But investors who missed SpaceX’s run may have another way in, not through the rocket company itself, but through the businesses building the networks, supplying the hardware, and preparing governments for a future where access to space stops being optional. 

Here are 3 stocks worth looking into.

AST SpaceMobile Is Trying To Turn Space Into A Cell Tower

While most companies are promising connectivity, AST SpaceMobile (NASDAQ: ASTS)  is pursuing something far more ambitious: allowing ordinary smartphones to connect directly to satellites without specialized hardware 

Its first-quarter update showed a business moving from concept toward commercialization. Management is targeting approximately 45 BlueBird satellites in orbit by the end of 2026 while continuing to expand agreements with telecom partners around the world. The company now works with nearly 60 mobile network operators covering more than 3 billion subscribers and expects full-year revenue between $150 million and $200 million. It also finished the quarter with roughly $3.5 billion in cash, giving it one of the strongest balance sheets among emerging space companies.

AST also achieved peak download speeds of 98.9 Mbps directly to an unmodified smartphone and continues scaling production, with BlueBird satellites already in advanced stages of assembly. 

No wonder why the stock exploded to roughly $130 earlier this year before retreating toward the mid-$80s. The stock now sits below its 20-day and 50-day moving averages while remaining above its 200-day trend line. Volume surged during the recent pullback, suggesting investors are reassessing timelines rather than abandoning the story altogether.

For AST, the conversation has moved past whether direct-to-device connectivity works to how quickly management can convert technological leadership into meaningful revenue.

Kratos Is Building The Defense Infrastructure 

Kratos Defense And Security Solutions Inc (NASDAQ: KTOS) sits at the intersection of space and defense budgets. The company develops systems supporting satellites, missile defense programs, hypersonic initiatives, drones, propulsion systems, and military communications. While investors often focus on launches and satellites, governments increasingly care about the infrastructure supporting them.

First-quarter results showed demand accelerating across the business. Revenue rose 22.6% to $371 million while organic growth reached 15.8%. Bookings totaled $605 million, producing a book-to-bill ratio of 1.6 and helping backlog climb to more than $2 billion. Management subsequently raised full-year guidance, citing what it described as a generational recapitalization of the U.S. defense industrial base. Those numbers suggest current growth is not coming from a single contract or isolated program. Demand is broadening across multiple areas tied to national security spending.

Not surprisingly, the chart tells a completely different story.

Shares have fallen from about $130 earlier this year to the mid-$50s and remain below their 20-day, 50-day, and 200-day moving averages. The long-term downtrend remains intact, and buyers have repeatedly failed to establish sustained momentum. At the same time, that disconnect reveals that Wall Street is focused on recent price weakness while management is talking about expanding budgets, rising backlog, and increasing demand across several strategic programs. If those trends continue, fundamentals may eventually force investors to revisit the stock.

Karman Holdings May Be The Most Overlooked Name On This List

Unlike AST or Kratos, Karman Holdings Inc (NYSE: KRMN) remains largely unknown outside aerospace circles. But I suspect that may not last. The company supplies critical systems used across strategic missile defense, launch vehicles, tactical missile programs, and other national security applications. In other words, Karman benefits from growing demand for access to space without depending on consumer-facing excitement.

Its first-quarter results were also difficult to ignore as revenue jumped 51% year over year to $151.2 million. Adjusted EBITDA increased 47% to $44.8 million. Backlog reached approximately $1.6 billion, and management raised full-year revenue guidance to between $720 million and $735 million while increasing EBITDA expectations to as much as $215 million.

Those are the numbers investors typically associate with a stock making new highs. Instead, Karman shares have collapsed from around $115 earlier this year to roughly $52.

The chart shows a stock trading beneath every major moving average after months of sustained selling pressure. Yet recent price action suggests sellers may be losing control. Shares have started stabilizing near support around the low-$50 range even as the underlying business continues producing record revenue and record earnings.

As you probably know, sometimes the market gets ahead of fundamentals. Sometimes fundamentals catch up.

So before investors eventually decide whether a company growing revenue by more than 50% deserves to trade like a business in decline, grabbing some shares now could put me ahead of the curve.

The Trend Is Bigger Than Any Single Company

SpaceX helped investors recognize the opportunity. But the next chapter may belong to the companies building the networks, infrastructure, and systems surrounding it. As you’ve already seen – AST SpaceMobile, Kratos,and Karman – sit at the centre of it all.

In the United States, defense spending could also see a significant increase. President Donald Trump recently proposed a massive $1.5 trillion defense budget for fiscal year 2027. If approved, the proposal would represent a substantial jump from the roughly $900 billion defense budget authorized for 2026. Other countries are also boosting military investments. Canada, for example, has committed approximately $81.8 billion over the next five years to strengthen the capabilities of the Canadian Armed Forces. 

