AeroVironment (AVAV) has drawn fresh attention after two recent defense updates, including a successful LOCUST laser weapon system event with the U.S. Navy and Army, and a US$14.6 million VAPOR drone production contract.

The recent LOCUST laser weapon success and the new VAPOR drone contract come after a sharp 32.69% 90 day share price return decline, yet AeroVironment’s 1 year total shareholder return of 43.70% and 3 year total shareholder return of 110.92% show longer term momentum has still been strong.

If these defense technology moves have your attention, it could be a good moment to see what else is emerging across unmanned and automation plays via our 35 robotics and automation stocks

AVAV’s shares have retreated 32.69% over 90 days but still sit on a 1 year total return of 43.70%, leaving investors weighing recent contract wins and defense tech progress. Is there still upside, or is future growth already priced in?

Most Popular Narrative: 25% Undervalued

At a last close of $210.10 against a narrative fair value of $280, AeroVironment’s story centers on whether its drone and directed energy franchise can support that gap.

The bull case for AVAV isn't just about drones; it’s about ubiquity. In 20th-century warfare, air superiority required multi-million dollar jets and years of pilot training. In 2026, air superiority is increasingly defined by "low cost" systems: cheap, smart, and expendable.

If you want to understand why this narrative points to a higher fair value, the key lies in how it treats future revenue scale, margins, and the shift from low volume development to higher volume production across AeroVironment’s unmanned and directed energy portfolio.

Result: Fair Value of $280 (UNDERVALUED)

However, this hinges on AeroVironment turning its US$1,610.279 million revenue and US$224.36 million loss into sustainable profitability, while integrating BlueHalo without margin or execution setbacks.

Another View: Cash Flows Paint a Different Picture

That 25% undervalued narrative sits in clear tension with our DCF model. On this approach, AeroVironment at $210.10 is trading above an estimated future cash flow value of $154.87, which points to an overvalued result rather than a discount. So which story matters more for you?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out AeroVironment for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 61 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Next Steps

With such a mixed picture across valuation models, sentiment, and recent contracts, it helps to move fast, review the numbers yourself, then weigh the 1 key reward and 1 important warning sign

Looking for more investment ideas?

If AeroVironment has sharpened your interest, do not stop here; broaden your watchlist now so you are not the one hearing about strong ideas after the move.

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• Spot potential value early by checking companies highlighted in the screener containing 23 high quality undiscovered gems before they land on everyone else's radar.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.