Why Shares of AeroVironment Are Flying Higher This Week

After dipping almost 3% lower last week, shares of AeroVironment (NASDAQ: AVAV) have steadily gained more altitude this week for a variety of reasons. For one, the market is responding kindly to the drone company's fourth-quarter 2025 financial results, which it released on Tuesday. An analyst's positive take on the stock, as well as news from the NATO summit, are also contributing to the buying activity.

According to data provided by S&P Global Market Intelligence, shares of AeroVironment are up 40.2% from the end of trading last Friday through 3:10 p.m. ET on Thursday.

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AeroVironment crushes on the top and bottom of the income statement

While analysts expected AeroVironment to post fourth-quarter 2024 revenue of $242.6 million -- a company record for quarterly sales -- and earnings per share (EPS) of $1.38, the company performed markedly better, reporting sales and EPS of $275.1 million and $1.61, respectively. The future seems bright as well. Management noted that AeroVironment ended Q4 2025 with a backlog that was almost twice what it was at the end of fiscal 2024.

An improved outlook on AeroVironment stock provided another catalyst for its rise this week. Raising its price target to $225 from $200, Raymond James maintain its strong buy rating on the stock due to the presumed positive effect that the acquisition of Blue Halo, a designer of drones with advanced artificial intelligence (AI) capabilities, will have on the company.

Investors are also surmising that news from NATO that leaders are in agreement to increase defense spending to 5% of their countries' GDP by 2035 will benefit AeroVironment. In addition to the United States, AeroVironment generates sales from business with international allies.

Is now the time to pilot AeroVironment stock into your portfolio?

With shares of AeroVironment now up 76% for the year, it seems that investors may want to watch the stock from a distance until there's a pullback. Fortunately for them, there are plenty of other leading drone stocks to investigate as potential buys.

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Scott Levine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AeroVironment. The Motley Fool has a disclosure policy.