Ondas CEO says AI-powered autonomous warfare is becoming a reality

Ondas (ONDS) jumped 13% immediately following earnings as investors embraced a thesis far more specific than broad defense enthusiasm. Management views AI-powered autonomous warfare as a permanent shift that will come to warfare. As Ryan Hartman, CEO of Ondas's subsidiary, World View, said:

"Mission autonomy lives at the intelligence layer. It's the ability to perceive the operational environment, reason over what matters, coordinate action across platforms, and deliver finished intelligencewithout waiting for a human to close every loop."

It is clear that Ondas sees the world moving toward autonomous warfare, with CEO Eric Brock reiterating this view. Now, Ondas's business looks a lot more investable today than it has in the past, with the company reporting booked demand, improving unit economics, and sufficient capital to execute without near-term financing strain.

Q1 backlog growth resets the ONDS story

Ondas's first-quarter report marked a sharp change in scale. Revenue reached $50.1 million, up 1,065%year over year, while pro forma backlog expanded to $457 million from $68.3 million at year-end 2025. While 1,000% YoY growth naturally looks high at face value, the quarter's revenue also exceeded analysts' estimates by 27.4%, which is even more impressive.

Management's raised FY2026 backlog outlook of at least $390 million signals confidence that current orders can move through production within a commercially meaningful window.

Trending Stocks:

• Datadog CEO issues blunt 2-word message on AI race
• Morgan Stanley raises price targets across semiconductor sector
• Onsemi CEO issues bold 2-word message after earnings

With the rapidly rising backlog, investors now have a basis to judge Ondas on fulfillment and operating scale rather than on the promise of autonomous warfare alone.

It will be important to monitor whether revenue continues to track toward the annual target and whether backlog drawdown is supported by fresh order activity. Strong conversion strengthens credibility for follow-on procurement, while slower delivery or weaker replenishment could quickly pressure the current enthusiasm.

Ondas' margins improve before consolidated earnings arrive

Ondas also delivered an important signal on profitability. Gross margin rose to 49% from 42% in the fourth quarter of 2025, and the company said its product businesses "achieved EBITDA profitability at the product company level 2 quarters ahead of our prior expectations." The product company is expected to continue profitability "through 2026 and beyond."

In hardware and systems businesses, rapid growth often exposes production friction, discounting, or integration costs. Ondas instead showed early evidence that higher volume and mix are strengthening economics.

If gross margin stays near 49% as deliveries ramp, even modest operating expense discipline would meaningfully improve the earnings profile. If margin slips as volume expands, investors will have a much harder time underwriting eventual profitability.

Ondas' cash cushion lowers financing pressure materially

Ondas ended the quarter with a substantial liquidity buffer. Cash, restricted cash, and short-term investments totaled $1.48 billion, even as Q1 operating loss reached -$42.7 million. It's important to look at the company's liquidity because Ondas is competing with companies with deep pockets.

For small- to mid-cap defense and autonomy companies, financing pressure often makes it difficult to profitably meet demand before economies of scale take hold. Ondas has far more room than most to fund increased production and support customer programs.

Future Publishing via Getty Images

A strong balance sheet also improves confidence across procurement cycles that often require significant upfront investment before revenue is recognized.

The burden now falls squarely on management. If Ondas turns financial flexibility into on-time delivery and margin-bearing revenue, the cash balance will look like a strategic advantage.

What could drive more upside for Ondas

• Backlog converts into shipments on schedule, validating that demand is operationally real rather than purely contractual
• Counter-drone and autonomous warfare demand expands globally, increasing follow-on awards across defense programs
• Product-level profitability spreads across more subsidiaries, showing operating leverage is improving across the broader platform
• Gross margin remains strong as revenue scales, supporting the case that backlog growth can create durable earnings power
• AI-driven defense systems become more deeply embedded in military procurement priorities, increasing the likelihood of long-term funded demand

What could break Ondas's story

• Backlog conversion slows, turning strong demand visibility into a timing issue and pressuring confidence in the revenue outlook
• Manufacturing or integration bottlenecks limit Ondas's ability to deliver systems at scale
• Margin improvement reverses as costs rise or product mix shifts, weakening the operating leverage narrative
• Defense procurement timelines stretch or contract awards slip, reducing future backlog replenishment
• Corporate-level losses remain elevated despite subsidiary progress, raising concerns that operating complexity is absorbing profitability gains

Key takeaways for Ondas

Ondas looks increasingly like a company entering the phase where execution will define the investment case. The jump in revenue, the significant increase in backlog to $457 million, and management's outlook for at least $390 million in 2026 revenue give the company a credible path to operating at scale. Gross margin reached 49%, product units hit adjusted EBITDA positivity ahead of schedule, and a $1.48 billion liquidity position gives Ondas the capacity to prove the model without financing pressure.

Investors need evidence that backlog converts into revenue, margins hold as volume rises, and new orders continue to refill the pipeline. If Ondas clears those hurdles, the stock has room to keep rerating as a scaled autonomy and defense manufacturer.

Related: Morgan Stanley resets IonQ stock price target after earnings

The Arena Media Brands, LLC THESTREET is a registered trademark of TheStreet, Inc.

This story was originally published May 15, 2026 at 7:33 AM.