Ondas Holdings has secured a Beyond Visual Line of Sight waiver from the Federal Aviation Administration. This is a special waiver that allows the company to operate its drones far away from the controller, without requiring it to be in their visual line of sight. The American Robotics unit, acquired by Ondas in 2021, has come a long way since the acquisition and this permission is proof of that. The stock is up 20% in just one month.
Ondas Holdings offers networking equipment and software for the operation of drone technologies. It does this through its FullMAX software: a radio platform that allows secure communication and access between the drones and their operations. It also offers the Optimus System which is an AI-powered autonomous drone mainly used in industrial applications.
The company has a Total Addressable Market (TAM) of $130 billion. So at a market cap of just $229 million, it is an AI growth play. The need for drone surveillance is now ever more important, especially in the light of terror attacks in the United States. The recent rally has helped the stock gain some investor attention, so it’s worth looking a bit deeper into the company.
Many catalysts could spur the demand for the company’s drone technology. Think of border patrol, surveillance of critical infrastructure, and even foreign deployment in war zones. The possibilities are many. At home, the company’s technology can even help replace the current drone infrastructure. The 4G technology that most drones now run on requires a high number of communication towers. Ondas’ technology doesn’t require as many, which helps it improve the yield, offering better returns on a lower fixed capital investment. We’re at an early stage of drone deployments so cost-savings are a huge part of the calculations for the government.
Speaking of government, Ondas seems to expect some favorable contracts from both the Army and the Department of Defense. The company only made $15 million in revenue in 2023, and the figure nearly halved in 2024. However, with a revenue estimate of $33 million in 2025, one can see that new deals have been secured, most probably with the government.
As the company keeps reducing its loss per share, chances are there will be a huge rally once it comes close to breakeven. That’s when most growth stocks really take off. Investors need to be wary though as the company only has $2.8 million in cash. As the stock moves higher, the company will likely use it to raise more funds through stock offerings. A tricky decision to decide the entry point, but the bullish thesis seems to be playing out well.
Ondas is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 3 hedge fund portfolios held ONDS at the end of the third quarter which was 4 in the previous quarter. While we acknowledge the potential of ONDS as a leading AI investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as ONDS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.
Disclosure: None. This article was originally published at Insider Monkey.
Hedge Fund Resource Center