Can Applied Aerospace & Defense (AADX) Convert Its Backlog Into Durable Earnings Growth?

Can Applied Aerospace & Defense (AADX) Convert Its Backlog Into Durable Earnings Growth? Soumya Eswaran Wed, August 19, 2026 at 6:37 AM EDT 3 min read AADX ^RUT Baron Capital , an investment management company, released its Q2 2026 investor letter for the "Baron Small Cap Fund." Baron Small Cap Fund gained 12.57% (Institutional Shares) in the second quarter, trailing the Russell 2000 Growth Index's 25.71% return. A copy of the letter can be  downloaded here . U.S. equities rebounded sharply after March's selloff related to the U.S.-Iran conflict, with AI infrastructure, semiconductors, and other technology stocks driving much of the market's gains. Small caps also outperformed large caps, although performance remained concentrated in high-Beta and Momentum stocks, areas where the Fund has historically had less exposure. The Fund benefited from several AI-related and industrial holdings, but software and services stocks remained pressured by concerns that AI could disrupt their businesses. Looking ahead, management believes broader market participation, attractive small-cap valuations, improving industrial growth, and stronger earnings could support future returns despite continued uncertainty around oil prices, inflation, and interest rates. In addition, please check the Fund's top five holdings to know its best picks in 2026. In its second-quarter 2026 investor letter, Baron Small Cap Fund highlighted Applied Aerospace & Defense, Inc. (N…