While attention is focused on large defense contractors, a less noticed but lucrative ecosystem is emerging in the shadow of the defense boom. The real winners in the new security landscape are often companies that provide the essential foundations, from critical raw materials for high technology to defense against ubiquitous drone threats to analysis of crucial data streams. These companies are structurally benefiting from billion-dollar budgets and redefining modern security architecture. Three specialized players illustrate this momentum: Almonty Industries, DroneShield, and Palantir.
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Almonty Industries – Tungsten: The invisible metal with visible opportunities
For attentive commodity investors, a clear picture is emerging for tungsten. A long-neglected industrial metal is becoming increasingly strategic. While China controls over 80 per cent of the global market and tightens its export policy, Canadian producer Almonty Industries (TSX:AII) is systematically building an alternative supply chain outside this sphere of influence. The latest operational milestone, the start of ore production at the Sangdong mine in South Korea, marks the beginning of a new, significant production vein. The Company has been an established producer for years with its mine in Portugal and will expand its presence in North America with another project in Montana starting in 2026. This will make Almonty the largest tungsten producer outside of China.
The strategic importance is obvious. Tungsten is indispensable for the defense industry, from penetrating ammunition to protective armor. Almonty is benefiting directly from this trend. The appointment of US Army Brigadier General (Retired) Steven L. Allen as Chief Operating Officer is a clear signal of the Company’s focus on operational excellence and delivery reliability. His expertise in complex logistics underscores the Company’s claim to be a reliable partner for Western defense sectors. The successful completion of a USD 129 million capital increase in December significantly reduces near-term financing risk and provides Almonty with flexibility for the next expansion steps.
The growth narrative extends far beyond military applications. Demand from civilian future technologies such as semiconductors, electromobility, and renewable energy is steadily increasing. This broad industrial base creates stable long-term demand. Analysts recognize the potential of these combined drivers. Cantor Fitzgerald sees a price target of USD 10, while Oppenheimer even considers USD 12 per share to be justified. For investors looking to diversify their critical raw material supply, Almonty represents a concrete, operationally growing opportunity to participate in this structural trend. The stock is currently trading at USD 8.80.
DroneShield – How a niche provider is benefiting from the global arms trend
Rising defense budgets around the world are not only fueling manufacturers of traditional weapons systems. An indirect but increasingly lucrative beneficiary is the market for drone defense. Companies such as DroneShield are positioning themselves precisely at this interface. Their business is growing not primarily through the sale of fighter jets, but through the demand for protection against increasingly affordable and ubiquitous drone technology. Conflicts such as the one in Ukraine have acted as a catalyst, demonstrating how inexpensive drones can threaten expensive infrastructure. This realization is now driving global investment in defense systems, a structural trend from which specialized providers are likely to benefit in the long term.
DroneShield is currently providing concrete evidence of this market dynamic. The Company announced two substantial orders in quick succession. A AUD 6.2 million deal with a military end customer in the Asia-Pacific region includes third-party hardware that will be integrated into the Company’s own command software platform. This was followed shortly thereafter by an AUD 8.2 million order for a Western military. These are handheld systems whose inventory levels allow for rapid delivery later this year or early next year. Both deals are being handled by established resellers, which speaks to recurring sales channels.
Repeat orders from existing customers signal that drone defense is increasingly evolving from a niche to a standard requirement. For DroneShield, this means a full order pipeline and predictable revenues. The Company is starting the new year with secured orders of nearly AUD 100 million – a record. While the direct defense market is subject to cyclical fluctuations, the demand for defensive protection solutions against drone-based threats appears to be growing more sustainably. DroneShield is thus positioned at a promising source within the broader defense boom. The stock is currently trading at AUD 3.31.
Palantir – AI giant with tailwinds from the defense sector
Palantir is consolidating its position as a leading provider of enterprise AI solutions. The Company is experiencing explosive growth, driven by massive demand for platforms that convert complex data streams into actionable intelligence. The US business in particular is growing dynamically, with commercial revenue up over 100 per cent year-on-year. Its strength lies in its unique ability to quickly develop concrete use cases for customers through so-called boot camps, thereby significantly shortening lengthy sales cycles. This efficiency is directly reflected in profitability.
An often overlooked but crucial growth driver is business with government agencies, particularly in the defense sector. Palantir’s expertise in analyzing vast and sensitive amounts of data makes it the ideal partner for security and intelligence agencies. At a time of rising defense budgets and technological arms races worldwide, the Company is benefiting directly from this development. The platform is used for logistics, reconnaissance, and strategic planning, which leads to lucrative, long-term contracts and complements the commercial business in a stable manner.
Despite these strong fundamentals, the exceptionally high valuation poses a challenge. The market is already pricing in near-perfect further growth. The most significant risk for investors is therefore potential disappointment if the pace of revenue expansion slows or the expected scaling of margins stalls. In addition, the business is not immune to macroeconomic cycles, especially if capital expenditure on AI technologies turns out to be weaker than currently assumed. The current valuation leaves little room for unforeseen setbacks. The share price is currently trading at USD 167.86.
The defense boom is creating strategic winners beyond the arms giants. Almonty Industries is establishing itself as an indispensable tungsten supplier outside of Chinese dominance. DroneShield is structurally benefiting from the escalating demand for protection against drone threats. Palantir is leveraging its AI expertise to benefit directly from growing defense budgets and the flood of data. Together, these specialized players embody the new security architecture and offer exposed investment opportunities in a fundamentally changed geopolitical environment.
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