Defense Stocks Surge as nLIGHT Soars 20% Following Iran Strikes

Investors reacted vigorously to recent military operations in Iran, causing significant movements in defense-related stocks. Notably, shares of nLIGHT (NASDAQ: LASR) surged by 20% today, fuelled by increasing demand for its laser technologies. In contrast, AeroVironment (NASDAQ: AVAV) experienced a substantial decline, dropping by 19% after a downgrade from Raymond James. Meanwhile, Ondas Holdings (NASDAQ: ONDS) saw a more modest increase of 8.5% around midday.

nLIGHT’s Rise Amid Conflict

As of 12:30 p.m. ET, nLIGHT shares traded at $67.28, marking a remarkable increase of over 600% in the past year. The company specializes in high-power semiconductor and fiber lasers, which are essential for directed-energy weapon systems. The ongoing conflict involving Iran, particularly concerning drone and missile threats, has shifted investor focus to laser-based defense solutions.

In its latest earnings report, nLIGHT announced preliminary revenue for the fourth quarter of $79 million, surpassing its previous guidance of $72 million to $78 million. The strong performance in the aerospace and defense sectors contributed significantly to this growth. Analysts project a consensus target of $66.75 for the stock, with six ratings classified as “Buy” and one as “Strong Buy.” The geopolitical tensions in the region have only intensified interest in nLIGHT‘s innovations.

AeroVironment Faces Downgrade

In stark contrast, AeroVironment began the day on a positive note but swiftly turned negative due to a significant downgrade from Raymond James. The firm raised concerns regarding the company’s backlog, which may be impacted by the U.S. Space Force’s decision to recompete its SCAR program. This change could potentially eliminate between $1.0 billion and $1.4 billion from AeroVironment’s existing backlog, currently valued at $2.8 billion.

As of midday, shares of AeroVironment had fallen by 31% since earlier in the day, reflecting a rapid market response to the downgrade. While the company stands to benefit from increased defense spending on drones, analysts suggest that competitive pressures may lead to a contraction in its backlog in the coming quarters.

Ondas Holdings’ Steady Gains

Among the trio, Ondas Holdings has displayed the most volatility. The company’s shares rose to a high of $12.35 before settling at $10.95, reflecting an increase of 8.5% on the day. With over 1,100% growth over the past year, Ondas has carved out a niche in the autonomous drone and private wireless solutions market.

The company reported $10.1 million in revenue for the third quarter of 2025, a sixfold increase compared to the previous year. Looking ahead, Ondas has set a preliminary revenue target of over $110 million for 2026, indicating a strong demand cycle for its unmanned platforms. CEO Eric Brock emphasized the robust growth trajectory, particularly within their defense technology offerings.

Overall, the developments in Iran have prompted a notable shift in investor sentiment towards defense stocks, emphasizing the nuanced dynamics at play in the market. As conflicts unfold, companies like nLIGHT, AeroVironment, and Ondas Holdings are likely to remain at the forefront of discussions surrounding national defense and military technology.