AeroVironment, Inc. (AVAV): A Bull Case Theory 

We came across a bullish thesis on AeroVironment, Inc. on Uncle Stock Notes’s Substack. In this article, we will summarize the bulls’ thesis on AVAV. AeroVironment, Inc.’s share was trading at $264.95 as of December 2nd. AVAV’s trailing and forward P/E were 149.83 and 138.89 respectively according to Yahoo Finance.

The author concurs with Bank of America’s “buy” rating on AeroVironment (AVAV) but argues that its $300 price target underestimates the company’s transformation and policy-driven growth cycle, proposing a 12–18 month target of at least $380. The Pentagon’s strategic pivot from costly, limited assets to scalable, low-cost autonomous systems—anchored by the Replicator program and the July 2025 defense memorandum—marks a generational shift in U.S. defense procurement.

This shift prioritizes speed, availability, and attritability, creating a durable demand runway for AVAV’s unmanned systems. The FY2025 defense budget further reinforces this trajectory, allocating $10.1 billion to unmanned vehicles and over $1.7 billion to C-UAS programs—areas where AVAV, post its $4.1 billion BlueHalo acquisition, is now deeply entrenched. The merger transformed AVAV from a hardware supplier into an integrated “Defense Stack Prime” capable of delivering full-spectrum solutions spanning AI autonomy, C-UAS, space, and cybersecurity. The first quarter post-merger validated this pivot, with revenue surging 140% year-over-year to $454.7 million and a record $1.1 billion funded backlog.

Though GAAP results show temporary losses due to accounting charges, underlying profitability remains strong, with margins poised to expand as amortization subsides. Relative to private peers Anduril and Shield AI—trading at 30x and 20x P/S, respectively—AVAV’s 7.7x multiple highlights clear undervaluation. Based on FY28 EPS estimates of $6 and a justified forward P/E of 65x, the author’s model yields a $390 target, reflecting a re-rating opportunity as AVAV evolves into a next-generation defense technology leader underpinned by policy momentum and expanding profitability.

Previously we covered a bullish thesis on AeroVironment, Inc. (AVAV) by Stock Picker’s Corner in January 2025, which highlighted the company’s leadership in the expanding global drone market amid rising geopolitical tensions. The company’s stock price has appreciated approximately by 64.55% since our coverage. This is because the thesis played out. The thesis still stands as defense innovation accelerates. Uncle Stock Notes shares a similar view but emphasizes AVAV’s policy-driven transformation after acquiring BlueHalo.

AeroVironment, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 31 hedge fund portfolios held AVAV at the end of the second quarter which was 23 in the previous quarter. While we acknowledge the risk and potential of AVAV as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than AVAV and that has 10,000% upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.