**Beyond AI: Space and Defense Stocks Deliver Stellar Returns as Investors Look Up**
While Wall Street fixated on the artificial intelligence frenzy this year, a significant gravitational pull towards the cosmos rewarded investors with outsized returns. Defense contractors and space-focused companies, often overlooked in the rush for silicon innovation, emerged as some of the market’s top performers, fueled by a resurgent interest in national security, lunar exploration, and the burgeoning “orbital economy.”
The renewed emphasis on bolstering American defense capabilities, from ambitious missile defense projects to shipbuilding initiatives, has spurred substantial government investment. This spending is not solely directed at established titans like Lockheed Martin and Northrop Grumman. Instead, a broader spectrum of companies, including innovative private entities and publicly traded satellite operators, are finding themselves at the forefront of this reindustrialization. The Biden administration’s commitment to returning astronauts to the moon for the first time in over half a century, coupled with a strategic vision for unlocking new economic frontiers in space, is a key catalyst.
The booming space sector is creating fertile ground for both established and emerging players. Private aerospace pioneers like Palmer Luckey’s Anduril and Elon Musk’s SpaceX are capturing significant attention, with SpaceX’s potential 2026 IPO poised to be a landmark event. SpaceX, the parent company of satellite internet giant Starlink, is at the intersection of defense and communication, a dual focus that resonates strongly in the current geopolitical climate.
**Satellite Imagery and Connectivity: A Growth Engine**
Among publicly traded companies, satellite operators have experienced a remarkable surge. Legacy providers like EchoStar and newer entrants such as Planet Labs have seen their valuations more than triple this year, underscoring the growing demand for space-based data and connectivity solutions.
**Planet Labs**, a San Francisco-based company specializing in Earth observation and geospatial analytics, has witnessed its stock climb nearly 400%, valuing it at $6.2 billion. The company, which went public in 2021 via a SPAC merger, recently reported robust third-quarter fiscal results, exceeding analyst expectations and raising its guidance. Planet Labs has significantly expanded its backlog year-over-year and continues to enhance its satellite constellation, launching new Pelican and SuperDove satellites to expand its Earth-imaging capabilities.
Strategic partnerships are also driving Planet Labs’ growth. Recent contract wins include agreements with NATO and the European Space Agency, alongside a renewed contract with the U.S. Navy for Earth data services. Furthermore, the company is collaborating with Google on Project Suncatcher, an initiative leveraging AI and machine learning in space, with prototype satellites incorporating Google’s Tensor Processing Units (TPUs) slated for launch by early 2027. This collaboration highlights the increasing integration of advanced computing and AI into space-based applications, opening new avenues for data analysis and autonomous operations.
**EchoStar**, founded by industry veteran Charlie Ergen, has also seen a dramatic stock appreciation of 377% this year. The company, known for its Dish TV, Sling TV, and Boost Mobile brands, has undergone significant strategic shifts. Facing regulatory pressure to build out its 5G network, EchoStar divested substantial wireless spectrum licenses. A notable $23 billion deal with AT&T and a subsequent $17 billion transaction with SpaceX for spectrum rights have provided the company with crucial capital. SpaceX’s acquisition is intended to bolster Starlink’s terrestrial mobile connectivity, aiming to eliminate mobile dead zones globally. While these deals have generated considerable value for EchoStar and its largest shareholder, Charlie Ergen, they have also led to litigation from cell tower companies like Crown Castle and American Tower, who allege breaches of long-term agreements. EchoStar’s management maintains that these transactions provide the necessary “capital runway” to expand its business portfolio, although the precise roadmap remains in development.
**ViaSat**, another key player in satellite communications, has experienced a 315% stock jump in 2025. The company’s expansion efforts include the successful launch of its second ViaSAT-3 satellite, which will enhance coverage for the Americas. ViaSat has secured significant government contracts, including a U.S. Space Force award for a satellite launch planned in 2028. On the commercial front, ViaSat has deepened partnerships with airlines such as Etihad Airways, Aeromexico, and Riyadh Air, directly competing with SpaceX’s Starlink service in the inflight connectivity market. The company has also attracted attention from activist investors, and analysts at JPMorgan Chase have highlighted the potential value unlock through a separation of its commercial and government business segments.
**Ondas Holdings**, specializing in autonomous drone technology, has seen its stock soar by 251%. The company, with a portfolio of 21 patents, targets a substantial market opportunity estimated at $130 billion. Third-quarter revenue more than quadrupled to $10.1 million, and the company raised its full-year revenue guidance significantly. CEO Eric Brock attributes this growth to “a powerful demand cycle for our unmanned platforms.” Ondas has secured major orders for its Optimus drone system, including a $14.3 million purchase order from a leading defense contractor and a $3 million deal with the United Arab Emirates. These systems are designed for autonomous data collection in challenging environments, serving government, public safety, and emergency services. The company’s backlog has grown to $22.2 million, driven by demand for its Optimus and Iron Drone products. Analysts at Stifel initiated coverage with a buy rating, identifying Ondas as a potential leader in the unmanned systems sector.
**Astronics**, a provider of aerospace and defense systems, has climbed 241% this year. The company supplies critical charging and lighting solutions to major aircraft manufacturers like Boeing and airlines such as Delta, while also supporting the U.S. Army and NASA. At the end of the third quarter, Astronics reported a backlog of $646.7 million, with its aerospace segment contributing $572.5 million. While this represents a slight decrease from a record backlog in the first quarter, the company is pursuing strategic growth initiatives. Astronics announced plans to acquire Germany-based Bühler Motor Aviation, a move projected to add $22 million in revenue next year. Concurrently, the company also planned to offer $210 million in convertible notes.
As investment continues to flow into space and defense, these companies are poised to play a crucial role in shaping the future of exploration, communication, and national security, demonstrating that innovation and significant returns can be found far beyond the familiar landscape of Silicon Valley.
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