YeahDave
Investor, Space/Energy/Defense/AI/Quantum
Defense, drone and space stocks such as AST SpaceMobile, Rocket Lab, Planet Labs, Kratos and AeroVironment are set to receive non-cyclical, perpetual capex while many sit 60%-70% below their highs. Spending is rising in the US and across the rest of the world, flowing to names that are not crowded or recently up 1,000%. The sector has reset and been left for dead, making it a target basket for next year, including Ondas, LightPath, nLight, Karman and Inflection Point. x.com x.comÂ
The House's record $1.15 trillion defense bill should channel capital to US defense suppliers: Red Cat, Ondas, Kratos and AeroVironment in drones and counter-drone; L3Harris, RTX and Palantir in missile defense; Lockheed Martin and Northrop Grumman in aircraft; Rocket Lab and Redwire in space; BlackSky and Spire in satellite intelligence; Huntington Ingalls and General Dynamics in shipbuilding; BWX Technologies in nuclear propulsion; and MP Materials in critical materials. x.comÂ
A US military-budget increase would be well-timed for defense stocks as most appear to be bottoming or sitting on support. If history repeats, one will probably be announced soon. Since the earlier sell signals, Amprius is down about 42%, AeroVironment about 60% and Ondas about 54%; many other names also look oversold. x.comÂ
Space and defense stocks such as Rocket Lab, Kratos and AeroVironment warrant skepticism after a big run because the sector doesn't generate profits the way other sectors do. Many of the announced deals are burdens that take a long time to execute. Excitement around Rocket Lab could return before or after its Neutron launch. x.com x.com x.comÂ
Government spending is defense's version of AI hyperscaler capex but more dependable, and the market isn't pricing it in. Global defense is seen at $3T+ for 2027 versus about $1T of hyperscaler capex, and the Pentagon seeks $80B in wartime spending on top of a $1.5T budget. With Lockheed Martin, Northrop Grumman, Kratos, AeroVironment, AEVEX and Kraken Robotics 24-58% off highs, capital could rotate back soon, especially if institutions diversify from AI, rewarding contrarians in 3-6 months. … Show more
Small-cap defense stocks such as Red Cat, AEVEX and Kraken Robotics look like buying opportunities after a sell-the-news drop following the Iran strikes, because the thesis has only gotten stronger. The U.S. lacks enough drones, interceptors, mine-hunting technology and critical metals, and a proposed $1.5 trillion defense budget should bring a wave of fresh contracts as it advances. The Iran war is a major catalyst even though Lockheed, Kratos and Red Cat have fallen 15-19% in a month. x.comÂ
Electro Optic Systems, nLIGHT and LightPath are defense stocks to own as forward multiples may compress with no high-profile conflicts in sight. US and European rearmament is unchanged and earnings should grow solidly for two to three years, but upside may take patience. Well-managed, profitable firms with backlog growth in the fastest-growing niches should hold up better than cash-burning drone makers. EOS's UAE joint venture, laser contract and $124 million RWS contract add optionality. x.comÂ
Jan Zuazo Pfingsten
Thematic Investor, Physical Scarcity & AI Infrastructure, Primary-Source Research
Public defense stocks look mispriced because demand and private valuations are rising while their shares fall 20%. Anduril raised $5 billion at $61 billion, about 28x sales, while Ondas trades near 5x with a comparable counter-drone stack. The five primes' backlog rose 23.7% to $1.36 trillion, and the Pentagon's FY2027 request has $75 billion for drones and counter-drone tech. Peace rotates spending rather than ending it, and as in the 1990s, a bear market should spur small-cap consolidation. … Show more
Rising regional conflicts and soaring NATO spending commitments favor defense companies such as Rocket Lab and RTX, which carry massive multi-year backlogs. Rocket Lab, a $40 billion space launch and defense technology player, is up about 2,700% from its lows. RTX is up a more modest 69% but acts as a remarkably safe, high-yielding haven when institutions rotate. Both sit on the winning side of a 2026 market where money is rotating into favored sectors rather than lifting the whole index. x.comÂ
Defense money is rotating into next-generation drone makers such as AeroVironment and Red Cat, not just legacy plays like Lockheed's F-35, after NATO members pledged 5% of GDP to defense, roughly a second U.S. military budget. x.comÂ
Defense stocks such as Kratos, AeroVironment, Ondas, Northrop Grumman and L3Harris are trading as if global leaders had turned into pacifist hippies, which is probably not the case. x.comÂ
