Go outside and look up the next time you hear an aircraft overhead: You'll see the same airplanes or helicopters you're used to seeing.
But that may soon change in certain metropolitan areas. Manufacturers of electric vertical takeoff and landing (eVTOL) aircraft are progressing toward the launch of commercial operations.
Recognizing this, investors are paying close attention to eVTOL leaders Archer Aviation (ACHR 2.05%) and Joby Aviation (JOBY 3.40%). Let's see how these two fool.com contributors break down the bull cases for each stock.
Image source: Getty Images.
Archer targets commercial and defense applications
Scott Levine (Archer Aviation): Taking a two-pronged approach, Archer plans on selling its Midnight eVTOL aircraft directly to operators as well as providing a direct-to-consumer aerial ride-share service. Already, the company has made significant progress in both regards, but what is particularly interesting about its growth prospects is the opportunity as a defense contractor.
Archer has inked a number of notable agreements, suggesting the company is well positioned for a quick takeoff once it has received all necessary Federal Aviation Administration (FAA) certifications. In addition to a deal with United Airlines, which will see the carrier purchase up to $1.5 billion in eVTOLs, Archer has signed deals with Abu Dhabi Aviation and Ethiopian Airlines -- both of which are under Archer's Launch Edition program to deploy aircraft in early-adoption markets.
The company continues to strengthen its foothold in the civilian market, but it's the possibility of expanding into defense applications that seem particularly alluring. In late 2024, Archer announced the formation of an exclusive partnership with defense contractor Anduril to develop hybrid eVTOL aircraft for crucial defense applications. The goal is securing a potential program of record from the Department of Defense.
Should Archer succeed in developing a hybrid eVTOL for defense purposes, the company would also have a sizable opportunity in selling its aircraft to NATO allies. With global tensions remaining high and showing little indication of abating, the ability to offer a hybrid eVTOL aircraft to U.S. allies seems like an auspicious option.
Heavyweight backers provide reassurance for Joby investors
Lee Samaha (Joby Aviation): Joby Aviation is flying a different route to generating long-term value for investors, but it makes sense and gives the stock more upside potential than its rivals.
One differentiating factor is that -- unlike many of its peers, which heavily rely on established companies for technology -- Joby follows a vertically integrated process where it develops components in-house. Moreover, Joby doesn't intend to sell its aircraft to other companies. Instead, it plans to manufacture and operate its aircraft itself while also offering transportation services.
It's an ambitious goal that might have seemed unfeasible a decade ago. However, the company has some heavyweight backers, including Toyota, Uber, and Delta Air Lines, which gives cause for confidence.
Toyota has committed to investing up to $894 million in Joby and is providing parts as well as helping with its manufacturing. Meanwhile, Uber's investment and Joby's acquisition of Uber's flying taxi business, Elevate, position Joby to scale up transportation services after certification.
Delta's investment and partnership will enable Joby to offer airport transfers to Delta passengers -- a value-added service for both companies, as Delta seeks to foster loyalty among its premium customers.
All told, Joby's plans have solid backing, and the stock offers substantial upside potential to investors.
Is it better to fly with shares of Archer or Joby?
Disruptors in the travel industry don't come along frequently, but when they do, investors sit up and take notice. This is the case with both Archer and Joby -- two companies leading the path forward in the development of electric air taxi service.
For these upstart companies, there's bound to be some turbulence as they navigate a nascent industry, yet investors with long-term investing horizons may be rewarded with an Archer or Joby investment. For those also interested in defense industry exposure, Archer will be more appealing, while those less concerned with the defense angle may choose Joby instead.
