AVAV · AeroVironment, Inc.

Aerospace & Defense · mkt cap $10.2B · calls: Q4 FY2026 vs Q3 FY2026

6.0 conviction · conf-adj 6

conf 4/10 🚀 reported partial

triage_only:6.0

Enthusiasm latest 7 / prev 8 (falling)

Autonomy in drones mentioned; no strategic business emphasis

MODEL CONSENSUS (impact)

partial

Adopted X's adjusted-NI denominator and conservative current-margin rule, averaged defensible per-claim figures, and took the more conservative 'behind' verdict.

Conflicts reconciled

EPS denominator: X=$81.5M adj NI vs Y=$43.6M GAAP -> used $81.5M because the earnings-basis rule requires the consensus adjusted basis; GAAP is distorted by BlueHalo costs
Golden Dome margin: X=15% vs Y=5.3% -> used 5.3% per default-current-margin rule (15% software/services margin unanchored)
Next-FY figures: SV 15 vs 23 ->19; GoldenDome 120 vs 166.7 ->143.3; IDIQ 150 vs 174.8 ->162.4 (averaged defensible estimates)
vs_analyst_expectations: X=inline vs Y=behind -> used behind, more conservative; named claims explain only ~30% of the consensus step-up
confidence: X=4 vs Y=6 -> 4, lowered on verdict conflict

Field	Opus 4.8	GPT-5.5
Rev uplift %	34.73	–
EPS uplift %	32.83	–
Priced in	high	–
vs analysts	inline	–
Confidence	4	–
Top line	Three anchored AI-enabled claims size to ~$285M of next-FY incremental revenue on an $820.6M base = ~34.7% (Titan SV ~$15M/1.8%, Golden Dome ~$120M/14.6%, Army FMS IDIQ ~$150M/18.3%). But this base is <$1B, so large %s are low-confidence, and two of the three are an 'opportunity' estimate and an IDIQ ceiling, not firm revenue. The Titan 4x scale-up and AV_Halo deployment are real but unanchored (no Titan revenue base, no module price) -> not sized.	–
Bottom line	Flowing the incremental revenue to earnings gives ~$26.8M added net income (Golden Dome dominates at $18M via the 15% software/services margin; hardware claims add ~$8.7M at the thin 5.3% margin) -> ~32.8% of the $81.5M consensus FY26 adjusted NI. Note the thin ~5.3% net margin: the hardware EPS lift is small precisely because each revenue dollar drops little to the bottom line; the bottom-line story hinges on the software/services mix in the Golden Dome architecture actually materializing.	–
Reasoning	Consensus already models FY2026 revenue of $1.89B vs $820.6M actual — a +$1.07B / +130.7% jump — and FY27 of $2.19B, with adj NI rising from $43.6M GAAP to $81.5M. The ~$285M (34.7%) of identified AI-attributable next-FY revenue sits INSIDE that $1.07B envelope rather than on top of it; the $26.8M incremental NI is a fraction of the $38M NI step-up consensus already bakes in. So the AI claims corroborate the existing bar but do not clearly exceed it.	–

Rows highlighted where the two models disagreed.

QUANTIFICATIONS

Titan manufacturing scale-up: more than 4x this year; more than 10x current levels by fiscal year 2030 (FY2026 and FY2030, topline)
“With demand on the rise for our Titan family of products, we are actively increasing manufacturing by more than 4x this year with additional plans to increase by more than 10x current levels by fiscal year 2030.”

Titan SV contract award: $23 million (Q3 FY2026 (award last week before call), topline)
“just last week, we were awarded a $23 million contract from the U.S. Marine Corps for additional deliveries of our Titan SV.”

Golden Dome / GrandSKY limited-area defense opportunity (software + hardware + services): approximately $0.5 billion (over the next 3 years, topline)
“Based on engagements with our customers, we estimate that this opportunity could represent approximately $0.5 billion to AV over the next 3 years, and we expect that we will create a model which can be replicated across other critical U.S. national security sites.”

