Defense stocks are generally surging Monday morning as investors react to U.S. military strikes on Iran that began over the weekend. A couple names with large gains are: nLIGHT (Nasdaq: LASR) Ondas Holdings (Nasdaq: ONDS). Meanwhile, shares of AeroVironment (Nasdaq: AVAV) began the day up big, and are now sinking 16% midday after a massive Wall Street downgrade from Raymond James.
Geopolitical escalation events like this historically trigger sharp, rapid re-ratings in defense names, particularly smaller-cap companies with niche military technology that suddenly finds itself in the spotlight. Let’s dive into the biggest news today.
nLIGHT (LASR): Directed Energy Moves to the Forefront
Shares of nLIGHT are among the standout movers this morning. The stock is already up 75% year-to-date and trade for $67.28 as of 12:20 p.m. ET. nLGIHT and has gained more than 600% over the past year. That’s not a typo. The stock is up 20% today alone.
nLIGHT designs and manufactures high-power semiconductor and fiber lasers with significant defense applications, including directed-energy weapons systems. In a conflict scenario involving Iran, where drone swarms and missile threats are a primary concern, laser-based defense solutions move immediately to the forefront of investor attention.
The fundamentals back up the enthusiasm. The company reported Q4 2025 preliminary revenue of approximately $79 million, beating its own prior guidance range of $72 to $78 million, with Advanced Development revenue of $24 to $25 million driven by strong aerospace and defense demand. Analysts have a consensus target of $66.75 on the stock, with six Buy ratings and one Strong Buy among covering analysts. Today’s geopolitical catalyst adds urgency to a thesis that was already building.
Watch for attention to focus in the coming days on the asymmetric cost trade off of nations like Iran firing drones, short-range missiles, and ballistics. The cost of these systems is generally much cheaper than the costs to defend against them. For example, the drones Iran uses may cost as little as $35,000 per unit while interceptors often cost 10X (or more) that amount. The longer the conflict goes, the higher the chances of countries defending against Iran’s attacks running out of supplies.
This is the value proposition of lasers. The cost of laser defense systems would be the electricity used for the lasers themselves. The current conflict will focus more attention on how nLIGHT’s systems are a leader in the most pressing areas for national defense.
AeroVironment (AVAV): The Institutional Play on Battlefield Drones
The morning began great for AeroVironment investors, but that’s quickly changed. Shares are now down 31% from 10:15 a.m. ET. Overall, they’re down 19% from Friday’s closing price.
The reason for the drop is a downgrade from Ratymond James. The researcher issued a note with details on Space Force competing its SCAR program, which could erase $1.0 to $1.4 billion of Aer0Vironment’s total backlog (currently at $2.8 billion).
The market’s reaction to the downgrade has been both swift and severe. While AeroVironment benefits from increased spending to drones in general, Raymond James notes the company’s backlog appears to be non-growing/contracting in coming quarters due to competitive pressures.
Ondas Holdings (ONDS): High-Beta Torque on the Defense Theme
Ondas is the smallest and most volatile of the three, and it is moving accordingly. Shares are trading at $10.95 and up 8.5% on the day. They had traded as high as $12.35 in early trading, but have given back most of those gains. Over the past year, the stock has gained over 1,100% from a base of under $1.
Ondas operates in autonomous drone systems and private wireless solutions, with defense-facing platforms including Iron Drone and Optimus. The company has been building out its Roboteam partnership focused on ground-based autonomous military robots and has made a series of acquisitions, including Sentrycs, Apeiro Motion, 4M Defense, and Rift Dynamics, to build out its defense technology stack.
Operationally, the trajectory is steep. Q3 2025 revenue came in at $10.1 million, up roughly 6x year over year, and the company has set a preliminary 2026 revenue target of $110 million or more. CEO Eric Brock has described a powerful demand cycle for the company’s unmanned platforms.
Top Gaining Stocks
Top Losing Stocks