Aerovironment Stock Climbs 57% in 2025 on BlueHalo Deal and Expanding Defense Demand

WASHINGTON — Drone and robotics manufacturer AeroVironment closed 2025 with a 57 percent share-price gain, a move largely attributed to its purchase of defense technology firm BlueHalo, accelerating bookings, and expectations of higher U.S. defense spending.

The California-based company, traded on the Nasdaq under the ticker AVAV, displayed pronounced volatility during the year yet finished well ahead of broader market indices. Data compiled by S&P Global Market Intelligence show the stock’s advance outpaced many peers in the emerging defense-technology segment.

Main growth driver: BlueHalo acquisition

AeroVironment announced its agreement to acquire BlueHalo in November 2024 and completed the transaction in May 2025. Because the deal closed during the first half of the year, BlueHalo’s results were fully consolidated for the first time in the company’s fiscal second quarter, which ended in late 2025.

During that three-month period, AeroVironment reported revenue of $472.5 million, a 151 percent jump from the comparable quarter of the prior year. Management attributed most of the increase to the newly acquired business, although organic sales still climbed 21 percent. The combination broadened the company’s product lineup beyond unmanned aerial vehicles and ground robots to include BlueHalo’s directed-energy, space and cyber capabilities, effectively expanding AeroVironment’s total addressable market.

Bookings, a forward-looking measure of contract value that converts to revenue as work is performed, reached $1.4 billion in the second quarter. The funded portion of those orders, recorded as backlog, totaled $1.1 billion. Both figures underscored rising demand from U.S. and allied defense customers seeking autonomous systems and complementary technologies.

Political backdrop favors sector

Investor sentiment toward defense equities strengthened after U.S. forces detained Venezuelan President Nicolás Maduro in January 2026. The incident heightened geopolitical concerns and prompted renewed interest in companies supplying advanced military equipment. In addition, President Donald Trump signaled support for lifting the proposed fiscal 2027 defense budget from $1 trillion to $1.5 trillion, a prospect that could increase funding for programs involving drones, robotics and electronic warfare.

AeroVironment’s share price reacted accordingly, rising 52.6 percent between the start of 2026 and Jan. 15. The company has historically been profitable and is forecasting adjusted earnings per share of $3.40 to $3.55 for the current fiscal year, underlining its ability to generate cash even while integrating a sizable acquisition.

Key contract awards

Beyond the BlueHalo deal, AeroVironment secured a significant multiyear agreement with the U.S. Army in 2025. The contract covers the supply of small unmanned aircraft systems for reconnaissance and target acquisition, reinforcing the firm’s core competency in field-deployable drones.

Management also noted increasing inquiries from domestic law-enforcement agencies, mirroring the administration’s stated intention to bolster internal security. While the value of those prospective orders has not been disclosed, executives cited the interest as an additional catalyst for bookings growth.

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Market risks remain

Despite the strong performance, analysts caution that AeroVironment’s valuation is sensitive to shifts in defense spending priorities and investor appetite for emerging technology stocks. Share-price swings during 2025 highlighted that sensitivity, with the company at times moving sharply in response to policy statements, contract news and broader market trends.

Nonetheless, AeroVironment’s record of profitability distinguishes it from some early-stage aerospace ventures, such as several electric vertical takeoff and landing (eVTOL) developers that have yet to produce consistent revenue. The company’s backlog and bookings indicate a clear revenue pipeline, offering greater visibility than many firms in adjacent innovative sectors.

Outlook

For the remainder of its fiscal year, AeroVironment plans to focus on integrating BlueHalo’s operations, cross-selling complementary products, and pursuing new programs in autonomous systems and directed energy. Management expects the combined organization to compete for larger, more complex contracts across multiple branches of the U.S. military and allied defense ministries.

Further clarity on future defense appropriations is likely to emerge when the administration submits its detailed budget request to Congress. According to the U.S. Department of Defense Comptroller’s Office, the formal proposal typically outlines spending priorities for research, procurement and operations, factors that directly influence AeroVironment’s addressable market.

In the nearer term, investors will monitor the company’s third-quarter results to gauge the pace of BlueHalo integration, margin trends and the conversion of bookings into revenue. Any updates regarding the Army drone contract or additional orders tied to heightened security initiatives could further affect the stock’s trajectory.

With a diversified portfolio spanning unmanned systems, space technologies and electronic warfare, AeroVironment enters 2026 positioned to benefit from both organic demand and the expanded capabilities gained through its most significant acquisition to date.

Crédito da imagem: Getty Images