New York, Jan 8, 2026, 13:26 (EST) — Regular session
- AeroVironment shares rise about 7% in early afternoon trading
- Defense stocks gain after Trump floats a sharply higher 2027 military budget
- Investors watch budget follow-through and AeroVironment’s next earnings window
AeroVironment Inc shares (AVAV) rose about 7% on Thursday, tracking a broad jump in defense stocks. The stock was up $21.72 at $340.20, after swinging between $338.00 and $371.20, with about 2.26 million shares traded.
The move followed President Donald Trump’s call for a $1.5 trillion U.S. military budget in 2027, well above the $901 billion Congress approved for 2026, and investors bought the idea before seeing the details. “It raises questions about where the funds would be directed,” Byron Callan, a defense analyst at Capital Alpha Partners, told Reuters. Reuters
Why this matters now: AeroVironment sits in the part of the defense market where spending can turn quickly into orders. Drones and counter-drone systems can be bought fast, and programs can scale on short notice.
The push was not just about AeroVironment. Lockheed Martin and Northrop Grumman rose, while Kratos Defense jumped, and the S&P aerospace and defense sub-index hit an all-time high, Reuters reported. “The defense budget is growing, if anything,” said Joe Saluzzi, partner and co-founder at Themis Trading. Reuters
AeroVironment’s last detailed update leaned hard on order flow. In a presentation filed with the SEC, the company reported funded backlog of $1.1 billion and unfunded backlog of $3.0 billion, and pointed to contract awards with a ceiling of $3.5 billion; it also forecast fiscal 2026 revenue of $1.95 billion to $2.0 billion and non-GAAP earnings per share of $3.40 to $3.55, a metric that strips out some acquisition-related and other non-cash items. SEC
Backlog is the work already booked; the funded portion is tied to money already set aside, while “unfunded” depends on later approvals. An IDIQ contract — short for indefinite delivery, indefinite quantity — sets a maximum value, but the government places orders over time through task orders.
That’s the debate for traders: how much of a headline ceiling turns into funded orders, and how fast. AeroVironment’s mix is also shifting, with more services tied to recent deals, and that can move margins around.
But there is a trap here. If the budget push gets watered down, or the timing slips, high-momentum defense names can hand back gains quickly — and AeroVironment has been trading like a headline stock.
