Rolls-Royce profits rise 50% amid AI and defense demand

Rolls-Royce sees a 50% increase in profits, driven by jet engine demand and investments in AI.

Rolls-Royce reports significant profit growth amid high demand for engines

Rolls-Royce has announced a remarkable 50% increase in its half-year profits, boosted by strong demand for its jet engines and power systems for AI data centers. The company's underlying operating profits reached £1.7 billion in the first half of 2025, up from £1.1 billion the previous year. This earnings report pushed Rolls-Royce shares to an all-time high, contributing to a new peak for the FTSE 100 index. The manufacturer has increased its profit forecast for the year to £3.1 billion to £3.2 billion, up from the previous estimate of £2.7 billion to £2.9 billion. The strong results were partly driven by heightened demand for large engines, along with a surge in defense spending linked to the conflict in Ukraine. Orders from data centers rose by an impressive 85% compared to the previous year, and Rolls-Royce expects this segment to grow annually by 20% until 2030. The company’s recent success is credited to CEO Tufan Erginbilgiç's aggressive strategies that have included cost-cutting measures and contract renegotiations in regard to engine maintenance services. Additionally, Rolls-Royce has been selected to deliver small modular nuclear reactors, a project expected to generate significant future revenue.

The upward trajectory of Rolls-Royce's profits signals a robust recovery and reflects larger industry trends, particularly the escalating demand for technologies linked to artificial intelligence. The inclusion of defense contracts is noteworthy, especially in light of the ongoing geopolitical tensions. As Rolls-Royce expands into new markets like nuclear energy, its diversified portfolio may reduce future risks, but it must navigate the challenges that come with such shifts. While the company's resurgence is commendable, it remains crucial to assess its long-term sustainability amidst changing market conditions and potential volatility in defense spending.

Highlights

The company's future hinges on sustained demand and successful diversification efforts.