AV_Halo module field deployment: thousands, if not tens of thousands (already deployed (as of Q2 FY2026), both)
“we already have thousands, if not tens of thousands of some of the modules already deployed in the field.”

Army FMS IDIQ including Titan Counter-UAS: $874 million (5-year sole-source IDIQ) (Q3 FY2026 award; multi-year vehicle, topline)
“we were awarded an additional 5-year sole-source IDIQ contract worth $874 million from the U.S. Army for our UAS and counter UAS product lines to support Foreign Military Sales or FMS demand.”

Army FMS IDIQ including Titan (prior quarter): $874 million sole-sourced IDIQ (Q2 FY2026, topline)
“we were recently awarded an $874 million sole-sourced IDIQ contract from the U.S. Army for international sales of our small UAS products... This IDIQ contract vehicle also allows for the sale of our JUMP 20 medium UAS and Titan series of Counter-UAS solutions.”

PAST (realized)

Q2 FY2026 — Wahid Nawabi: "we already have thousands, if not tens of thousands of some of the modules already deployed in the field."
Q2 FY2026 — Wahid Nawabi: "AV was awarded the U.S. Army's contract for Human Machine Integrated Formation, or HMIF program."
Q3 FY2026 — Wahid Nawabi: "just last week, we were awarded a $23 million contract from the U.S. Marine Corps for additional deliveries of our Titan SV."
Q3 FY2026 — Wahid Nawabi: "Just this past quarter, we expanded our Puma Visual Navigation kit to our Puma LE variant."

CURRENT (now)

Q3 FY2026 — Wahid Nawabi: "The use case for AI-enabled RF detect and defeat counter UAS continues to rapidly expand both domestically and abroad."
Q3 FY2026 — Wahid Nawabi: "we are actively increasing manufacturing by more than 4x this year" for Titan.
Q3 FY2026 — Wahid Nawabi: "we're continuing to prudently reinvest capital into our software solutions, including AV_Halo."
Q2 FY2026 — Wahid Nawabi: "Our newly integrated NVIDIA Orin onboard computer makes the VAPOR CLE fully autonomous and enables automatic target recognition through AV_Halo VISION computer vision software and AV_Halo WIZARD artificial intelligence machine learning AI/ML processing suite."
Q2 FY2026 — Wahid Nawabi: "As part of this win, AV is going to be the lead software and system integrator for robotic systems on the edge of the battlefield."

FORWARD (guidance)

Q3 FY2026 — Wahid Nawabi: "additional plans to increase by more than 10x current levels by fiscal year 2030" for Titan manufacturing.
Q3 FY2026 — Wahid Nawabi: "The demand for cost-efficient AI-enabled autonomous non-lethal and lethal drones and counter drones are unprecedented."
Q3 FY2026 — Wahid Nawabi: "we estimate that this opportunity could represent approximately $0.5 billion to AV over the next 3 years" (Golden Dome / counter-UAS architecture including AV software and hardware).
Q2 FY2026 — Wahid Nawabi: "cost-efficient autonomous drones and counter drone systems enabled by AI and machine learning will define the battlefield."
Q2 FY2026 — Wahid Nawabi: "we expect that AV_Halo's ability to enable competing products to operate on a common command and control software system will play an increasingly crucial role in U.S. defense procurement decisions."
Q2 FY2026 — Wahid Nawabi: "AV_Halo will continue to roll out more products and offerings that position AV as the core and leading developer in this space."

TRACK RECORD — PROMISE vs DELIVERY

50/100 track record mixed 6 calls reviewed

AVAV’s quantified “AI” track record in these six calls is mostly autonomy-adjacent manufacturing scale (Switchblade/LMS), not standalone AI revenue or model KPIs. They missed the FY2025 $500M annual Switchblade revenue pledge but hit the reframed Q4 annualized run-rate target; larger FY2027 capacity/revenue goals and new Titan/Golden Dome targets are not yet judgeable.

>$500M annual Switchblade product revenue by end of FY2025 — promised Q2 FY2025
missed FY2025 LMS segment revenue was $352M (~30% below target); management did not claim the annual goal was met.

