Ondas (NASDAQ: ONDS) has agreed to acquire Cyberhawk for approximately $125 million to expand its critical infrastructure intelligence capabilities. The acquisition combines autonomous systems with AI-powered inspection software and analytics. Cyberhawk expects over $45 million in revenue for fiscal year 2027 with 95% recurring revenue, a $95 million backlog, and projected EBITDA margins expanding to over 25% by 2030. The transaction is expected to close in Q3 2026 and will be funded about 95% in cash.

Three small-cap defense tech companies—BigBear.ai (BBAI), Palladyne AI (PDYN), and Ondas (ONDS)—are building significant Pentagon contract backlogs and demonstrating strong growth. BigBear.ai has a $281.9M backlog with 17% revenue growth guidance; Palladyne AI announced a strategic partnership with Israel Aerospace Industries for loitering munition systems; and Ondas raised its 2026 revenue target to $390M+ after 10-fold Q1 growth. While these stocks offer exposure to defense AI spending trends, they carry execution risk and balance sheet challenges.

Ondas Inc. (NASDAQ: ONDS) shares declined 2.04% in premarket trading despite announcing $30 million in new orders for its unmanned and autonomous systems portfolio. The company reported strong Q1 revenue of $50.1 million, significantly exceeding analyst estimates, and raised its full-year 2026 revenue guidance to over $390 million. The stock trades well above its moving averages with bullish technical indicators, though it faces some profit-taking pressure.

The US drone sector is experiencing renewed momentum as the Trump administration considers direct financial support for domestic drone makers. Three standout companies—Kratos Defense, Ondas Holdings, and Red Cat Holdings—are positioned to benefit from increased government contracts and defense spending, with analysts projecting significant upside potential ranging from 50-73%.

Palantir stock surged 8.13% on Thursday, driven by broader tech market gains and news that the U.S. government may provide direct funding to domestic drone companies. While Palantir wasn't directly named as a funding recipient, the company could benefit through its software supporting drone applications and its partnership with Ondas. Despite today's gains, the stock remains down 20% year-to-date and trades at a high valuation of 98x forward earnings.

The Trump administration is in active talks to take equity stakes in domestic drone manufacturers through the Pentagon's Office of Strategic Capital. This follows the June 2025 'Drone Dominance' executive order and FY2027 defense budget allocating tens of billions for drone production, targeting 300,000 low-cost attack drones by 2027. The $1 billion Drone Dominance Program is actively running with 49 companies competing in Phase II qualifying events.

Ondas (ONDS) has surged 944% over the past year, driven by strong military and defense spending demand. While the company reported impressive Q1 2026 results with $50M revenue (10x YoY growth) and a $450M+ order backlog, the author cautions against investing due to an extremely high valuation of 36.3x price-to-sales ratio compared to its 5-year average of 10.6x. The company is not yet profitable and won't reach EBITDA profitability until Q1 2028.

Ondas Inc. announced a definitive agreement to acquire Omnisys Ltd., an Israeli developer of battlefield optimization software, to expand its AI-powered defense capabilities. The acquisition adds Omnisys' Battle Resource Optimization (BRO) platform, which has been combat-proven for over 25 years, to Ondas' portfolio. Despite the strategic move and strong 12-month performance (893.37% surge), ONDS stock traded 9.23% lower at $9.64 on the announcement day, currently below its short-term moving average.

Ondas Holdings stock surged 26.52% after reporting exceptional Q1 2026 results with revenue jumping over 1,000% year-over-year to $50.1 million, driven by strong counter-drone system sales. The defense technology company has acquired Mistral and World View Enterprises, partnered with Palantir Technologies on an AI-powered intelligence platform, and projects full-year revenue growth of 670% to $390 million. However, the company remains unprofitable with widening EBITDA losses, though management expects profitability by Q1 2028.

Three communications equipment companies—Lumentum Holdings, Applied Optoelectronics, and Ondas Holdings—have each delivered over 1,000% returns in the past year, significantly outpacing Nvidia's 75% gain. Lumentum and Applied Optoelectronics benefit from hyperscaler datacenter buildouts requiring optical components, while Ondas focuses on industrial communications and defense-adjacent autonomy. Wall Street analyst consensus remains mixed, with some targets lagging current prices, particularly for Applied Optoelectronics which shows 35% implied downside.

XTEND, an AI operating system company for drones and robots, is planning a $1.5 billion Nasdaq IPO (ticker: XTND) through a merger with JFB. The software-first company has deployed 10,000 systems across 32+ countries and secured DoD contracts worth millions. It partners with major defense contractors like Lockheed Martin and has a $500 million pipeline, but faces execution risks including international expansion and competition.

VisionWave Holdings filed a provisional patent for its xCalibre visual intelligence platform designed to convert camera streams into structured sensor intelligence for defense applications. The filing comes amid a surge in defense spending and autonomous systems procurement, with competitors like Red Cat Holdings, Ondas Inc., Mercury Systems, and Mobix Labs securing major contracts in related areas. The patent targets perception software that can operate at the edge in real-time, addressing a critical gap in defense procurement where the intelligence layer—not hardware—is becoming the key differentiator.