The stock market is hitting new records — and Big Tech isn't the top performer.
The Industrials (XLI) sector has been on fire this year as it has outperformed the entire market to lead the S&P 500 (^GSPC) to all-time highs. The sector is up 16% year to date, outpacing Technology (XLK), which has risen 13%, and Utilities (XLU), up 11% over the same period
A boom in aerospace production, combined with AI-driven data center build-outs and investments in power infrastructure, has created a crop of Industrial highfliers.
On Tuesday, Boeing (BA) posted better-than-expected quarterly results, signaling continued progress in its recovery. The aerospace giant's stock is up 28% year to date, trailing only AI chip maker Nvidia (NVDA) on the Dow Jones Industrial Average (^DJI).
Shares of the aircraft maker, which is undergoing a turnaround plan, are up nearly 30% year to date and roughly 70% since the April lows.
The company has emerged as a major beneficiary of President Trump's dealmaking abroad, clinching its biggest order ever from Qatar Airways in May and securing a commitment from British Airways as part of a UK trade framework.
GE Aerospace (GE) also recently highlighted a growth in engine orders stemming from deals abroad. Shares of the engine maker have surged more than 60% year to date as revenue and earnings per share jumped more than 20% last quarter.
The outperformance of the Industrials sector underscores Trump's focus on beefing up manufacturing both through dealmaking and incentives within the One Big Beautiful Bill Act, signed into law earlier this month.
Tax incentives, including write-offs for capital expenditures and onshoring, are expected to be a tailwind for the sector.
“We think that the fiscal bill adds to some of the strength that industrials will see in the coming quarters,” Yung-Yu Ma, chief investment strategist at PNC Asset Management Group, told Yahoo Finance on Tuesday.
“We think there is still a lot of momentum, we don't think we're in the late innings of industrials strength, we're probably in the middle innings though,” he added.
Power generation for AI data centers and upgrades to the electrical grid have also driven a rally in shares of power equipment makers.
GE Vernova (GEV) stock is up more than 90% year to date as the manufacturer of natural gas turbines saw its order books balloon last quarter with strong demand from data centers.
Meta (META), Microsoft (MSFT), Amazon (AMZN), and Google parent Alphabet (GOOGL, GOOG) are expected to spend a cumulative $325 billion in 2025, driven by a continued commitment to building out artificial intelligence infrastructure.
