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3 Defense Stocks Riding the High-Energy Laser Boom

Reported by Nathan Reiff. Published: 9/15/2026.

A science-fiction future is becoming increasingly possible in the present, thanks to rapid advances in high-energy lasers for military and defense applications. Major gains in fiber laser technology, tracking, optics and thermal management are making these systems a reality as potential counter-drone measures, with other applications likely to follow.

In September 2026, the U.S. Army signaled just how important this technology could become 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 for the company as it continues to expand beyond its drone technology roots.

Combined with a strong earnings report in the same month, the contract suggests AeroVironment may be positioned for a major recovery, even as the stock remains down 36% year to date (YTD).

Beyond AeroVironment, 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 several appealing qualities for investors. The $465 million contract from the U.S. Army is one of two significant updates involving the company's high-energy laser program. The company also recently received its first international purchase order for the LOCUST Laser Weapon System, valued at more than $50 million. This could indicate that AeroVironment is not only a domestic leader in this emerging field but also an important international player.

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

With a stable balance sheet and growing momentum in its laser technologies, AeroVironment appears to have earned its optimistic ratings. Twenty Wall Street firms have rated AVAV a Buy, compared with just four that have Sell or Hold ratings. The question is what might catalyze a reversal in the firm's share price. 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 view Kratos Defense & Security Solutions Inc. (NASDAQ: KTOS) as a potential rival to AeroVironment in the laser space. Although the company has genuine credentials in the field, its laser work is not yet visible as a distinct revenue driver.

Kratos provides coherently combined laser systems through its HELEX products, along with 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 also speaks to its expertise in this emerging technology.

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

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

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

Red Cat Benefits From Adjacency

Unlike the companies above, Red Cat Holdings (NASDAQ: RCAT) does not have a directed-energy weapons program. Instead, this drone reconnaissance and counter-drone technology company offers supplemental systems that are being deployed alongside laser programs in U.S. military settings. The stock could appeal to investors who believe AeroVironment's success in the high-energy laser space will benefit other companies in the industry, including those not directly involved in the technology.

Specifically, Red Cat's reconnaissance drones may provide target acquisition, battle damage assessment and other critical support. These capabilities could make the difference between laser weapons being effectively operational and merely theoretically capable.

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