There is a quieter arms race happening beneath the headlines around drones, missiles and missile defense.
It is the fight for control of the electromagnetic spectrum.
Jamming.
Signal intelligence.
Radar deception.
Electronic attack.
GPS-denied navigation.
Spectrum sensing.
Counter-drone warfare.
Communications resilience.
Modern militaries increasingly depend on the ability to see, control, protect and exploit the spectrum. And Ukraine has provided one of the clearest real-world demonstrations of why this matters.
This is not a futuristic concept anymore.
It is becoming a core layer of modern warfare.
And importantly for investors, the spending is beginning to move from research and prototypes toward production contracts and field deployment.
The market is getting much bigger
MarketsandMarkets estimates the global electronic-warfare market at approximately $32.35 billion in 2026, growing to $64.66 billion by 2031, representing a roughly 14.9% CAGR. The growth drivers include software-defined systems, AI, signal processing, adaptive jamming, unmanned systems and broader cyber-electromagnetic integration.
That growth estimate is important, but the more interesting signal is coming from actual government procurement.
The U.S. Army is increasingly treating electromagnetic-spectrum dominance as an operational requirement rather than a niche capability.
In February 2026, the Army explicitly said it was accelerating electromagnetic-warfare capabilities for large-scale combat operations and looking for commercial technologies, including AI and edge computing, capable of operating at machine speed.
Then the money started following.
The procurement pipeline is becoming real
In June, the Army awarded a $350 million five-year IDIQ contract for the Spectrum Situational Awareness System.
The system is designed to detect and report electromagnetic-spectrum activity and interference in near real time, helping commanders understand their own electromagnetic signature and identify unauthorized or hostile interference.
And just this week, the Army announced another major development:
It awarded nearly $196 million in its first production contracts under the Rapid Electromagnetic Warfare and Signals Intelligence initiative.
The awards went to:
• Heaviside Industries — $99 million for distributed spectrum sensors
• Research Innovations — $96.9 million for AI-driven sensors integrated onto unmanned aircraft
Both contracts have five-year ordering periods.
That is the part investors should pay attention to.
The Army isn’t simply asking:
“Can we build better EW technology?”
It is increasingly asking:
“How quickly can we buy it and put it into soldiers’ hands?”
That changes the investment equation.
Why Ukraine Matters
The war in Ukraine has effectively become a live laboratory for electronic warfare.
Cheap drones, GPS disruption, communications jamming, signal detection and rapidly evolving countermeasures have demonstrated that battlefield superiority increasingly depends on what happens inside the spectrum.
The lesson is straightforward:
A sophisticated weapon is far less useful if its communications can be disrupted.
A drone is less effective if it can be detected, spoofed or jammed.
A GPS-dependent system becomes vulnerable when GPS is denied.
And a military that cannot see the electromagnetic environment around it is fighting partially blind.
The U.S. military is responding accordingly.
The Army’s 2026 research budget includes work on “Spectrum Superstorm”, designed to use distributed RF effects and orchestration software to make Army emitters harder to geolocate and improve spectrum operations.
DARPA is simultaneously working on GPS-independent timing because modern military systems remain vulnerable to jamming and spoofing. Its ROCkN program is developing optical-clock networks capable of maintaining precision timing in GPS-denied environments.
This creates a much larger investment theme than traditional “electronic warfare.”
It becomes:
Spectrum dominance + resilient communications + navigation + AI + drones + sensors.
The Companies: Where the Exposure Actually Sits
1. $MRCY — Mercury Systems
The picks-and-shovels play
Mercury Systems is one of the more interesting names for investors looking for exposure beneath the major defense primes.
The company supplies high-performance processing and embedded computing technologies used in radar, electronic warfare, signals intelligence and other defense applications.
But there is another reason MRCY is interesting right now:
capacity.
Mercury recently partnered with Palantir to use AI-driven factory automation and material-planning tools to accelerate production of critical military technologies.
Its FY26 results also showed backlog and next-12-month backlog growth of 38.4% and 23.3%, respectively, while quarterly revenue reached its highest level in 15 quarters.
That is exactly the type of development I want to see in a defense-tech thesis:
technology → backlog → production → revenue.
The Palantir connection adds another interesting layer.
AI isn’t just being integrated into the battlefield.
It is increasingly being integrated into the defense-industrial supply chain itself.
What I like
• Electronic warfare exposure
• Embedded computing / processing
• Increasing defense demand
• Backlog growth
• Production automation
• AI + defense convergence
What to watch
MRCY is still an execution story. Higher defense spending doesn’t automatically translate into shareholder returns if margins, production or program execution disappoint.
2. $LHX — L3Harris
The scaled spectrum-dominance play
If Mercury represents the component and processing layer, L3Harris represents something much larger.
L3Harris has exposure across electronic warfare, signals intelligence, radar, secure communications, counter-drone systems and spectrum operations.