Exit Q4 FY2025 at ~$500M annualized Switchblade production run rate — promised Q3 FY2025
delivered Q4 FY2025 LMS revenue was $138M (~$553M annualized), and later calls continued citing strong Switchblade ramp without revisiting a miss on run rate.

>$1B annual LMS revenue by end of FY2027 (Utah expansion) — promised Q3 FY2025
too-early Reiterated through FY2026 calls with Utah build-out still underway; FY2027 has not ended in this transcript set.

Utah plant to enable >$1B annual Switchblade revenues; initial production by end of FY2026 — promised Q4 FY2025
too-early As of Q3 FY2026 the ~140k sq ft Salt Lake facility was still under construction with operations expected ~1 year out.

Increase Titan (AI-enabled RF counter-UAS) manufacturing >4x in FY2026 and >10x by FY2030 — promised Q3 FY2026
too-early First stated on the latest call; no later results in this set to verify scaling.

Golden Dome limited-area defense opportunity ~$0.5B to AV over the next 3 years — promised Q3 FY2026
too-early Presented as a customer-engagement estimate only; no delivery metrics yet in subsequent calls.

PRICED-IN (REFINED)

MEDIUM

Est. revisions flat · Fwd P/E 67.3 · EV/Sales 6.7x

AI claim maps to UxS, LMS, Product sales

Rating counts are broadly stable with a slight tilt toward more holds and fewer buys recently, and street price targets have drifted lower (last-year ~$348 vs last-quarter ~$283) rather than being raised, so revision momentum is not clearly rising. Forward consensus already embeds a large step-up (FY2026 revenue ~$1.89B vs ~$787M in the prior estimate year) while the stock trades at a rich ~67x next-FY P/E and ~6.7x EV/Sales, implying much of the growth/AI-autonomy thesis is in the multiple and estimate level even without fresh upward revisions. AI-driven upside would most plausibly flow through unmanned portfolios (UxS, LMS) and product sales rather than contract services alone, supporting a mixed priced-in call: stretched valuation and baked-in growth, but not the classic rising-estimates-plus-rich-multiple combo.

COVERAGE — ENTHUSIASM TRAJECTORY + CATALYSTS

4Q2 FY20255Q3 FY20257Q4 FY20258Q1 FY20269Q2 FY20267Q3 FY2026

AI enthusiasm across 6 calls — trend ↗ rising

AI story shifted from M&A and policy themes to HALO, Orin vision stacks, and named autonomy on core drones.

BUSINESS IMPACT - QUALITATIVE MATERIALITY

7/10 qualitative impact material medium-term · mixed evidence

Where AI matters: AI-enabled C-UAS (Titan), autonomous UAS/vision nav, AV_Halo edge C2

Fielded AI/ML in Titan, Puma visual nav, and AV_Halo is tied to real contracts, capacity ramps, and Army HMIF—not just pilots—but management does not break out AI-specific revenue/margin and much of the quantified upside is IDIQ ceilings and a ~$0.5B opportunity estimate, not firm, attributable AI P&L.

Caveats: No standalone AI revenue/margin disclosure—Titan/HALO upside may be overstated in narrative vs P&L; Large growth claims rely on IDIQ ceilings and customer estimates ($874M FMS, ~$0.5B Golden Dome), not booked revenue; Cheaper AI-enabled small UAS/C-UAS competition could pressure pricing over time even as AV adopts AI

AI DISRUPTION / CANNIBALIZATION RISK tailwind · 2/10

AVAV monetizes integrated hardware plus battlefield software and program-of-record positions; AI/autonomy is a product differentiator and demand driver, not a substitute that deflates billable labor or commoditizes the core offering the way it does for services arbitrage models.

OPTIONS / MARKET STRUCTURE

option liquidity: good

ATM IV

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TYPICAL BID-ASK

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OPEN INTEREST

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proxy inputs — dollar-ADV $344M · beta 1.355 · px $204.35

source: proxy (no options chain on FMP)
FMP /stable/ exposes no options-chain endpoint on this key, so ATM IV, bid-ask spread and open interest are unavailable. Liquidity below is a PROXY from dollar-ADV, beta and price level (a stand-in for option depth), not measured option-market data.

