Palladyne AI Corp. (NASDAQ: PDYN) shares rose roughly 15% in early trading on Tuesday following the company's announcement that it secured a contract to supply a key propulsion subsystem for an existing U.S. missile system program.
The agreement, awarded by a major U.S. defense prime contractor, is projected to produce nearly $1 million in revenue for Palladyne AI in 2026. The Salt Lake City-based defense and industrial technology firm said it will provide mission-critical hardware that supports missile propulsion, with all deliverables scheduled to be completed by the end of the third quarter of 2026.
According to Palladyne AI, the prime contractor selected the company because of its established record in defense manufacturing, documented performance on prior defense programs, and the ability to meet accelerated timelines. The company framed the contract as consistent with its objective to increase defense manufacturing revenues and deepen its role in longer lifecycle weapons programs.
Ben Wolff, Chief Executive Officer of Palladyne AI, commented on the win: "This contract win represents a meaningful step in scaling our defense manufacturing revenues and reinforces our strategy of embedding Palladyne AI into long-lifecycle weapons programs." He added, "It also reflects the confidence that another leading defense prime has placed in our ability to deliver mission-critical hardware on demanding timelines."
Palladyne AI said it views the contract as an opportunity to strengthen its relationship with the prime contractor and to potentially expand its participation in long-life-cycle U.S. missile programs. The company emphasized that the award aligns with a broader strategy to deepen integration within the U.S. defense industrial base while focusing on American-made solutions intended to support national security platforms.
The company is described as a specialist in embodied AI-powered collaborative autonomy solutions, advanced avionics, precision-manufactured components, unmanned aerial vehicles, and aerospace engineering services.
Context and next steps
Palladyne AI will proceed with manufacturing and delivery to meet the schedule outlined in the contract, with the work expected to conclude by the end of the third quarter of 2026. The company has highlighted this contract as part of its effort to scale defense-related revenue streams and to increase its footprint in long-lifecycle weapons programs.
Market reaction
The stock's approximately 15% rise Tuesday morning reflects investor response to the contract announcement and the revenue projection for 2026. The company did not disclose additional financial terms beyond the near-$1 million revenue expectation tied to the contract.