant 42.

While still not battle-tested, the bombers already contributed to Q1 revenue for Northrop Grumman.

On Tuesday, April 21, the company reported Q1 EPS of $6.14, beating analyst expectations of $6.03. Quarterly revenue of $9.88 billion also surpassed estimates, marking a 4.4% YOY increase. The earnings beat marked Northrop Grumman’s 14th in the last 15 quarters.

“As we are seeing in recent military operations, many of our systems are playing a critical role in successfully executing the mission,” CEO Kathy Warden said in her earnings calling comments. Warden highlighted how demand for the company’s offerings is increasing, noting that “in the last two years, [Northrop Grumman has] opened over 20 new facilities and added more than 2 million square feet of manufacturing space across the United States.”

The stock, which has only mustered around a 3% year-to-date (YTD) gain, sold off after releasing Q1 financials, with shares sliding nearly 7% after investors reacted negatively to management reaffirming—rather than raising—full-year guidance.

RTX: Punished After a Double Beat

RTX, created through the 2020 merger of Raytheon and United Technologies, also impressed on Tuesday, April 21, with Q1 EPS of $1.78 coming in higher than the consensus estimate of $1.52, up 21% YOY.

Meanwhile, quarterly revenue of $22.08 billion was 8.7% high YOY and above analyst expectations of $21.38 billion.

Notably, the company has beaten earnings estimates every quarter since Q4 2016.

Adjusted sales came in at $22.1 billion, with management raising full-year sales and EPS guidance while maintaining free cash flow guidance.

“Our backlog is a record $271 billion, up 25% year-over-year, with strong commercial and defense awards in the quarter,” CEO Chris Calio said in his earnings call comments after acknowledging the ongoing situation in Iran.

“On the defense side of the business, we saw significant awards across all three segments, highlighting the strength of our product offerings. At Pratt, the military business was awarded over $3 billion for F-135 Lot 19 production,” Calio added.

Still, RTX sold off on Tuesday, with shares falling by more than 4%, which dragged the stock into the red on the year.

How Much Upside Can Defense Contractors Still Deliver?

Despite the market’s negative reactions on Tuesday, all three defense contractors remain in the favor of analysts, with each carrying a Moderate Buy rating. Consensus one-year price targets suggest that GE has upside potential of more than 27%, NOC more than 22%, and RTX more than 12%.

A near-term resolution to the Iran war could sour investor sentiment. But in the long term, defense companies will maintain revenue from government contracts. That’s reflected in the earnings growth expectations for each of these companies, with GE Aerospace's EPS forecast to grow by more than 16% over the following year, Northrop Grumman's by nearly 8%, and RTX’s by 10%.

For investors looking to use the post-earnings selloff as an entry point, NOC and RTX are currently trading at far more attractive forward P/E multiples of around 21 and 28, respectively.

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Tractor Supply’s 10% Culling: A Bruise, Not a Break

A double-digit stock plunge on massive trading volume is the kind of market event that demands attention. Following its first-quarter earnings report on April 21, shares of Tractor Supply Company (NASDAQ: TSCO) did just that, falling over 11% to a new 52-week low.

The sell-off was fueled by a volume of 25.9 million shares, more than double the daily average. At first glance, such a dramatic reaction suggests a company in distress. However, a deeper look at the data reveals a more nuanced story.

While the rural retailer missed analyst targets, it also grew revenue, reaffirmed its full-year guidance, and advanced key strategic plans. This raises a critical question for investors navigating the aftermath: Was the market's sharp rebuke a true reflection of Tractor Supply's health, or was it a potential overreaction to short-term pressures?

The Numbers Behind the Mayhem

Tractor Supply's first-quarter report presented a complex picture that helps explain the market's cautious stance. The company reported earnings per share (EPS) of 31 cents, missing the consensus estimate of 34 cents. Revenue for the quarter landed at $3.59 billion. While this marked a respectable 3.6% increase from the prior year, it fell just shy of the $3.64 billion analysts had forecast.

The report offered a clear window into the behavior of the American rural consumer. Comparable store sales, a metric that filters out the impact of new and closed stores, were up 0.5%. This slight increase was the product of a tug-of-war between two key trends: the average spend per customer rose 1.6%, while the total number of transactions declined 1%. This dynamic, known as trip consolidation, often occurs when consumers face economic pressure from factors like inflation and high fuel prices. They visit stores less often to save time and money, but they tend to buy more in each visit.

