AeroVironment (AVAV +0.20%) specializes in drones and has several government contracts, making it a well-known name. While the company's 151% year-over-year revenue growth rate in the second quarter of fiscal year 2026 (the three months ended Nov. 1) sounds attractive, most of that growth came from the recent acquisition of BlueHalo.
If you ignore the BlueHalo acquisition, the legacy company delivered 21% year-over-year revenue growth, going from $188.5 million in Q2 2025 to $227.4 million in Q2 2026.
This context is important, and it explains why Ondas (ONDS 2.30%) is the better drone stock. It has more impressive revenue growth, a bullish forecast, and is starting to win big contracts. Ondas is a smaller company but looks poised to produce compelling long-term returns.
Revenue is accelerating sharply, and guidance is even better
Image source: Getty Images.
Soaring revenue is a key component of growth stocks, and Ondas lives up to that parameter. The drone company reported 582% year-over-year revenue growth in Q3 2025, which also represents 60% quarter-over-quarter growth.
NASDAQ: ONDS
Key Data Points
Ondas is also using acquisitions to gain market share, but its status as a smaller drone maker, plus its 2026 forecast, make it a more compelling long-term pick. While AeroVironment has a $13 billion market cap, Ondas only has a $4 billion market cap.
Investors can see the real potential of Ondas by reading its 2026 guidance. The company said it planned to generate $36 million in revenue in 2025, which is a big gain from 2024. However, Ondas also projected at least $110 million in 2026. The drone maker has a history of outperforming, so it's entirely possible that the company exceeds its $110 million benchmark. (Ondas has an investor day planned for Jan. 16, when investors will be able to get updates.)
That growth should compound in 2027 as demand for drones grows. AeroVironment is more successful right now, but Ondas' long-term growth projections make it more compelling for growth investors.
Ondas is winning big contracts that can translate into lucrative recurring revenue
Each time Ondas signs a big, multiyear contract, it gets annual recurring revenue and boosts the demand for its services. The company has recently made several deals in Europe, including an $8.2 million order for an international airport. The order includes multiple Iron Drone Raider counter-drone systems.
Ondas touted it as a repeat order from a leading European security customer, but Europe isn't the only continent where Ondas is expanding its market share. The company also serves U.S. customers and wrapped up 2025 by securing $10 million in new orders across its autonomous systems portfolio.
Ondas' autonomous aerial and ground robot intelligence portfolio can turn it into a top-tier defense stock. Optimistic 2026 guidance highlights this growth stock's potential.
