ONDS Stock Rallies 618%—But Is the Valuation Justified Before Q3 Results?

Ondas Holdings Inc. (ONDS) is set to announce third-quarter 2025 earnings on November 13, and investor enthusiasm is undeniable. The stock has soared 618.2% over the past six months, dramatically outpacing the Communication-Network Software industry’s 10.2% decline and trouncing the S&P 500’s 17.7% gain. Yet behind this meteoric rise lies a critical question: Can the company’s fundamentals justify such an aggressive valuation?

The Growth Engine: Autonomous Systems Division Firing on All Cylinders

The story behind ONDS’ momentum centers on its Ondas Autonomous Systems (OAS) business, which has transformed the company’s top line. In Q2 2025, revenues exploded 500% year-over-year to $6.3 million, with OAS contributing $6.1 million—up from just $0.3 million in the prior-year period. This division’s $22 million backlog provides substantial visibility into future performance, while management guidance of at least $25 million in full-year revenue (with $20 million from OAS alone) underscores continued momentum.

The OAS expansion is being fueled by deepening relationships across defense and homeland security verticals in the United States, Europe, and the Middle East. The company’s Optimus System and Iron Drone Radar platform are gaining traction, particularly through partnerships expected to accelerate U.S. government adoption.

Strategic M&A: Building a Defense-Tech Powerhouse

Ondas is aggressively broadening its portfolio through targeted acquisitions. Recent moves include planned deals for Sentry CS Ltd. (Cyber-over-RF and counter-UAS technology), controlling stakes in Insight Intelligent Sensors (AI-driven electro-optical sensing), 4M Defense (advanced demining platforms), and S.P.O Smart Precision Optics (precision optical components). These inorganic initiatives, combined with the Apeiro Motion acquisition (ground robotics and fiber optics), signal a clear strategy to expand capabilities across the growing drone and defense-tech ecosystem.

The Rift Dynamics partnership—which added the modular Wasp drone platform to ONDS’ portfolio—represents a particular win. By partnering with NammoRaufoss AS on fully integrated drone-munition systems, Ondas is positioning itself in the high-margin $1 billion-plus one-way drone market.

Valuation Red Flag: ONDS Trading at 15.5X Peers’ Premium

Here’s where caution enters the picture. ONDS trades at a forward price-to-sales multiple of 29.85X versus the industry average of 1.93X. Compared to direct competitors, the premium is staggering: AeroVironment trades at 7.66X, Draganfly at 3.83X, and Unusual Machines at 19.66X. Even Unusual Machines, another high-flyer in the drone space, trades at less than two-thirds of ONDS’ valuation.

This valuation gap suggests that growth expectations are already heavily priced in. Any shortfall in execution could trigger a sharp correction.

Q3 Expectations: A Mixed Earnings Outlook

The Zacks Consensus Estimate for Q3 2025 forecasts a loss of 5 cents per share, with revenues expected at $7.37 million—a 398% jump from the year-ago quarter. However, ONDS carries a Zacks Rank of #2 (Buy) alongside an Earnings ESP of 0.00%, suggesting the model doesn’t predict an earnings beat. Notably, ONDS has a mixed track record: it beat estimates last quarter but missed in the three preceding quarters, posting an average negative surprise of 17.95%.

The Bottom Line: Growth Potential Tempered by Execution Risk

Ondas Holdings presents a compelling growth narrative anchored in explosive OAS revenue expansion, a strengthening backlog, and strategic M&A positioning it across defense and autonomous systems markets. Management’s second-half bookings guidance and plans for accelerated backlog expansion into 2026 reinforce the bullish case.

Yet the company’s heavy dependence on OAS for near-term revenues—combined with customer concentration risk in an increasingly competitive drone space—introduces meaningful downside if any large contract is delayed, reduced, or canceled. Additionally, the punishing 29.85X forward P/S multiple leaves little room for disappointment.

For prospective investors, ONDS represents a high-risk, high-reward play suitable only for those comfortable with significant volatility and execution risk. Current shareholders should monitor Q3 results closely for signs the company can sustain its growth trajectory and justify its valuation premium.