On the profit side, Tractor Supply maintained its gross margin at 36.2%, a positive sign of its cost management. However, operating income decreased by 6.3%. This contraction was not due to a collapse in pricing but was a direct result of sales volumes coming in lower than planned, combined with the significant investment required to open a record 40 new stores during the quarter. When viewed through a broader lens, these marginal misses appear almost trivial. They are set against the backdrop of significant, ongoing investments and progress in the company’s internal strategic transformation, known as Project Fusion, and the broader, lingering uncertainty of the current economic climate.

Prioritizing Profits Over Progress

In today's economic climate, the market often prioritizes profitability and efficiency over top-line growth, and its reaction to Tractor Supply's report was a textbook example. The sell-off was triggered primarily by declines in operating income and customer traffic.

These metrics were interpreted as potential cracks in Tractor Supply's otherwise resilient needs-based business model. The positive revenue growth and the crucial reaffirmation of full-year guidance were largely overshadowed by near-term margin concerns.

The stock's dramatic fall to the $39.57 level pushed it to a new 52-week low, a move that starkly contrasts with analysts' prevailing view. Even after the report, the Wall Street consensus rating for Tractor Supply remains a Moderate Buy. The average price target of $57.78 suggests analysts see significant long-term value, with the current price viewed as undervalued. This wide gap between the market's immediate, punitive reaction and the more optimistic long-term professional outlook is often where potential opportunities can be found.

How Tractor Supply Is Cultivating a Comeback

Acknowledging the challenges is the first step toward overcoming them, and Tractor Supply's management has outlined a clear and proactive strategy. The primary headwind identified in the report was the Companion Animal category, which dragged comparable sales by 100 basis points. In response, Tractor Supply is executing a multi-pronged plan to revitalize this crucial segment.

• Pivoting to Premium Pet Food: Tractor Supply is aggressively scaling its assortment of fresh and frozen pet food, a high-growth area where it was under-indexed. The plan is to expand this offering from just 80 stores to over 700 by the end of 2026.

• Courting the Cat Customer: To capitalize on shifting pet ownership trends, Tractor Supply is significantly expanding and upgrading its assortment of cat food and supplies.

• Innovating with Exclusive Brands: Tractor Supply is relaunching its exclusive Retriever pet food line with enhanced formulas and expanding its popular 4health brand into new formats.

While the pet category is being retooled, other areas of the business continue to fire on all cylinders. Digital sales posted another quarter of strong double-digit growth, powered by a triple-digit increase in its subscription business for consumable goods.

The Final Mile delivery network is also expanding, enhancing Tractor Supply's ability to efficiently handle large-scale orders of items like feed and fencing. This digital and logistical strength, combined with the continued opening of new physical stores, demonstrates a business simultaneously addressing weaknesses and scaling its strengths.

Harvesting Opportunity: A Resilient Retailer at a Discounted Price?

For investors, the central question is whether Tractor Supply's stock price now represents a value trap or a genuine bargain. With the share price at a 52-week low and a trailing price-to-earnings ratio of 19X, the stock is trading at a discount to its historical valuation. This suggests that the market may have overly punished the stock for short-term issues.

For those focused on income, the stock's profile has become more attractive. The price drop pushed the dividend yield to 2.4%. This income stream is supported by a track record of shareholder returns. Tractor Supply has increased its dividend for 16 consecutive years, proving its resilience through various economic cycles. Furthermore, with a dividend payout ratio of just 46.38%, the dividend is not only safe but has ample room for future growth.

The first quarter undoubtedly revealed that even a needs-based retailer like Tractor Supply is not immune to a cautious consumer. However, the market's severe reaction appears to downplay Tractor Supply's stable foundation.

With reaffirmed guidance, a clear strategy to address its challenges, and a steadfast commitment to its dividend, Tractor Supply's fundamentals remain solid. Investors focused on long-term value and reliable income may find that now is an opportune time to watch this rural retail leader for accumulation.

