3 Defense Stocks Riding the High-Energy Laser Boom

Key Points

• AeroVironment secured a $465 million U.S. Army laser weapon contract and a $50 million international LOCUST order, alongside record quarterly revenue of $480.5 million.
• Kratos Defense participates in high-energy laser systems through its HELEX products and Navy history, but its laser revenue remains bundled within broader weapon systems reporting.
• Red Cat Holdings lacks a direct laser program but supplies reconnaissance drones supporting laser deployments, and its stock has fallen only about 1% year to date.

A science-fiction future is becoming increasingly possible in the present, thanks to rapid advancements in high-energy lasers for military and defense applications. Thanks to major gains in fiber laser technology, tracking, optics, and thermal management, these tools are becoming a reality as potential counter-drone measures, with other applications on the way.

In September 2026, the U.S. Army signaled just how important this technology may be going forward by awarding a major production contract for a high-energy laser weapon system to AeroVironment Inc. NASDAQ: AVAV. That's a significant boon for AVAV stock and a boost for the company as it continues to expand beyond its drone tech foundations.

Add in a strong earnings report in the same month, and AeroVironment looks ready for a major recovery, even as the stock remains down 36% year to date (YTD).

Beyond this one firm, a new technological opportunity is emerging for laser companies, with several already establishing important footholds.

The Path Forward for AVAV After Laser Contract

Despite its poor stock performance this year, AeroVironment offers many appealing qualities for investors. The $465-million contract from the U.S. Army is one of two significant updates from the company's high-energy laser program. It also recently received its first international purchase order for the LOCUST Laser Weapon System, valued at more than $50 million. This may show that AeroVironment is not just a domestic leader in this emerging field but also a key international player.

The company's latest quarter brought record revenue of $480.5 million, up about 6% year over year (YOY), and a sizable earnings beat relative to predictions. Perhaps even more impressively, AeroVironment's funded backlog climbed by 37% YOY to $1.5 billion.

With a stable balance sheet and building momentum in the company's laser technologies, it seems to have justified its optimistic ratings; 20 Wall Street firms have rated AVAV a Buy, compared to just four who see reason to hesitate, carrying Sell or Hold ratings. The question is what might catalyze a reversal in the firm's share price, and with analysts projecting nearly 36% earnings growth in the coming year, investors may be anticipating an upswing.

Kratos May Be a Closer Competitor Than Its Financials Let On

Investors might see Kratos Defense & Security Solutions Inc. NASDAQ: KTOS as a potential rival to AeroVironment in the laser space, and while the firm has genuine credentials in the field, its laser work isn't yet visible as a distinct revenue driver.

It provides not only a coherently combined laser system in its HELEX products but also a variety of other system integration and subsystem support tools. The firm's participation in the U.S. Navy's previous Laser Weapon System program speaks to its authority in this new technology.

For now, Kratos reports high-energy laser activity within the broader category of weapon systems, making it difficult for investors to assess how much of the firm's recent 30.5% YOY revenue growth for Q2 2026 may have been driven by laser business.

Still, as Kratos diversifies its offerings, and as the military relies on low-cost, rapidly engaging laser tools more heavily, this firm could be close behind AeroVironment.

KTOS shares have a similar downward trajectory this year, falling by 37% YTD, but also share AVAV's broad analyst support.

Red Cat Benefits From Adjacency

Unlike the firms above, Red Cat Holdings NASDAQ: RCAT does not have a directed energy weapons program. Rather, this drone reconnaissance and counter-drone tech firm offers supplemental systems that are being deployed alongside those laser programs in U.S. military settings. This stock is a play for investors anticipating that AeroVironment's success in the high-energy laser space will have repercussions for other companies in the industry, even those not directly involved in the tech.

Specifically, Red Cat's reconnaissance drones may be able to provide target acquisition, battle damage assessment, and other critical support that could be the difference between laser weapons being effectively operational and just theoretically capable.

Investors may also be drawn to Red Cat for its varied performance compared to the other stocks above. RCAT shares are down only about 1% this year, a substantially smaller YTD decline than both companies above. Like both of those firms, though, Red Cat is an analyst favorite: seven of nine Wall Street firms call it a Buy, and it has significant upside potential, with a consensus price target of $18, about 130% above its current price.