AeroVironment keeps the $464.8 million Army laser while the Army opens its parts to rival bidders

The US Army is reopening the supply chain inside its new counter-drone laser to competition. At the Association of the United States Army's annual meeting on October 12, Army and company officials said components and subsystems of the Enduring-High Energy Laser (E-HEL) program will be re-bid, with a supplier industry day at the end of October↗ ¹. The trade is plain: AeroVironment▼−3.73% — AeroVironment, down 3.73 percent today (NASDAQ: AVAV), the defense-technology company that won the prime contract on September 2, keeps the production ramp, and the Army gets rival bidders for the parts ².

The Army's first laser production contract went to a 30-kilowatt design

The September award is a $464.8 million agreement and the first production contract for a directed-energy weapon in US military history↗ ²³. The winning design, LOCUST X3, is a 30-kilowatt laser that mounts on trucks or pallets and reloads from its own power supply instead of expending missiles ²³. It is aimed by AV_Halo, the company's AI-driven targeting software ³.

Eleven interface documents turn the internals into an open standard

The new part this month is the mechanism. John Garrity, AeroVironment↗'s vice-president of directed energy systems, says the company is writing 11 interface control documents and handing them to the Army ¹³. Those documents are the specs for how each subsystem connects; once they are Army property they become a reference architecture, a standard any qualified supplier can build compatible hardware against ¹. Standardize the seams, and the parts behind them become replaceable.

Rivals read the invitation immediately. KBR, which offered a competing 20-kilowatt system for the same program, is already describing the chance to on-ramp its own components into the platform ¹. The Pentagon is widening the vendor base on every track: on October 5 it named AeroVironment, the rival counter-drone makers EpirusPVT$1.09B — Epirus, private, latest valuation $1.09B and Kord, and Boeing to a homeland directed-energy pilot↗ ⁴.

The market has already priced the margin question

AVAV touched a 52-week low of $131.50 this week↗ ⁵⁶. The shares have fallen from a $411.16 high over the past year ⁶. A September 9 quarter that beat estimates, with adjusted earnings of $0.59 against a $0.22 consensus↗, did not slow the fall ⁵⁷. Revenue was a first-quarter record of $480.5 million ⁷. The street still carries a consensus target of $228.80 ⁵.

The discomfort has a basis. The segment that houses the laser, Space, Cyber and Directed Energy, posted negative adjusted EBITDA in that quarter while the autonomous-systems arm earned the profit ⁷. Gross margin tells the same story: compressed since AeroVironment bought BlueHalo in May 2025↗, an all-stock purchase of the defense business that brought the LOCUST laser line and roughly doubled revenue ⁸⁹. It is still dragged by purchase-accounting amortization ⁷.

Who shows up at the October supplier day is the tell

The industry day at the end of October will show how real the competition is. Whoever owns the interfaces allocates the margin, and the Army now owns the interfaces. AeroVironment's durable claim is the prime seat, the integration and the software that aims the beam; the parts behind the seams go to bid. The laser gets fielded either way, and faster with more suppliers. What the stock is deciding is how much of that ramp AeroVironment keeps.