Meteoric Rheinmetall Rise: Boom or Bust for Late Investors?

Meteoric Rheinmetall rise is attracting investors' attention, while Stephen Yiu remains cautious. For more information on the reasons behind this situation, please visit CDS.

Published by Begüm DİLBAZ

29 July 2025, 20:10 published Updated 29 July 2025, 20:10

Meteoric Rheinmetall Rise, but Is It Too Pricey Now

The stock price of Rheinmetall AG has almost tripled since January, making it one of the most impressive performers in the European defense industry this year. Investor enthusiasm for defense companies amid elevated geopolitical tensions and rising military spending around the continent is reflected in the RHM share price boom.

But Stephen Yiu, manager of the Blue Whale Growth Fund, is approaching the market cautiously despite an outstanding recovery and solid fundamentals. Even with premium brands like Rheinmetall stock, Yiu feels that the current valuation levels are too stretched to support fresh investments, despite his continued optimism about the sector’s long-term prospects.

Europe’s Geopolitical Tensions Fuel Rheinmetall’s Defense Boom

The surge in defense spending pledges from NATO partners and European governments is largely responsible for Rheinmetall’s incredible year-to-date rise. Countries all over the continent have committed to strengthening their military capabilities as a result of the ongoing geopolitical unrest, which has led to a surge in investment in defense companies. This tendency has greatly benefited Rheinmetall, which is well-known for its armored vehicles and ammunition. The company’s growing order book and strategic placement within Europe’s defense ecosystem have elicited positive reactions from investors.

Investor Caution Grows Amid Rheinmetall’s Soaring Defense Stock Price

Yiu is hesitant to start or grow investments at the current levels, even though Rheinmetall has solid fundamentals and leads the sector. The manager acknowledged that he values the caliber of European defense companies in a recent interview with CNBC, but he claimed that valuations had increased to what he considers to be extremely high levels.

Yiu underlined that it may take years before government pledges result in significant earnings growth and that the sector’s recent advances have already factored in a large portion of the expected fiscal stimulus. He warned that there could not be much upside for investors buying Rheinmetall shares now.