AI Defense Firm Soars On Air Force Contract; Two Top Names Report

• Palladyne AI's SwarmOS platform will enable the Air Force to connect satellite, aerial, and ground systems for real-time battlefield coordination, though contract financial details were not disclosed
• General Dynamics reported Q4 earnings of $4.17 per share (up 0.5%) on revenue of $13.6 billion, with a backlog exceeding $96 billion, but stock slipped 2.7% out of its buy zone
• Textron's Q4 earnings rose 29% to $1.73 per share, but shares plunged 8% after the company guided 2026 earnings to $7.75-$7.95 per share, below analyst expectations of $8.18

Market Summary: AI Defense Firm Soars on Air Force Contract

Key Developments:

Palladyne AI (PDYN) surged over 20% Wednesday after securing a contract with the Air Force Research Laboratory (AFRL) for its SwarmOS software platform. The technology enables autonomous systems—including drones, robots, and sensors—to operate as coordinated, intelligent teams for battlefield applications. Financial terms were not disclosed. PDYN stock jumped back above its 200-day moving average on the news.

Defense Sector Earnings:

General Dynamics (GD) reported mixed Q4 results and retreated 2.7%, falling out of its buy zone:

• EPS: $4.17, up 0.5% year-over-year, missing estimates of $4.23
• Revenue: $13.15 billion, up 8.3%, slightly above expectations
• Backlog: $22.4 billion in quarterly orders, $93 billion total
• Marine systems revenue jumped 22% to $4.82 billion, beating forecasts
• Aerospace sales missed at $3.79 billion vs. $3.87 billion expected

Textron (TXT) plunged 8% on disappointing guidance:

• Q4 EPS: $1.73, up 29%, beating estimates of $1.72
• Q4 Revenue: $3.77 billion, down 1.4%
• 2026 EPS guidance: $6.45-$6.65, below consensus of $7.01

Market Context:

RTX and Northrop Grumman reported Tuesday, with both advancing on their results. The defense sector continues to focus on AI integration and autonomous systems, with Palladyne AI's contract highlighting growing military investment in coordinated autonomous technologies.