Will nLIGHT (LASR) Benefit from Increased Spending on Missile and Drone Defense?

Prosper Stars & Stripes, a long/short equity fund, recently released its second quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund underperformed and generated a net return of +9.6% compared to a total return of +8.5% for the long-only small-cap Russell 2000 Index (the “Russell”), and a total return of +5.0% for the long/short equity hedge fund peer group represented by the HFRX Equity Hedge Index (the “HFRX”). For the six months ended 2025, Prosper Stars & Stripes returned a net return of (0.8%) compared to (1.8%) for the Russell and +5.9% for the HFRI. The portfolio demonstrated strong outperformance relative to its net exposure during the quarter. In the second quarter of 2025, US equities reversed the declines seen in the first quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Prosper Stars & Stripes highlighted stocks such as nLIGHT, Inc. (NASDAQ:LASR). nLIGHT, Inc. (NASDAQ:LASR) is a technology company that designs, develops, manufactures, and sells semiconductor and fiber lasers. The one-month return of nLIGHT, Inc. (NASDAQ:LASR) was 36.95%, and its shares gained 141.21% of their value over the last 52 weeks. On August 29, 2025, nLIGHT, Inc. (NASDAQ:LASR) stock closed at $28.80 per share, with a market capitalization of $1.437 billion.

Prosper Stars & Stripes stated the following regarding nLIGHT, Inc. (NASDAQ:LASR) in its second quarter 2025 investor letter:

“We identified nLIGHT, Inc. (NASDAQ:LASR) as a potential beneficiary of increased spending on missile and drone defense. The company is a leader in high-powered laser technology for anti-missile and anti-drone systems. Laser-based weapons offer a far more cost-efficient solution than conventional munitions due to their low cost per shot and nearly unlimited magazine capacity. We believe LASR is well-positioned to materially expand its defense business, which has grown from less than 36% to approximately 66% of sales in just a few years, driven by successful sales and development contracts. We expect the U.S. Golden Dome initiative and higher defense spending to enable LASR to achieve exceptional growth rates. Using what we believe to be conservative estimates while also assuming laser-based weapons gain broad adoption, our bull-case price target for LASR is $45 per share.”

In another article, we covered nLIGHT, Inc. (NASDAQ:LASR) and shared the list of best performing semiconductor stocks to buy. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money.

Disclosure: None. This article is originally published at Insider Monkey.