CONFIRMATION — INSIDERS · 13F · LANGUAGE

Mixed — insiders selling, institutions adding, management language 5/10 measured.

INSIDERS selling 13 open-market sell(s) vs 0 buy(s) — net distribution

INSTITUTIONS (13F) adding as of 2026-03-31: 126 new / 116 closed positions; 392 increased / 140 reduced; institutional ownership -52.68pp; +20 net 13F holders

MGMT LANGUAGE 5/10 measured AI mostly product labels; firm Titan scale targets; hedged well-positioned opportunity framing; little AI ops ownership.

commit “we are actively increasing manufacturing by more than 4x this year with additional plans to increase by more than 10x current levels by fiscal year 2030”

commit “The use case for AI-enabled RF detect and defeat counter UAS continues to rapidly expand both domestically and abroad.”

hedge “AV is well positioned to capitalize on this generational opportunity that is in front of us.”

VERBATIM AI QUOTES

“The demand for cost-efficient AI-enabled autonomous non-lethal and lethal drones and counter drones are unprecedented, and AV is well positioned to capitalize on this generational opportunity that is in front of us.”
— Wahid Nawabi, Q3 FY2026

“including the Titan family of AI-enabled RF jammers and Freedom Eagle-1 or FE-1.”
— Wahid Nawabi, Q3 FY2026

“The use case for AI-enabled RF detect and defeat counter UAS continues to rapidly expand both domestically and abroad.”
— Wahid Nawabi, Q3 FY2026

“With demand on the rise for our Titan family of products, we are actively increasing manufacturing by more than 4x this year with additional plans to increase by more than 10x current levels by fiscal year 2030.”
— Wahid Nawabi, Q3 FY2026

“Titan is the leading AI-enabled counter UAS solution for RF detect and defeat at home and globally.”
— Wahid Nawabi, Q3 FY2026

“Just this past quarter, we expanded our Puma Visual Navigation kit to our Puma LE variant. This additional capability uses advanced computer vision and onboard processing to deliver precise Global Navigation Satellite Systems or GNSS and independent navigation in degraded or communication denied environments.”
— Wahid Nawabi, Q3 FY2026

“Red Dragon is positioned to define the next category in autonomous one-way attack drones, an example of how we will disrupt the market once again with the creation of another category.”
— Wahid Nawabi, Q3 FY2026

“This open architecture software platform is designed to unify command and control, intelligence analysis, synthetic training and autonomous targeting across all domains to create advanced communication among critical assets during conflict.”
— Wahid Nawabi, Q3 FY2026

“Based on engagements with our customers, we estimate that this opportunity could represent approximately $0.5 billion to AV over the next 3 years, and we expect that we will create a model which can be replicated across other critical U.S. national security sites.”
— Wahid Nawabi, Q3 FY2026

“our Titan series of RF detect and defeat solutions”
— Wahid Nawabi, Q3 FY2026

“Looking ahead, cost-efficient autonomous drones and counter drone systems enabled by AI and machine learning will define the battlefield.”
— Wahid Nawabi, Q2 FY2026

“Known for our uncrewed aircraft systems and leading AI integration, we believe AV is uniquely positioned to capitalize on this transformation.”
— Wahid Nawabi, Q2 FY2026

“AV_Halo, our open architecture software platform is designed to unify command and control, intelligence analysis, synthetic training and autonomous targeting across all domains, creating advanced communication among critical assets during conflict.”
— Wahid Nawabi, Q2 FY2026

“By integrating AV_Halo into our portfolio and other platforms, we're delivering a powerful hardware-agnostic ecosystem that enhances the speed, autonomy and interoperability of AV's platforms for our customers.”
— Wahid Nawabi, Q2 FY2026

“Moreover, we expect that AV_Halo's ability to enable competing products to operate on a common command and control software system will play an increasingly crucial role in U.S. defense procurement decisions.”
— Wahid Nawabi, Q2 FY2026

