AeroVironment stock booms as earnings show defense spending surge

AeroVironment Shares skyrocket 21% after drone maker easily beats Wall Street fiscal fourth quarter The predictions draw on US plans to modernize the military and secure space.

The Virginia-based defense company more than doubled its revenue from a year ago to $642 million, while funded savings rose 65% to $1.2 billion. Revenue from autonomous systems totaled $492 million, exceeding StreetAccount’s expectations of $402 million.

CEO Wahid Nawabi told analysts on Monday’s earnings call that the company is scaling production to keep up with unprecedented demand and that the company’s growth opportunity has “never been stronger.”

Other drone stocks also rallied for support. Kratos Defense and Security Solutions increased by 7 percent Red Cat 5% won. Small clamshell drone components manufacturer Extraordinary Machines 9% added.

As shares pull back in June, AeroVironment is poised for a windfall from an increase in government funding. The Defense Department budget calls for a record $75 billion for drones in 2027, as the Trump administration seeks a historic $1.5 trillion defense budget.

President Donald Trump, in his second term in office, American drone dominance In an environment of increasing geopolitical threats, scaling up U.S. shipbuilding and protecting space is one of its primary military goals, along with a comprehensive Golden Dome project.

One of AeroVironment’s products is a high-energy laser system known as LOCUST that can hit drone targets. Analysts consider the vehicle essential to the company’s 2027 guidance and the Army’s permanent high-energy laser program.

“Should geopolitical tensions intensify, AVAV will be among the biggest beneficiaries in our view,” KeyBanc Capital Markets analysts wrote. “We continue to see multiple levers of growth and believe AVAV is an opportunity for long-term growth investors.”

Nawabi told CNBC’s Morgan Brennan in a recent interview that the United States and its allies are “trying to catch up” in adopting drone technology, and conflicts in both Ukraine and Iran have increased the urgency.

“We knew this turning point would happen sooner or later,” he said, adding that recent conflicts had brought drone technology “to the forefront.”

AeroVironment said its acquisitions of BlueHalo and Empirical Systems Aerospace added $282.3 million in revenue in the quarter.

— CNBC’s Chris Eudaily contributed reporting