Its EW portfolio includes systems such as CORVUS, Viper Shield, Next Generation Jammer and distributed spectrum capabilities.
More importantly, L3Harris is pushing EW toward autonomy.
In April 2026, the company demonstrated an autonomous EW capability during a U.S. Army experiment using multiple unmanned aerial systems.
Its Deceptor system was able to detect and geolocate RF threats, fuse information from multiple sensors and execute RF jamming.
Think about the significance.
Traditional EW can involve humans detecting a threat, identifying it and deciding how to respond.
AI-enabled EW aims to compress that process toward:
Detect → identify → decide → respond.
At machine speed.
That is potentially one of the most important changes happening in electronic warfare.
What I like
• Scale
• Deep Pentagon relationships
• EW + ISR + communications
• Autonomous EW development
• Counter-drone exposure
• Multi-domain capabilities
The trade-off
LHX is much less of a pure-play than MRCY.
You are buying a diversified defense company, not simply an electromagnetic-spectrum bet.
3. $KTOS — Kratos Defense
The higher-risk growth play
Kratos is where the theme gets much more speculative.
Its Valkyrie platform is part of the broader push toward autonomous, lower-cost military aircraft.
But the important development for this thesis is that a missionized U.S. Marine Corps Valkyrie successfully demonstrated electronic-warfare capabilities and beyond-line-of-sight command and control.
This matters because EW is increasingly moving onto unmanned platforms.
Instead of thinking about EW as something mounted exclusively on expensive manned aircraft, imagine distributed networks of relatively inexpensive autonomous systems:
Drone → sensor → RF detection → AI → EW effect.
That is a very different battlefield architecture.
And potentially a very large market.
But KTOS deserves smaller sizing than a mature defense prime.
The market already assigns substantial expectations to its autonomous systems and drone opportunity.
What I like
• Autonomous aircraft
• EW integration
• Drone/CCA exposure
• BLOS communications
• Potential for rapid growth
Risk
This is a growth stock, not a traditional defense-income play.
Execution matters enormously.
High upside, high expectations, high volatility.
4. $RTX — RTX / Raytheon
RTX gives investors exposure to electronic warfare without making EW the entire investment thesis.
Raytheon already has major capabilities in radar, electronic attack, jamming and counter-drone technologies.
Its Next Generation Jammer Mid-Band system is designed to disrupt enemy communications and air-defense systems using active electronically scanned arrays and an all-digital architecture.
In April 2026, Raytheon delivered the first Next Generation Jammer shipsets to the Royal Australian Air Force.
And in August, RTX completed a $50 million expansion of its Mississippi manufacturing facility specifically to increase production capacity for electronic-warfare and radar systems.
That is another important distinction:
This isn’t simply R&D anymore.
Companies are expanding manufacturing capacity because they expect demand.
What I like
• Large-scale defense exposure
• EW + radar + missiles
• Allied demand
• Manufacturing expansion
• Counter-drone exposure
The downside
EW is only one piece of RTX.
If you want concentrated exposure to the theme, MRCY or KTOS is more direct.
If you want EW exposure inside a diversified defense portfolio, RTX is much more attractive.
5. $BAESY / $BAESF — BAE Systems
BAE is another major European defense player with significant electronic-warfare exposure.
Its Digital Electronic Warfare System, for example, is designed to detect and counter evolving threats while maintaining adaptability for future upgrades.
The bigger thesis is European defense spending.
Europe is increasingly focused on rebuilding defense capacity, improving sovereignty and reducing dependence on external suppliers.
That creates a potentially attractive environment for companies with established EW, radar, communications and sensor capabilities.
6. Leonardo
Leonardo provides another European angle into radar, sensors, electronics and electronic warfare.
The attraction here isn’t necessarily a pure-play EW thesis.
It is the broader idea that European governments are increasingly investing in sovereign defense capabilities.
That creates multiple ways for the company to participate in the spectrum, sensor and electronic-defense buildout.
7. $FEIM — Frequency Electronics
This is where the watchlist gets more interesting.
Frequency Electronics is much smaller and much more specialized.
Its technology focuses on precision timing, frequency control, RF/microwave systems and resilient positioning, navigation and timing.
That becomes increasingly important when GPS is jammed or spoofed.
FEI explicitly markets solutions designed to maintain navigation and timing when GPS signals are degraded, denied, jammed or spoofed.
This isn’t necessarily the obvious EW stock.
That’s precisely why it is interesting.
The future battlefield needs more than jammers.
It needs systems that can continue functioning when the jammers are operating.
That means resilient PNT becomes another layer of the electromagnetic-war thesis.
8. $AIRO — AIRO Group
AIRO is the speculative end of the watchlist.
The company combines drones, advanced aerospace/defense technology and related training capabilities.
Its 2025 revenue reached approximately $90.9 million, and the company entered 2026 expecting 15–25% year-over-year revenue growth. It also reported roughly $150 million of drone backlog as of March 31, 2026.
