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An executive order unveiled by the White House in late July aims to “unleash” the U.S. drone industry. The initiative includes billions in federal investments to accelerate the deployment of unmanned systems across defense, homeland security, and critical infrastructure. As the order makes clear, drones and other unmanned aerial vehicles (UAVs) are no longer a nascent sector; they are now platforms of power.

Just days earlier, a report from DroneLife confirmed what many in the industry had only heard anecdotally: a new generation of drone tech companies are finally leveraging procurement reform to apply directly for contracts, bypassing slow-moving, traditionally bureaucratic processes. The Pentagon’s Defense Innovation Unit (DIU)—the outfit tasked with fast-tracking commercial technology into the military—leads this charge.

Many of the recent requests for proposals (RFPs) from the DIU and other agencies are designed to accelerate this shift, allowing new vendors to onboard more quickly and demonstrate short trial projects that prove real-world viability. The goal is to show that these solutions can not only look good on paper, but actually work in the field.

Against this backdrop, new drone tech vendors such as Elsight and D-Fend Solutions—companies providing enabling technology rather than drones themselves—are rising in prominence. Unlike traditional defense giants, this new breed isn’t competing on size or budgets. Instead, they are zeroing in on urgent problems and delivering targeted solutions.

Speed matters

When executives from aerospace and defense giant Lockheed Martin visited Elsight’s booth at a drone industry event last year, they expected little more than a demo. Instead, they discovered a fully functional system ready to integrate. Within hours of being invited to Lockheed’s headquarters, Elsight’s team had installed its Halo platform into an Indago 4 quadcopter, enabling a secure “beyond visual line-of-sight” (BVLOS) mission, which means the drone could be flown safely even when it was too far away for the pilot to see.

“From proof-of-value to flight operations in a matter of days,” says Elsight CEO Yoav Amitai. “That kind of velocity is rare in defense, and our buyers notice.”

Elsight’s Halo is a 93-gram, software-defined connectivity module that bonds cellular, satellite, and RF (radio frequency) links—the wireless signals used to transmit data, commands, or telemetry between devices—to keep unmanned systems connected even in contested environments.

In one case, Amitai recounts, a military unit deployed in a live electronic warfare (EW) zone (where radio and GPS signals were being disrupted) even found itself jammed by its own countermeasures. Conventional systems failed. But after a late-night call, Elsight’s team had a Halo unit installed and operational within hours, using off-the-shelf commercial technology.

For D-Fend, speed takes a different form but is no less critical. The company’s counter-drone platform, EnforceAir, is designed for military, homeland security, law enforcement, critical infrastructure, and VIP protection. It uses non-kinetic, non-jamming RF cyber takeover—remote takeover of a drone via RF rather than jamming, kinetic, or destructive measures—to detect, identify, and neutralize rogue drones.

EnforceAir takes control of a hostile drone mid-flight and guides it to a safe landing, without destroying it or interfering with nearby communications. The system is mobile, operable by one person, and can be updated on the spot with new software to respond to emerging threats.

Building credibility

In the world of defense technology, credibility is often built on the battlefield. For emerging vendors, the quickest way to gain trust is to deliver when the stakes are high and the margin for error is zero.

One such moment came during Pope Francis’ 2021 Mass in Slovakia, attended by over 60,000 people, including dignitaries and international media. When a DIY drone entered restricted airspace, jamming wasn’t an option due to sensitive communications infrastructure, and kinetic takedown risked panic or collateral damage. EnforceAir neutralized the drone mid-flight, safely redirecting it without disruption.

“Counter-drone operators need tools that just work,” says D-Fend CMO Jeffrey Starr. “That means precision over brute force. And that’s where focused and innovative vendors like us thrive.”

Elsight’s Amitai echoes the sentiment. “We’re not trying to be everything,” he says. “We’re trying to be the best at one thing: Ensuring drones stay connected, no matter what.”

The procurement shift

Both Elsight and D-Fend credit recent procurement changes for enabling their growth. “For a long time, the biggest barrier wasn’t our product—it was the bureaucracy,” Amitai says. Traditional defense acquisitions favored legacy vendors, partly because they understood how to navigate the process. “New generation defense tech vendors bring innovation not only to the product technology, but also to the adoption process,” adds Starr.

That is beginning to change. The DIU is using fast-track pilots, milestone-based funding, and a growing openness to off-the-shelf solutions. These are commercially available products that do not need to be custom-built for the military. This shift gives smaller players more room to prove themselves. Agencies are recognizing that technological superiority does not automatically come from size. In a world where drone risks evolve in weeks rather than years, procurement cycles cannot afford to lag.

Still, the playing field remains uneven. Many acquisition teams are hesitant to adopt next-generation platforms from smaller firms, especially those without a familiar logo. As defense buyers grow more outcome-driven and less brand-dependent, however, the incentives are shifting toward capability rather than legacy.

What comes next

Both companies are already looking ahead. Elsight is developing technology to enable fully autonomous and swarming operations, requiring not just secure links but also dynamic bandwidth allocation and real-time intelligence integration with mission centers. D-Fend, meanwhile, is evolving EnforceAir into a cyber-driven foundational platform, designed to integrate with other sensors and defenses into layered detection-and-defeat systems that can protect military convoys or safeguard major public events.

Both firms also stress that speed does not need to conflict with safety or compliance. Elsight’s Halo is compliant with the National Defense Authorization Act (NDAA) and certified for BVLOS flights in multiple jurisdictions. D-Fend’s system is being validated by security forces worldwide to ensure pinpoint accuracy, even when other systems are overwhelmed.

What’s becoming clear is that the future of defense is not just about who can build the biggest platforms, but who can respond fastest to evolving threats. In an era where even communications and GPS can be contested, agility is paramount.

Large contractors may still build the platforms. But increasingly, it is the emerging, agile companies that provide the intelligence, connectivity, and control needed to keep those systems mission-ready.

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BigBear.ai (BBAI -3.35%) stock closed out this past week’s trading with another run of big gains. The software and services company’s share price climbed 23.5% from the previous week’s market close amid a gain of 0.6% for the S&P 500 index.

BigBear.ai’s valuation surged again this past week, as investors continued to place bullish bets on companies with artificial intelligence (AI) tools tailored for the defense industry. The company’s share price is now up 101% over the past month and 214% over the past three months.

Image source: Getty Images.

BigBear.ai stock continues to surge despite no major news

Even in the absence of apparent meaningful developments for the business, BigBear.ai stock has continued to rally. The company’s big valuation gains appear to be primarily connected to the defense-AI investment trend that has been hot in the market.

Palantir has been a top defense-AI play and reached a new valuation high in this week’s trading, and BigBear.ai stock has often seen valuation moves that correspond with pricing action for the software leader. Some investors are betting that BigBear.ai could emerge as a Palantir-like winner as demand for AI-powered defense software continues to increase.

What’s next for BigBear.ai?

The massive valuation run up for BigBear.ai stock appears to be out of step with the company’s recent business performance and near-term outlook. Despite demand tailwinds in the AI industry, the company’s revenue increased just 5% year over year in the last quarter. Growth is expected to accelerate in the second half of the company’s current fiscal year, but management’s midpoint target for annual sales growth of roughly 7.5% still raises valuation concerns following recent gains for the stock.

While it’s possible that continued acceleration for sales growth and margin improvements will pave the way for BigBear.ai stock to see more explosive gains above its current valuation level, huge valuation gains in the absence of major news suggest that the company is a risky investment right now. Investors will get a closer look at the business on Aug. 11, when the company publishes its next quarterly report.

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