Top defense contractor scores huge U.S. Army payday, stock jumps

AeroVironment (AVAV) just landed the kind of contract that changes how investors see a company.

The drone maker won a U.S. Army order worth at least $400 million for its Locust laser system, and the stock reacted fast.

Shares closed at $186.73 on August 7, up 9.12% on the day and about 22% over five trading days.

The deal does more than add sales. It is the first time the Pentagon has placed a production order for a laser weapon built to shoot down drones.

That order moves the technology out of testing and into real deployment, and the shift matters for a stock that fell for most of 2026.

AeroVironment is no longer only a maker of small drones. It now builds one of the weapons the U.S. military wants most.

Here is what the contract means, why the timing counts, and what to watch before the next earnings report.

What the $400 million Army laser contract actually gives AeroVironment

The U.S. Army agreed to buy at least $400 million of counter-drone laser systems from AeroVironment, Bloomberg reported.

The order covers dozens of the company’s Locust systems.

Locust uses artificial intelligence to spot and track small and medium drones, then helps a human operator destroy them with a high-energy laser.

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The size of the award stands out, but the type of award matters more.

This is the Pentagon’s first production contract for a directed-energy counter-drone system, which means the government is committing to build these lasers at scale rather than test a few units.

AeroVironment gained Locust through its purchase of BlueHalo, a roughly $4.1 billion acquisition completed in 2025.

The current version, Locust X3, runs a scalable laser rated between 20 and 35 kilowatts and can sit at a fixed base or ride on a tactical vehicle.

Why the Pentagon wants a cheaper way to shoot down drones

A single Locust shot costs about$5, according to ZeroHedge.

Compare that with a missile interceptor that can cost more than $100,000, or in some cases over $1 million, to stop a drone that a rival built for a few thousand dollars.

That gap is the problem the U.S. military has been trying to solve. Cheap drones now shape modern battlefields, and firing expensive missiles at them is not sustainable.

Lasers change that equation. Once the system is in place, each additional shot costs almost nothing, and the power comes from the vehicle or base it sits on.

There is also a clear path beyond the U.S. Army. Allied nations face the same drone threat, and a proven American contract often opens the door to foreign sales.

AeroVironment’s Locust system uses a high-energy laser to track and destroy drones for a fraction of the cost of a missile.

SOPA Images / Getty Images

How the deal supports AeroVironment’s revenue and 2027 guidance

The contract adds hard backing to numbers the company has already given investors.

For fiscal 2027, AeroVironment guided to revenue of $2.125 billion to $2.225 billion and non-GAAP earnings of $3.02 to $3.34 per share, according to Investing.com.

That range points to about 10%revenue growth over fiscal 2026.

A $400 million order feeds directly into that outlook in three ways:

Backlog: It builds long-term revenue the company can count on, on top of the record backlog it reported last quarter.
Production scale: Moving from prototype to full production lets AeroVironment spread manufacturing costs across more units.
Guidance support: A firm government order makes the management’s earnings targets easier to defend.

The company also keeps expanding its autonomy software work with partner Applied Intuition, which shapes how quickly its AI tools reach more platforms.

Where AeroVironment stock sits after the 2026 selloff

The rally lands after a rough stretch. AeroVironment traded as high as $417.86 over the past year before falling to a low of $135.20.

Even with the increase to $186.73, the stock sits well below its peak. The August 7 move recovered ground rather than setting a new high.

Wall Street still sees room above current levels. The average analyst price target is $225.50, based on 17 analysts, with a Strong Buy consensus rating.

Several analysts cut their targets earlier in 2026 after softer earnings guidance, even while keeping buy ratings.

The risks investors should weigh before buying AVAV

The contract is a clear positive, but two risks remain.

First, valuation. AeroVironment still trades at a premium to many defense peers, so the stock can fall quickly if results disappoint. Its market value stands at about $9.45 billion.

Second, customer concentration. A large share of AeroVironment’s revenue comes from a small number of Pentagon programs, which leaves it exposed if any single contract slows or shifts.

Neither risk cancels the opportunity. They set the terms for how much an investor should be willing to pay today.

The next date on the calendar for AeroVironment

The clearest catalyst is the earnings report. AeroVironment reports fiscal first-quarter results on September 9, 2026, confirmed by TipRanks.

On that call, management is expected to lay out the initial revenue timing for the Locust order, which will show how fast the $400 million converts into sales.

Investors should also listen for updates on the Applied Intuition software work, since faster progress there signals AeroVironment can grow beyond hardware alone.

For now, the story is simple. One Army order turned AeroVironment into a production supplier of laser weapons, and that role gives the company a place in a market the Pentagon plans to fund for years.

Whether the stock reaches the $266.68 target depends on execution.

The contract gives AeroVironment a strong start, but the company still has to deliver the systems, book the revenue, and prove the first order leads to more.