If geopolitical tensions serve as the catalyst, then drone defense systems have undoubtedly become one of today's most sought-after investment opportunities. Ondas Holdings Inc. (NASDAQ: ONDS), a company aggressively commercializing autonomous drone defense systems, has amassed substantial capital through multiple equity financings. However, the current multibillion-dollar valuation presents a striking disconnect with the company's $110 million revenue target for 2026, warranting a Neutral rating.
The Disconnect Between Backlog and Revenue Targets
As of Q3 2025, Ondas reported a total backlog of just $22 million. While management projects 2026 revenues will reach $110 million—representing approximately 200% growth from 2025—the absolute figure remains relatively modest. Given the counter-UAS (Unmanned Aircraft Systems) market's rapid expansion, fueled by geopolitical conflicts, questions persist about Ondas' ability to stand out in this increasingly competitive landscape.
"The global counter-drone technology market is projected to grow from approximately $2.4 billion in 2024 to over $10.5 billion by 2030, at a 27% compound annual growth rate," noted Sentrycs CEO Tal Cohen during an earnings call. "This growth stems from escalating drone threats in defense, homeland security, and critical infrastructure sectors, coupled with strong government funding and regulatory support."
Currently, Ondas reported Q3 2025 revenues of $10 million, with Q4 projections at $15 million. Analyst consensus has since revised 2026 revenue estimates upward to $140 million, reflecting market optimism about Ondas' growth potential—though this raises concerns about overextended expectations.
Notably, Ondas may have secured prime contractor status for Israel's Jordan Border "Smart Defense Project," a $1.7 billion initiative managed by Airobotics, which Ondas acquired in 2023. However, the company has yet to disclose specific financial details, leaving investors unable to properly assess the project's potential impact.
The "Trump Rally" and Valuation Concerns
Former President Donald Trump's proposal to increase U.S. defense spending to $1.5 trillion—a 50% hike—along with his criticism of traditional defense contractors' lagging production capacity, has fueled investor enthusiasm for next-gen defense tech firms. This sentiment propelled ONDS shares from under $10 in late 2024 to $14 recently, retesting all-time highs.
In 2025 alone, Ondas raised $855 million through four equity offerings and warrant/option exercises. Combined with a planned $1 billion year-end offering, the company's market capitalization surged to $6.2 billion, eclipsing its previous $5.2 billion peak.
Additionally, Ondas issued 73.9 million warrants exercisable at $20 (potentially raising $1.5 billion) and 121.6 million warrants at $28 (potentially raising $3.5 billion). Should the stock reach $20, Ondas' valuation would exceed $10 billion; at $28, it could approach $17.5 billion—though such moves would also introduce approximately $5 billion in new capital.
Despite management's 2027 revenue target of just $250 million, current valuations imply significantly higher growth expectations. Financially, Ondas posted an $8.8 million EBITDA loss in Q3 2025, though cash flow pressures have eased and revenue growth appears to be accelerating.
Lack of Technological Moat and Valuation Risks
The primary risk facing Ondas is its unproven long-term technological leadership in the drone defense sector. With rapid innovation and intense competition, the company's ability to sustain a competitive edge remains uncertain. Current valuations already price in years of high growth, magnifying the risk of overvaluation.
Investment Outlook: Cautious Waiting Game
While Ondas' growth narrative as an automated unmanned systems provider remains compelling—particularly given policy tailwinds—the gap between its current valuation and projected 2026 revenues ($110 million) is difficult to justify. Further warrant-related dilution compounds these concerns. Investors would be prudent to adopt a wait-and-see approach, allowing fundamental performance to catch up before committing capital. Until technological differentiation becomes clearer and competitive dynamics stabilize, premature exposure could carry elevated risk.