NEW YORK, January 8, 2026, 15:17 EST — Regular session
- AeroVironment shares rose about 8% in afternoon trade after earlier hitting a session high near $371.
- Defense stocks rebounded after Trump floated a $1.5 trillion U.S. military budget for 2027, despite new pressure on buybacks and dividends.
- The FCC said some drone models and components, including AeroVironment-listed models, can still be imported through end-2026.
Shares of AeroVironment Inc (AVAV.O) rose 7.8% to $343.30 at 3:05 p.m. ET on Thursday, extending a sharp run in small defense names. The stock was up as much as 16.6% earlier after touching $371.20.
The move came as defense stocks climbed after President Donald Trump called for a big increase in U.S. military spending, a shift that traders treated as supportive for order books even as Washington tightens the screws on shareholder payouts. RBC Capital Markets analysts led by Ken Herbert said the prospect of a larger budget could “offset” the hit to sentiment from capital-return limits, but they flagged “significant uncertainty” around any final number. Morgan Stanley analysts led by Kristine Liwag called the payout limits an “incremental negative,” but said the size looked “manageable.” Reuters
Trump said on Wednesday the 2027 U.S. military budget should be $1.5 trillion, up from the $901 billion approved by Congress for 2026, and he argued tariff revenue could cover the increase. Byron Callan, a defense analyst with Capital Alpha Partners, said the post raised questions about where the money would go and whether the sector could absorb a jump of that scale. Reuters
There was a second, more technical tailwind for drone makers. The Federal Communications Commission said it will exempt imports of some new models of foreign-made drones and critical components from a sweeping ban adopted in December, acting on a Pentagon recommendation. The list of drone models allowed for import through the end of 2026 includes AeroVironment, alongside firms such as Parrot and Teledyne FLIR, while the broader restriction targets new models from foreign makers such as DJI and Autel by limiting FCC approvals. Reuters
The spending talk landed after Trump moved to curb dividends and share buybacks — stock repurchases used widely to return cash to investors — unless contractors speed up weapons production. His executive order said contractors were not permitted to pay dividends or buy back stock until they can deliver “on time and on budget,” and it directs the Pentagon chief to identify underperforming contractors within 30 days and build tighter terms into future contracts, including how executive incentives are set. Reuters
AeroVironment is best known for its small unmanned aircraft and loitering munitions sold to U.S. and allied customers, including the Switchblade line. The company also markets the Puma small uncrewed aircraft system. Avinc
But the policy mix cuts both ways. A larger topline defense budget would still need congressional backing, and AP reported Trump’s proposal is likely to run into resistance from Democrats who want parity between defense and non-defense spending, as well as deficit hawks in his own party, while tariff revenue may not cover the bill. AP News
What’s next for the stock is less about today’s tape and more about the next hard datapoints: how the Pentagon enforces the payout limits, and whether lawmakers move toward Trump’s headline spending number. AeroVironment is estimated to report earnings on March 3, according to Nasdaq data, with investors likely to focus on demand signals, backlog and any update tied to shifting drone rules. Nasdaq
