AeroVironment Shares Soar 24% After Blowing Past Q4 Expectations and Issuing Bullish Outlook

AeroVironment Inc. (NASDAQ: AVAV) experienced a dramatic surge in share price on Wednesday, climbing 24% following the release of exceptional fourth-quarter earnings results that significantly exceeded Wall Street expectations. The drone and defense technology company also provided an optimistic outlook for fiscal year 2026, further fueling investor enthusiasm.

Strong Financial Performance Drives Market Rally

The California-based defense contractor reported adjusted earnings per share of $1.61 for the fourth quarter, substantially beating analyst consensus estimates of $1.39. Revenue reached $275 million, surpassing forecasts of $242 million and marking impressive year-over-year growth of 40%.

The company’s bottom line showed considerable improvement, with net income rising to $16.7 million, or $0.59 per share, compared to $6.05 million, or $0.22 per share, in the same quarter last year. This performance reflects the company’s ability to capitalize on increased demand for its specialized defense technologies.

AeroVironment’s Loitering Munitions Systems segment, which includes the company’s widely recognized Switchblade drone platform, emerged as a key growth driver. LMS revenue nearly doubled year-over-year to approximately $138 million, demonstrating strong market adoption of the company’s autonomous weapons systems.

Record Annual Results and Growing Order Book

For the complete fiscal year, AeroVironment achieved record revenue of $820.6 million, representing a 14% increase from the previous year. Perhaps more significantly for future prospects, the company’s funded backlog expanded by 82% to $726.6 million, while the unfunded backlog surged an remarkable 472% to $774.6 million. This substantial order book growth was primarily attributed to increased Switchblade contracts from various defense customers.

Strategic Acquisition Transforms Company Profile

The completion of AeroVironment’s $4.1 billion acquisition of BlueHalo on May 1 represents a transformative moment for the company. BlueHalo specializes in cyber operations, directed energy systems, and counter-drone technologies, significantly expanding AeroVironment’s technological capabilities and market reach.

Chief Executive Officer Wahid Nawabi emphasized the strategic value of the acquisition, stating that it “significantly enhances our portfolio with highly complementary capabilities that align with our customers’ evolving needs.” The combined entity will now operate through two primary business divisions: Autonomous Systems, projected to generate between $1.2 billion and $1.4 billion in revenue, and Space, Cyber & Directed Energy, expected to contribute $700 million to $800 million.

Ambitious Guidance Reflects Expanded Scale

Looking ahead to fiscal year 2026, AeroVironment provided guidance that reflects its dramatically increased scale following the BlueHalo integration. The company projects total revenue between $1.9 billion and $2 billion, with adjusted EBITDA expected in the range of $300 million to $320 million. Non-GAAP earnings per share are anticipated to fall between $2.80 and $3.00.

This guidance represents a significant step-change in the company’s financial profile and positions AeroVironment to potentially emerge as a major prime contractor in the defense technology sector.

Reduced Exposure to Ukraine Operations

AeroVironment also addressed its exposure to Ukraine-related contracts, highlighting a strategic shift toward greater geographic diversification. Ukraine accounted for 18% of total revenue in fiscal 2025, down from 38% in the prior year. The company expects this percentage to decline further to less than 5% of revenue in fiscal 2026, reducing concentration risk while demonstrating growing demand from other international customers.

Positive Analyst Reception

Investment analysts responded favorably to the results and outlook. Research teams at Jefferies and William Blair maintained Buy ratings on the stock, citing growing international demand for the company’s products, a robust development pipeline, and strong alignment with current U.S. defense spending priorities.

The analysts particularly noted AeroVironment’s positioning in the rapidly expanding market for autonomous defense systems, where the company’s technological expertise and established customer relationships provide competitive advantages.

Market Impact and Future Outlook

Wednesday’s 24% stock price surge made AeroVironment one of the day’s top-performing equities, reflecting investor confidence in the company’s transformation and growth prospects. The combination of strong operational results, successful acquisition integration, and ambitious forward guidance has positioned the company as a notable player in the evolving defense technology landscape.

The results suggest AeroVironment has successfully navigated its transition from a specialized drone manufacturer to a broader defense technology provider, with the scale and capabilities to compete for larger, more complex contracts in the years ahead.