Aircraft engines are about as far from a typical technology stock as you can get, but that is part of what makes GE Aerospace (NYSE:GE) and RTX Corporation (NYSE:RTX) interesting. Both companies operate in markets where products take years to develop, require extensive certification, and stay in service for decades. Once an engine is installed on an aircraft, the relationship with the customer can last for much longer than the original sale.
That creates a moat that is difficult to replicate. The bigger debate is which company is positioned to get more out of it.
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GE has an unusually valuable installed base
GE Aerospace has roughly 50,000 commercial and 30,000 military engines in its installed base, supporting an aftermarket business that accounts for about 70% of revenue.
That installed base is arguably the heart of GE’s moat. Airlines may have choices when purchasing a new aircraft, but once an engine is flying, maintaining it is a highly specialized business. GE gets years of parts, repairs, and maintenance revenue from engines that are already in service.
GE’s recent commentary shows why the aftermarket opportunity is so attractive. Demand for its LEAP engines is strong enough that the company is expanding both manufacturing and maintenance capacity, while also bringing more partners into its global MRO network. The results are already showing up, with internal shop-visit revenue up 30% in the first half of 2026 and engine deliveries rising 37%.
There is a nice flywheel here: more engines in service create a larger installed base, which creates more aftermarket work, which can help fund investment in the next generation of engines.
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RTX has a broader moat
RTX has a different advantage. Rather than relying primarily on one business, it combines Collins Aerospace, Pratt & Whitney and Raytheon, giving it exposure to commercial aviation, aircraft systems and defense.
Its aerospace business also benefits from long-term aftermarket relationships. RTX describes its commercial aerospace operations as having both original-equipment and extensive aftermarket businesses, with many customers covered by long-term service agreements.
That diversification matters. GE is increasingly a focused aerospace company, while RTX has a much broader set of customers and end markets.
The trade-off is that RTX has also had to deal with the Pratt & Whitney GTF problems. The powder-metal issue required accelerated inspections and removals across part of the A320neo fleet, creating costs and operational headaches that GE does not have to contend with to the same extent.
GE has the cleaner growth story, but valuation matters
GE Aerospace’s results show just how strong the business has become. Operating margin for the second quarter came in at 21.0%, or 21.7% on an adjusted basis, while adjusted EPS grew 22% from a year earlier.
RTX, meanwhile, generated $24.7 billion in second-quarter sales and $2.8 billion in operating profit, giving it an operating margin of roughly 11.4%.
GE therefore looks like the more focused business with stronger margins and a particularly attractive aftermarket model. But investors already recognize much of that strength. The valuation premium matters because a great business can still produce disappointing returns if too much optimism is already reflected in the stock.
RTX Corporation has its own opportunity. If Pratt & Whitney works through its GTF problems while commercial aerospace continues recovering, the company has room to benefit from both its aerospace portfolio and defense exposure.
The valuation gap is significant. GE trades at 35.34x forward earnings, compared with 24.57x for RTX. That premium is easier to understand when you consider the growth outlook: GE’s EPS is expected to grow by more than 20% annually over the next two years, while RTX’s is expected to grow by roughly 12% a year in that period. GE is therefore growing faster, but investors are also paying considerably more for that growth.
Conclusion
Both companies have genuine moats, but they are built slightly differently. GE’s advantage comes from an enormous installed engine base and an increasingly focused aerospace business, while RTX combines aerospace aftermarket economics with a much broader defense and aircraft-systems portfolio.
GE currently has the cleaner operational story, particularly with its strong margins and growing aftermarket business. RTX offers greater diversification and a potentially meaningful recovery opportunity as its GTF problems become less disruptive.
For investors, the choice ultimately comes down to how much they are willing to pay for GE’s stronger growth and focus versus the broader business RTX offers.
Market sentiment
Market sentiment toward both aerospace stocks remained mixed in Insider Monkey’s database. The number of hedge funds holding RTX fell from 95 at the end of Q1 to 92 at the end of Q2 2026, while the total value of their positions increased from about $9.42 billion to $10.37 billion.
GE Aerospace saw a similar decline in the number of hedge fund holders, from 119 to 113, but the value of their positions jumped from about $21.23 billion to $29.88 billion over the same period.
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This article is originally published at Insider Monkey.