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Aehr Test Systems: Small AI Stock Sees Record AI Hyperscaler Order

The small semiconductor stock Aehr Test Systems (NASDAQ: AEHR) is generating increasing interest from customers and investors alike in 2026. On the year, Aehr has now soared more than 350%, making it one of the best performers in the entire U.S. stock market.

Driving Aehr’s success is the company’s accelerating demand from artificial intelligence (AI) customers. Aehr’s two most important products are its Sonoma and FOX-XP systems. These machines expose AI chips or wafers to extreme conditions, stress-testing them to prevent faulty products from entering data centers. With companies spending billions of dollars a year on the AI infrastructure build-out, Aehr's machines are helping protect these investments.

After receiving a string of orders, Aehr just added its biggest one yet.

Hyperscaler Re-Ups on Sonoma With Record $41 Million Order

In mid-April, Aehr said it had received a record $41 million production order from its lead hyperscale customer. According to the company, “The order is the largest in Aehr’s history." This order is for the firm’s Sonoma systems. Sonoma tests chips after packaging, while FOX-XP tests at the earlier wafer level.

This customer will use Sonoma to test its current-generation AI processor application-specific integrated circuits (ASICs). AI processor ASICs are also often referred to as “custom silicon" or XPUs. Companies like Broadcom (NASDAQ: AVGO) and Marvell Technology (NASDAQ: MRVL) co-develop these types of chips with massive hyperscalers like Meta Platforms (NASDAQ: META) or Amazon.com (NASDAQ: AMZN). Evoking these names aims to provide investors with a reference point, not to speculate on who Aehr’s customers may be.

Importantly, this is another follow-on order for the customer’s current generation chip testing needs. Aehr made similar announcements back in both July 2025 and August 2025. Notably, Aehr did not specify the size of these orders, suggesting they were more modest in scale.

This indicates that Aehr’s customer has found significant value in the Sonoma systems, causing them to keep coming back for more. Additionally, the customer appears to have significantly increased their commitment to Sonoma, resulting in the firm's largest order ever. This is yet another sign of Aehr validating its competitive position within the AI infrastructure landscape.

Aehr’s Orders Shoot to Over $90 Million, Far Above Previous Estimates

Now, Aehr has blown past its order forecasts. Previously, the company had expected to generate orders between $60 million and $80 million in the second half of its fiscal year 2026 (H2 FY2026). There are now approximately five weeks left in Aehr’s FY2026, as its fiscal reporting period is several quarters ahead of the calendar year period.

With its latest announcement, the company’s H2 FY2026 orders have risen to over $92 million. That is approximately 31% higher than the midpoint of its past guidance. Given the rapid pace at which Aehr has been announcing orders, this figure could move even higher.

Aehr is also working with this customer on its next-generation AI processor ASIC. It received an initial order to provide Sonoma systems for this device in February. Aehr expects this next-generation chip to move into production at some point in calendar year 2026.

Notably, the company says, “As these next-generation devices move into volume production, we see the potential for further substantial increases in demand for Sonoma systems and consumables in our next fiscal year.” Given the repeat orders that Aehr has received for the current-generation device, it would not be overly surprising to see this continue with the next-generation device.

Aehr is generating orders and interest from customers involved in a variety of data center components. This includes the aforementioned hyperscaler and a silicon photonics customer. Silicon photonics is a networking technology that enables different data center components to communicate.

Aehr also says it is engaging with potential customers that provide flash memory and high-bandwidth memory. Flash memory players include firms like SanDisk (NASDAQ: SNDK), while Micron Technology (NASDAQ: MU) is a notable name in high-bandwidth memory. Again, this is simply for investors' reference, not a suggestion that Aehr has engaged with these specific companies.

Aehr Issues Shares, Adding Tens of Millions to Its Balance Sheet

Interestingly, Aehr has recently issued a significant number of shares, generating gross proceeds of $60 million. Although this is dilutive to shareholders, it will dramatically improve Aehr’s cash position. The company’s cash and equivalents were approximately $36.9 million at the end of its latest quarter.

For a company like Aehr that is seeing its demand inflect, this is largely a positive sign. It suggests that Aehr needs extra cash to expand production capacity and deliver the products that customers have ordered. Adding capacity can also help the company serve future orders it may receive.

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