While Wall Street fixates on Nvidia Corp. (NASDAQ:NVDA) and the hyperscaler AI arms race, a cluster of small-cap defense tech companies is building contract backlogs that suggest the real AI spending wave hasn’t fully arrived yet.
BigBear.Ai, Inc. (NYSE:BBAI), Palladyne AI Corp. (NASDAQ:PDYN), and Ondas Holdings Inc. (NASDAQ:ONDS) are three names threading the needle between AI and defense spending tailwinds — and each just posted developments that deserve attention beyond the ticker tape.
- BBAI stock is moving. See the chart and price action here.
BigBear.Ai – BBAI
BigBear.Ai is the most established of the group, with a contract backlog that grew 14% quarter-over-quarter to $281.9 million in Q1 2026, including a $53 million classified sole-source military award.
The company reorganized specifically to lean into defense, security, and government — a strategic bet that the Pentagon’s AI modernization budget isn’t slowing down.
BigBear.Ai hauled in roughly $75 million in new Q1 national security and trade and travel contract wins and is guiding to approximately 17% revenue growth for 2026.
According to Benzinga Pro, the stock has a market cap of $1.43 billion — fairly modest relative to the backlog.
Palladyne AI – PDYN
Palladyne AI on Monday announced a strategic partnership with Israel Aerospace Industries to manufacture, integrate, and market IAI’s HARPY, HAROP, and Mini HARPY loitering munition systems to the U.S. Department of War.
PDYN shares are trading at $6.46 with a market cap of $251 million, meaning the market hasn’t fully priced in what could be a transformative contract vehicle.
Palladyne AI posted 107% year-over-year Q1 revenue growth to $3.5 million and reaffirmed full-year 2026 guidance of $24 million to $27 million. The company appointed two retired generals to its Defense Advisory Board last week and presented at the Jefferies 2026 Defense Tech Summit.
The autonomous swarming demonstrations via its IntelliSwarm and SwarmOS platforms are exactly the kind of capability the Department of War has been writing large checks for.
Ondas – ONDS
Ondas is the growth story of the three, raising its full-year 2026 revenue target to at least $390 million after Q1 revenue surged more than 10-fold year-over-year to $50.1 million.
The company is building a multi-domain autonomous defense platform — drones, ground robotics, AI-at-the-edge — and secured an $80 million-plus cluster of active demining programs and a $68 million military engineering order in recent months.
Ondas’ SkyWeaver platform, co-developed with Palantir Technologies Inc. (NASDAQ:PLTR), fuses drone hardware with agentic AI for real-time battlefield decision-making. Ondas stock trades at $9.60 with Tuesday’s volume at 27.7 million shares, per Benzinga Pro.
None of these stocks are risk-free bets — each carries execution risk, unprofitable balance sheets and sensitivity to government budget cycles.
But in a market where every AI narrative runs through the cloud, the defense angle offers something different: signed contracts, growing backlogs and a spending tailwind that transcends the AI hype cycle.
Photo: Shutterstock
Recent Comments