The attraction is obvious:
drones + autonomy + defense + EW.
But this should be treated very differently from LHX or RTX.
Small defense companies can experience explosive upside when they win contracts.
They can also experience equally explosive downside when a contract slips, funding disappears or dilution becomes necessary.
This is a speculative watchlist name, not a core defense holding.
The One I Would Avoid Treating as a Normal “Cheap Defense Stock”: $CMTL
Comtech Telecommunications is an interesting name because it has exposure to satellite communications and spectrum-related technologies.
But this is where investors need to separate thematic exposure from financial quality.
Comtech’s filings show significant debt and a highly leveraged capital structure. Its January 2026 filing showed roughly $125 million of borrowings under its credit facility, another ~$103 million under its subordinated credit facility, and a substantial preferred-stock liquidation preference.
The company itself has repeatedly highlighted liquidity and financing risks.
So while CMTL may screen as an inexpensive spectrum/communications name, I would classify it as:
turnaround/distress speculation — not a clean EW investment.
A great theme cannot rescue a bad balance sheet.
The Bigger Opportunity: EW Is Becoming AI-Driven
This is perhaps the most important part of the thesis.
Electronic warfare used to be heavily hardware-driven.
The future is increasingly:
Sensors + software + AI + edge computing + autonomous platforms.
The Army itself has said that machine-speed spectrum operations will be critical and is actively looking for AI and edge-computing solutions.
That creates a convergence between several of the strongest defense-tech themes:
AI
Identifying signals and threats faster.
Drones
Putting sensors and EW effects onto inexpensive autonomous platforms.
Semiconductors
Processing enormous amounts of RF data at the edge.
Cybersecurity
Protecting communications and networks.
Quantum / advanced sensing
Finding alternatives to GPS and traditional navigation.
Electronic warfare
Disrupting or deceiving the adversary.
This is why I don’t view EW as a standalone defense niche.
I view it as infrastructure for the next generation of warfare.
The Investment Map
If I were building a watchlist around this theme, I would divide it into four buckets.
Core Defense / Lower Risk
$LHX
$RTX
BAE Systems
Leonardo
Broad defense exposure with meaningful EW/spectrum capabilities.
Picks & Shovels
$MRCY
Embedded processing, RF and defense electronics.
Higher-Growth / Higher-Risk
$KTOS
$AIRO
Autonomous platforms, drones and next-generation defense systems.
Specialized / Small-Cap Watchlist
$FEIM
Precision timing, RF and GPS-denied resilience.
Distressed / Speculative
$CMTL
Potential upside from restructuring or turnaround, but financial risk is significantly higher.
What I Would Watch Next
The most important catalysts aren’t necessarily earnings headlines.
I would watch:
1. Army procurement
Are prototype programs moving into production?
The recent $196 million REWSI awards suggest that transition is already happening.
2. Five-year IDIQ contracts
These can become pipelines for recurring orders rather than one-off awards.
3. Autonomous EW
Watch who can put EW capabilities onto drones and other unmanned platforms.
4. AI-enabled spectrum management
The winner may not simply be the company with the best jammer.
It could be the company that can process the electromagnetic environment fastest.
5. GPS-denied navigation
As jamming and spoofing increase, resilient PNT becomes strategically important.
6. Manufacturing capacity
When defense companies begin spending heavily to expand production, pay attention.
RTX’s $50 million EW/radar manufacturing expansion is a good example.
7. Small-company acquisitions
Large primes may increasingly look to acquire specialized spectrum, RF, sensing and autonomous-defense capabilities.
That creates acquisition optionality — but investors should never buy a small defense company solely because they think it will be acquired.
The Bottom Line
The next defense-tech cycle may not be defined only by missiles, aircraft or drones.
It may be defined by who controls the invisible battlefield.
Every drone needs communications.
Every modern weapons system depends on sensors.
Every network creates an electromagnetic signature.
Every GPS-dependent system has a potential vulnerability.
And every adversary is trying to disrupt the other’s ability to see, communicate and coordinate.
The U.S. Army is now putting real procurement dollars behind spectrum awareness, EW and SIGINT capabilities. The recent $350 million S2AS contract and nearly $196 million in REWSI production awards are evidence that the transition from concept to deployment is accelerating.
The investment opportunity, therefore, isn’t simply:
“Buy defense.”
It’s:
Follow the bottleneck.
And increasingly, that bottleneck is the electromagnetic spectrum.
The companies that can sense it, process it, protect it, disrupt it and dominate it could become some of the most important defense-tech suppliers of the next decade.
My watchlist:
$MRCY
$LHX
$KTOS
$RTX
$FEIM
$AIRO
BAE Systems
Leonardo
With MRCY, LHX and RTX offering the more established exposure, KTOS and AIRO representing higher-risk autonomous/drone upside, and FEIM offering a smaller, specialized GPS-denied/PNT angle.
The theme is early enough to be interesting — but mature enough that governments are already writing checks.
DYOR.