Am I the only investor losing money on BAE Systems (LSE: BA) shares? Sometimes it feels like it. The FTSE 100 defence and aerospace manufacturer has had a brilliant run, its shares almost doubling over the last five years (plus dividends on top). Yet after buying them in March and May this year, I quickly found myself sitting on a double-digit loss. 

I managed to buy one of the UK’s most prized growth stocks just as it lost momentum, something I generally try to avoid. Yet in the longer run, I remain optimistic. I plan to hold BAE Systems for years – and ideally decades – so short-term setbacks like this ultimately mean little.

This FTSE 100 growth stock’s fighting back

The BAE Systems share price has climbed on the back of today’s geopolitical uncertainty, as governments ramp up their defence budgets. Need I mention Ukraine, the Middle East, Taiwan?

US President Donald Trump’s putting pressure on NATO members to spend more on their militaries, which should further boost defence spend.

BAE Systems has been lifted by a string of significant contract wins, filling out its already impressive order book. The Tempest fighter jet programme, a collaborative effort between the UK, Italy and Japan, is a biggie. The company’s global footprint also covers the US, Saudi Arabia, and Australia.

The board now expects to hit its upgraded underlying operating earnings growth target of 12-14% this year, pushing last year’s £2.7bn figure beyond £3bn. Debt’s under control. Plus it’s moving into potentially lucrative new areas, such as cyber security as countries look to protect their digital infrastructure.

Yet even defensive stocks can be volatile. If Trump drives through a peace deal in Ukraine, or global tensions ease in some unforeseeable way, the sector could lose some of its shine.

Also there’s a pretty fair chance NATO members won’t spend enough to please Trump. We’re all tight for cash now. Alternatively, a strong pound could hit the value of overseas revenues, knocking profits in sterling terms. I don’t feel that’s a huge risk right now.

The valuation’s a tad high

I think the main reason BAE Systems fell on my watch is that the shares simply became too expensive, trading at around 22 times earnings. Today, they’re a little cheaper at 19.5 times. That’s not excessively expensive, but it’s not a bargain either.

The sad fact is that buying BAE Systems shares is a bet on bad news. I’d happily see my shares tank as the world embraced love, peace and harmony, but I can’t see it happening in my lifetime.

In fact, they’re on the march again. The BAE System share price has climbed 7.4% so far in 2025. Somebody who invested £10,000 at the start of January would have £10,740 today. Over 12 months, they’re up 5%.

My loss is narrowing but what happens next depends on events. Big, deadly, global events. I’ll hold onto my shares through thick and thin. Unless human nature radically changes – and there’s little sign of that – I can’t see this stock going out of fashion.