# Rolls-Royce raises full-year profit guidance on defense and AI data center demand

> Rolls-Royce raised its full-year profit guidance on surging AI and defense demand. First-half underlying profit jumped 46% to £2.5 billion.

- Type: AI news
- Page: https://completeaitraining.com/news/rolls-royce-raises-full-year-profit-guidance-on-defense-and/
- Published: 2026-07-31
- Updated: 2026-07-31
- Author: Jeroen Erne
- Jobs: Finance
- Reading time: 2 min

Rolls-Royce raised its full-year profit guidance on Thursday, crediting surging defense budgets and the buildout of power-hungry AI data centers. The engineering group now expects underlying operating profit of £4.7 billion to £4.9 billion, a sharp increase from the previous range of £4 billion to £4.2 billion. Free cash flow guidance also climbed to £3.8 billion to £4 billion.

The upgrade came as the company reported first-half underlying operating profit of £2.5 billion ($3.3 billion), up 46% from a year earlier. Revenue rose over 24% to £11.3 billion. Shares gained as much as 6% in London trading before settling around 4% higher.

#### Dual tailwinds: defense and data centers

Chief Financial Officer Helen McCabe told CNBC that orders in the company's data center power business grew more than 50% in the first half. Operators are increasingly seeking backup and on-site power solutions as electricity grids struggle to keep up with demand from AI workloads.

McCabe also highlighted opportunities from higher defense spending, pointing to long-term commitments under the U.K.'s defense investment plan and NATO's push for greater military investment. "We've had very positive initial conversations with the new \[U.K.\] government, and we absolutely support their focus on growth, defense, and advancing industrial manufacturing, and we look forward to supporting them in that and playing our role," she said.

#### Turnaround strategy gains traction

The results underscore the broadening of Rolls-Royce's business under CEO Tufan Erginbilgic. Once viewed primarily as a civil aerospace manufacturer tied to long-haul aviation, the company is now positioning itself as a supplier to AI infrastructure and the global rearmament cycle.

"Our transformation continues to deliver," Erginbilgic said in a statement, adding that the group had "unlocked new growth opportunities across the Group" and built a more diversified portfolio.

#### Why this matters for finance professionals

The guidance hike signals that Rolls-Royce's earnings are becoming less dependent on the civil aviation cycle. With power systems orders tied to data center expansion and defense revenue supported by multi-year government commitments, the company's cash flow profile is growing more predictable. The raised free cash flow target strengthens the balance sheet and could accelerate capital returns to shareholders, a factor that may drive a re-rating of the stock.

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