Because most of what the US does in military aid is for R&D, not weapons. Raytheon Israel, for example, developed Iron Dome and that technology was transferred to the US and used in Standard and Patriot SAM systems, as but one example.
Unlike their neighbors, Israel has some top-notch military tech, and the US would prefer that it go to there rather than to say, India or China, or even Russia. We stop working with Israel, they go elsewhere. Whatever you think of Israel, one thing is for certain, they are not stupid. Their neighbors are, but they aren't.