Defense drone maker AeroVironment (AVAV) ripped 28% higher in early Tuesday trading after delivering a blowout fiscal fourth-quarter earnings report that smashed Wall Street estimates on both the top and bottom lines. The company earned $1.84 per share — a 26% beat versus the $1.46 consensus — while revenue more than doubled to $642 million, topping analyst expectations of $560 million. For a defense stock that had been down more than 40% year-to-date heading into the report, the reversal was dramatic.
The numbers behind the surge tell a compelling story about the structural shift in modern warfare. AeroVironment’s funded backlog hit $1.2 billion — up 65% year-over-year. Autonomous systems revenue, the company’s core drone business, came in at $492 million, handily beating the $402 million StreetAccount estimate by $90 million. CEO Wahid Nawabi cited the conflicts in Ukraine and the Iran war as inflection points that have fundamentally changed how militaries view drone technology. “We knew this inflection point was going to happen sooner or later,” Nawabi said. “These last couple of conflicts have essentially brought this thing to the forefront.” Looking ahead, the company guided for fiscal 2027 revenue of $2.13 billion to $2.23 billion, with adjusted EPS of $3.02 to $3.34. The U.S. Defense Department’s drone budget alone could top $75 billion next year, according to estimates.
For retail investors, AVAV represents one of the purest ways to play the drone defense theme — a category that was once a niche but is rapidly becoming central to U.S. and allied military strategy. The stock’s 40% year-to-date decline before this report had created a deep value opportunity that patient investors who held through are now being rewarded for. At these levels, with a 65% backlog growth and a massive addressable market in DoD drone procurement, analysts will likely be revising price targets higher. This is a company worth tracking closely as the global drone arms race accelerates.
