The U.S. Army awarded AeroVironment a production contract for its Enduring-High Energy Laser program on September 2. The stock is still trading near multi-year lows. Earnings arrive tonight after market close. That combination of a landmark contract and a beaten-down stock makes AVAV one of the more compelling defense situations heading into a reporting date this year.

The Business

Headquartered in Arlington, Virginia, AeroVironment is a defense technology company developing robotic and autonomous systems with a market capitalization of roughly $7.3 billion. Its portfolio includes unmanned aircraft, counter-drone systems, precision strike weapons, space communications, cybersecurity, and directed energy solutions. Revenue reached $1.98 billion in fiscal 2026.

Why Wall Street Is Paying Attention

The award designates AeroVironment to deliver dozens of its LOCUST X3 high-energy laser systems over the next few years, and it marks the Army’s first production contract for a high-energy laser weapon system.

The contract follows prior LOCUST demonstrations and Army testing work, and the production ramp is supported by an investment of more than $30 million in AeroVironment’s Albuquerque, New Mexico manufacturing campus that was announced on March 3, 2026.

Wall Street remains broadly positive on AVAV, with most analysts rating the stock a Buy and a smaller group at Hold. Price targets vary widely, but the consensus still implies substantial upside from recent prices.

What’s Driving the Opportunity

The Pentagon’s fiscal 2027 budget request emphasizes a sharp increase in spending on drones and counter-drone capabilities, with public reporting putting the total above $70 billion across unmanned and counter-unmanned systems. That is a major tailwind for U.S. drone suppliers. AeroVironment is positioned for durable growth, driven by major UAS, C-UAS, and directed-energy contract awards, with strong bookings and a healthy book-to-bill ratio supporting multi-year revenue visibility.

What Could Go Wrong

Full-year fiscal 2026 results showed a GAAP loss per share of $5.40 on revenue of $1.98 billion, with a GAAP net loss of $265.1 million. For fiscal 2027, the company expects revenue of $2.125 to $2.225 billion, with GAAP net income of $8 to $24 million. That gap between rapid revenue growth and thin GAAP profitability is the core debate.

One additional risk is timing. The E-HEL award is meaningful, but it is still a multi-year program and the revenue will not arrive all at once. Management has already indicated that fiscal 2027 is back-half weighted overall, so tonight’s Q1 results will not yet reflect the full contract’s financial lift.

The Bottom Line

AeroVironment now holds the Army’s first production contract for a high-energy laser weapon system, leads in tactical drone supply to an increasingly drone-dependent military, and sits directly in the spending path of a Pentagon budget that is prioritizing drones and counter-drone defenses. The stock is down about 40% over the past 52 weeks. Wall Street’s targets still point meaningfully higher. Tonight’s earnings call, and specifically management’s commentary on FY2027 revenue phasing and directed-energy margins, is the catalyst that closes or widens that gap.