During the lightning round of the September 2 episode, a caller asked if AeroVironment, Inc. (NASDAQ:AVAV) stock being down presents a good buying opportunity. Mad Money host Jim Cramer replied:
I’m thinking, even though the stock’s down 40%, the competition in their particular niche of defense work is so strong that I just have to say, not yet, not now.
Defense Demand and Backlog Growth
AeroVironment, Inc. has become a major player in drones and loitering munitions, fueled by heavy global military demand for its Switchblade series and a recent $464.8 million contract awarded by the U.S. Army for the Enduring-High Energy Laser program. The award represents the first-ever production contract for directed energy systems in U.S. history, marking a historic transition from prototype testing to full-scale manufacturing.
Additionally, the company posted record full-year revenue of nearly $1.98 billion for fiscal year 2026, a massive 141% jump from the prior year, backed by a solid order backlog of $1.2 billion. With fourth-quarter revenue hitting $641.6 million, up 133% year-over-year, AeroVironment is benefiting from stronger defense demand, although a significant portion of the reported growth reflects the BlueHalo acquisition.
Crowded Battlefields and Margin Pressures
Even with that massive revenue growth, AeroVironment, Inc. stock has pulled back sharply as competition in the tactical defense space heats up. Traditional defense giants like RTX Corporation and Lockheed Martin, along with venture-backed innovators like Anduril Industries and publicly traded peers like Kratos Defense & Security Solutions, are fighting for major contracts. That crowded battleground can squeeze profit margins and add execution pressure. Cramer noted that even with the stock trading down from its highs, the intense rivalry makes it smart to stay on the sidelines until the dust settles.
Hedge Fund Positioning and Market Sentiment
According to Insider Monkey data, 44 hedge funds held a stake in AeroVironment, Inc. in Q2, compared to 37 in the previous quarter. At the same time, market data shows that short interest stands at approximately 9.55% of the public float. This elevated short volume points to ongoing bearish speculation as investors weigh high operational growth potential against rising competitive friction in the defense technology market.
As Cramer pointed out, a steep pullback alone is not enough to justify a buy when a company faces such a fierce battle for market share. Rather than fighting through the margin pressures and intense rivalries in the tactical drone space, Cramer prefers to stay on the sidelines until the competitive landscape stabilizes.
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