“This Group II VTOL UAV is fully autonomous and can deliver up to 2 hours of flight, which is double the endurance of typical Group II quadrotor UAV platforms. Our newly integrated NVIDIA Orin onboard computer makes the VAPOR CLE fully autonomous and enables automatic target recognition through AV_Halo VISION computer vision software and AV_Halo WIZARD artificial intelligence machine learning AI/ML processing suite.”
— Wahid Nawabi, Q2 FY2026

“AV was awarded the U.S. Army's contract for Human Machine Integrated Formation, or HMIF program. This award accelerates fielding of multi-domain robotic formations using AV's unified interface of command and control, tactical awareness and autonomy solutions at the tactical edge.”
— Wahid Nawabi, Q2 FY2026

“As part of this win, AV is going to be the lead software and system integrator for robotic systems on the edge of the battlefield.”
— Wahid Nawabi, Q2 FY2026

“We also just released 2 new products from the AV_Halo Suite, including AV_Halo Cortex, a next-generation intelligence fusion and analysis environment; and AV_Halo Mentor, a war fighter readiness suite that leans on virtual and augmented reality weapons training and mission rehearsal.”
— Wahid Nawabi, Q2 FY2026

“With our AI and machine learning-driven platforms, we believe AV continues to set the industry standard, positioning us to fully capitalize on the generational opportunities ahead.”
— Wahid Nawabi, Q2 FY2026

“This IDIQ contract vehicle also allows for the sale of our JUMP 20 medium UAS and Titan series of Counter-UAS solutions.”
— Wahid Nawabi, Q2 FY2026

“we already have thousands, if not tens of thousands of some of the modules already deployed in the field.”
— Wahid Nawabi, Q2 FY2026

“We support not only our own platforms, we support more competitor platforms today than our own actually.”
— Wahid Nawabi, Q2 FY2026

“And we already support multiple platforms with our AV Command.”
— Kevin McDonnell, Q2 FY2026

ANALYST QUESTIONS ON AI

Q (Q2 FY2026, Trevor Walsh (Citizens)): Maybe just touching on AVHalo a little bit. Wahid, great to see the new products or the new, I guess, modules being added on to that. Can you maybe just take a step back, though around that whole product opportunity? Just given all the different systems from both AV as well as the other providers in the ecosystem that you're partnering and OEMing with and they're able to kind of link in. How much of that still just needs to work its way through the system in terms of getting those systems out into the field so that the customer can actually just know what's the right sort of overall software package to go with those?
A: Wahid Nawabi: First of all, I'm really excited about the AVHalo suite of software solutions... we already have thousands, if not tens of thousands of some of the modules already deployed in the field... One example of that success story is in my comments about the U.S. Army who selected us for the Human Machine Integrated Formation, HMIF program record... U.S. Army selected us. That means that the future battle space on the edge of the battlefield, the systems and the controllers that they're going to use to operate these robotic systems, whether on the ground or air, on land or sea, it's going to be ours... Kevin McDonnell: And we already support multiple platforms with our AV Command. Wahid Nawabi: We support not only our own platforms, we support more competitor platforms today than our own actually.

Q (Q2 FY2026, Andre Madrid (BTIG)): Can you tell us more about what the international opportunity looks like for the CUAS platforms? I think this is about one of the first times we've really heard about it. Also, can LOCUST be sold internationally?
A: Wahid Nawabi: the nearly $900 million sole-sourced IDIQ contract... now includes Raven, Puma AE, Puma LE, but we could also sell our Titan Counter-UAS solutions as well as potentially in the future, the LOCUST Directed Energy solutions... The market opportunity internationally is massive for us. Really, we're at the beginning phases of that for our Counter-UAS... I expect the international market over the next several years to grow significantly and be a major contributor.

Q (Q2 FY2026, Anthony Valentini (Goldman Sachs)): Is there a way to think through the catalyst path over the next few months as some of the reconciliation funding starts to hit backlogs? Like what should people be looking for?
A: Wahid Nawabi: Our RF Counter-UAS solutions, the Titan family of products is another contributor of significant growth year-over-year.