Better Space Stock: AST SpaceMobile vs. L3Harris Technologies

Space stocks were all the rage this past spring, and the initial public offering (IPO) of Space Exploration Technologies, known as SpaceX, on June 12 brought renewed interest to the entire sector.

The World Economic Forum estimates that global spending on space could reach $1.8 trillion by 2035, up from $630 billion in 2023. The bull case for that growth is the need for space-based enabled technologies in communications, positioning, navigation and timing, and Earth observation. The shrinking size and cost of satellites have enabled a surge in rocket launches to put those satellites there, with the number of space launches growing every year of this decade.

AST SpaceMobile (NASDAQ: ASTS) is a satellite communications company that is building a satellite network, and L3Harris Technologies (NYSE: LHX) is a defense contractor with significant exposure to the space industry. AST SpaceMobile's shares are down more than 24% since SpaceX's IPO on June 12, while L3Harris' shares are down over 15% in that same period.

Let's see if either one is worthy of purchase now.

Image source: Getty Images.

Each stock faces legitimate concerns

L3Harris is undergoing a massive capital expansion program, building out over 60 facilities and upgrading missile production capacity. Combined with a heavy debt load that generated $597 million in annual interest expenses in 2025, these elevated investments risk pressuring near-term free cash flow and profit margins if revenue conversion lags.

Defense procurement relies heavily on fixed-price contracts. If high inflation, supply chain bottlenecks, or manufacturing complexity lead to cost overruns during its missile production ramp-up, L3Harris, rather than the government, must absorb them, hurting operating margins.

AST SpaceMobile is building and launching a global satellite constellation, a process that requires billions in up-front capital. AST SpaceMobile continues to report multi-hundred-million-dollar annual net losses and negative free cash flow. To fund operations, the company relies heavily on convertible debt and secondary stock offerings, which pose a continuous risk of equity dilution for current shareholders.

The company faces significant execution risks and has pushed back the launch of its satellite phone service from late 2026 to 2027. On top of that, the direct-to-cell market is getting crowded. Competitors such as SpaceX's Starlink, Globalstar from Apple, and Kuiper from Amazon are aggressively expanding their capabilities.

Knowing the negatives, let's see which space stock is the best to buy now.

AST is seeing a huge spike in revenue

In the second quarter, AST SpaceMobile said its revenue backlog had surged to $1.3 billion. Rather than competing with traditional telecom giants, the company partners with more than 60 major mobile network operators (MNOs) globally, including AT&T, Verizon Communications, Vodafone, and Rakuten Group. This revenue-sharing model grants instant access to a combined subscriber base of hundreds of millions without heavy customer acquisition or marketing costs.

In the quarter, the company reported revenue of $31.5 billion, up 263% year over year, and it said it expects yearly revenue between $150 million and $200 million, up 147% at the midpoint.

L3Harris is consistently profitable

L3Harris can't match AST SpaceMobile's revenue growth, but it is a more established company that is consistently profitable. In the second quarter, it reported revenue of $7.3 billion, up 8%, year over year, and earnings per share (EPS) of $3.13, up 28% over the same period a year ago. Its backlog, at $42 billion, dwarfs AST SpaceMobile's.

It also upgraded its yearly revenue and EPS guidance. It said it expects 2026 revenue of $23.2 billion to $23.7 billion, up 7% at the midpoint, while yearly EPS is estimated between $11.80 and $12, up 39.5% at the midpoint.

AST SpaceMobile's technology is unique

AST SpaceMobile's direct-to-cell architecture is fundamentally different from traditional satellite communications, which require external ground hardware such as Starlink dishes or satellite phones. Instead, AST SpaceMobile's system acts as a network of space-based cell towers that connect natively to standard, unmodified 4G and 5G smartphones.

Instead of purchasing expensive, dedicated satellite spectrum, AST uses the existing cellular spectrum leased by its operator partners. When a subscriber walks out of range of ground towers, the terrestrial network hands off the device to the satellite array using those frequency bands.

L3Harris has multiple ways to benefit from space spending

L3Harris Technologies has positioned its space & airborne systems segment to capture high-margin, sticky revenue across several areas. As the U.S. Space Force and Space Development Agency (SDA) move from large, expensive orbital platforms to low Earth orbit (LEO) constellations, L3Harris has established itself as a leading provider of payloads by improving its manufacturing facilities to meet high-volume needs at a lower cost.

Through its acquisition of Aerojet Rocketdyne in 2023, L3 Harris supplies solid-rocket motors, liquid propulsion engines, and in-space electric thrusters for launch vehicles, missile defense systems, and space travel. The company also builds space domain awareness software, ground control systems (such as ATLAS), and tactical communications architecture to connect space data with forces on the ground.

Go with the steady choice

L3Harris operates as a mature Tier-1 defense contractor anchored by steady government funding, multiyear military procurement programs, and a record backlog exceeding $42 billion. This foundation generates predictable revenue and cash flows.

AST SpaceMobile is a high-beta, speculative growth play incurring heavy cash burn, with many questions about project execution.

The biggest advantage L3Harris has is its government-connected contracts. While they may expose the company to fixed-price entanglements, the company has a substantial moat, aided by defense-industry entry barriers, including strict national security clearances, specialized defense manufacturing capabilities, and decades-long relationships with the U.S. Department of Defense and allied governments.

While AST SpaceMobile holds an impressive patent portfolio in direct-to-cell space communications, it faces intensifying competition.

James Halley has positions in Apple and Verizon Communications. The Motley Fool has positions in and recommends AST SpaceMobile, Amazon, Apple, and L3Harris Technologies. The Motley Fool recommends Verizon Communications and Vodafone Group Public. The Motley Fool has a disclosure policy.