Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Tuesday.
Today is Tuesday, August 11th.
Today I want to talk about the military.
Specifically, some of the lessons we're learning from the Iran war and the Ukraine war — and how they connect directly to companies we've been following here for years.
AeroVironment Just Won a Half-Billion Dollar Contract
What got me thinking about this today was AeroVironment.
A company we recommended at much lower prices just landed a contract worth nearly $500 million from the US Army.
Counter-drone lasers.
This is the Pentagon's first ever contract for a directed energy counter-drone system.
And for those of you who've been following this channel for a while — you might remember me saying a couple of years ago that lasers are going to be the thing.
Let me explain why this matters so much.
The Drone Problem
Imagine you're on a US Navy ship crossing the South China Sea.
China decides it's time to make a move.
What do they do?
They send 20,000 drones at you automatically.
The goal isn't to destroy your ship with those drones.
The goal is to exhaust your ammunition.
Force you to burn through your $5 million missiles shooting down $500 drones.
Until you have nothing left.
That's the strategy.
And it's been playing out in real time in Iran and Ukraine.
The AeroVironment Locust system is the answer to that problem.
It tracks, identifies, and helps human operators destroy small to medium-sized drones with a high-energy laser.
The cost per shot?
Less than a dollar.
Versus millions of dollars per shot when you're using conventional missile systems.
Think about that.
A dollar versus a million dollars.
That is a fundamental shift in the economics of modern warfare.
Speed Is Everything
But the laser is only part of the story.
The bigger lesson from every modern conflict is the same one it's always been.
Success in warfare is based on speed.
The army that can identify the enemy, target the enemy, and destroy the enemy fastest is the army that wins.
Always.
People think Nazi Germany overran France in 1940 because they had more tanks.
That's not true.
France actually had more tanks — and better ones.
What the Germans had was two-way radios in every tank.
Tank A could call Tank B and say there's an enemy over here.
Tank C would respond.
They'd swarm.
That's not superior firepower.
That's superior communication speed.
The transmission of data won that war.
What's Happening Right Now
Fast forward to today.
You have a drone battery operating in southern Iran.
Ten other American operators running similar systems nearby.
They all have to talk to each other.
They all have to communicate with the base.
They all have to relay information back to Washington.
There is an enormous amount of data flowing through the air — through satellites — in real time.
And the speed at which that data moves determines outcomes.
This is why I've been so focused on the companies helping America solve exactly this problem.
Data compression.
Speeding up the transmission of information between drone operators, satellite systems, and command centers.
It doesn't go bang.
It's not glamorous.
But it makes the whole system work.
And in modern warfare, that is the ballgame.
The Bigger Picture
What you're seeing right now — AeroVironment's laser contract, the push for AI in the kill chain, the race to speed up battlefield communications — these are things we've been talking about here for years.
The Iran war and the Ukraine war haven't changed the thesis.
They've confirmed it.
The military is moving fast.
The companies positioned at the intersection of AI, drones, lasers, and battlefield communications are going to be very, very important.
We own some of them.
And we're watching others closely.
Now let me widen this out for a second, because the same lesson shows up a long way from any battlefield.
None of this runs on software alone.
The AI, the drone swarms, the data moving through satellites — all of it runs on machines, and on the electricity to feed them.
Which means the companies sitting on the bottleneck have far more leverage than anyone gives them credit for.
Elon Musk is about to learn that the hard way.
By our research, on January 2, 2027, the feds are set to pull the plug on his supercomputer.
And one small company is his only way out.
It doesn't go bang either.
But it's the reason the whole thing keeps running — which is the same argument I've been making all morning.
If I were you, that's the piece I'd spend twenty minutes on this week.
Here's the full story on the one company standing between Elon and a very expensive problem.
Have a wonderful day.
I'll see you tomorrow.
“The Buck Stops Here,”
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Written by Dylan Jovine