From here, global defense spending could rise further, given intensifying conflicts in Russia and Ukraine, as well as increased security issues across Asia and parts of Africa.  In addition, NATO allies committed to investing 5% of Gross Domestic Product (GDP) annually in core defense requirements and defense- and security-related spending by 2035. They will allocate at least 3.5% of GDP annually based on the agreed definition of NATO defense expenditure by 2035 to resource core defense requirements and to meet the NATO Capability Targets,” as noted by NATO.

So, what’s the best way to trade it?

One way is to invest in this surge in defense spending is through defense stocks, such as Palantir Technologies (NASDAQ: PLTR), Lockheed Martin (NYSE: LMT), C3.ai (NYSE: AI), BigBear.ai (NASDAQ: BBAI), AeroVironment (NASDAQ: AVAV), and Kratos Defense & Security (NASDAQ: KTOS), to name a few.

Or, you can diversify with exchange-traded funds (ETFs), such as:

Global X Defense Tech ETF (SHLD): A Bet on AI and Defense Technology

With an expense ratio of 0.5%, the Global X Defense Tech ETF (NYSEARCA: SHLD) invests in companies positioned to benefit from the increased adoption and utilization of defense technology. This includes companies that build and manage cybersecurity systems, utilize artificial intelligence and big data, and build advanced military systems and hardware, such as robotics, fuel systems, and aircraft for defense applications. Some of its 49 holdings include Lockheed Martin, RTX Corp., General Dynamics, Palantir Technologies, Northrop Grumman, and L3Harris.

U.S. Aerospace & Defense ETF (ITA): Exposure to Aerospace and Military Leaders

With an expense ratio of 0.38%, the U.S. Aerospace & Defense ETF (BATS: ITA) offers exposure to companies that manufacture commercial and military aircraft and other defense equipment. Some of its 41 holdings include GE Aerospace, RTX Corp., Boeing, Lockheed Martin, Northrop Grumman, L3Harris Technologies, General Dynamics, and Axon Enterprise.

SPDR S&P Aerospace & Defense ETF (XAR): Diversified Access to Defense Manufacturers

The SPDR S&P Aerospace & Defense ETF (NYSEARCA: XAR) seeks to provide investment results that, before fees and expenses, correspond generally to the total return performance of the S&P Aerospace & Defense Select Industry Index. The XAR ETF has an expense ratio of 0.35%. Some of its top holdings include Lockheed Martin, Northrop Grumman, Howmet Aerospace, L3Harris Technologies, Carpenter Technology, and Curtis-Wright Corp.

Invesco Aerospace & Defense ETF (PPA): Broad Exposure to Defense and Space Innovation

The Invesco Aerospace & Defense ETF (NYSEARCA: PPA) tracks a market-cap-weighted index of US-listed stocks involved in the defense, military, homeland security and space industries. The PPA ETF has an expense ratio of 0.57%. Some of its top holdings include Lockheed Martin, RTX Corp., General Electric, Boeing, Northrop Grumman, and General Dynamics.

Why Defense Spending Could Become a Decade-Long Megatrend

Defense spending is one of the most powerful long-term investment themes in the market. From advanced AI-driven warfare systems to aerospace innovation and cybersecurity infrastructure, governments around the world are preparing for a new era of military modernization—and investors are paying close attention.

Whether through individual defense stocks or diversified ETFs, the sector offers multiple ways to gain exposure to what could become a multi-trillion-dollar growth opportunity over the next decade. While no investment is without risk, the sustained rise in global defense budgets, combined with increasing geopolitical uncertainty, could provide strong tailwinds for aerospace and defense companies well into the future. For traders and long-term investors alike, this may be one megatrend worth watching closely.

But P/E ratios tell only part of the story. A high multiple often reflects market confidence in future earnings growth. When analysts still see substantial upside despite lofty valuations, patient investors may have reason to pay attention.

Three stocks stand out right now: Axon Enterprises (NASDAQ: AXON), Palantir Technologies (NASDAQ: PLTR), and Kratos Defense & Security Solutions (NASDAQ: KTOS). All three carry high P/E ratios — not just relative to the S&P 500, but to their own sectors. Yet Wall Street analysts continue to forecast meaningful upside for each one. That combination of elevated valuation and bullish outlooks makes these high P/E stocks worth examining closely.

Investors who are willing to look beyond the headline multiple and focus on growth trajectory may find that the premium these stocks command is justified. The key question is whether their earnings growth can eventually catch up to their prices, and analysts believe it can.

Axon Enterprises: The Public Safety AI Platform Built for Explosive Growth

Axon Enterprises is best known for its TASER devices, but the company has quietly transformed itself into a comprehensive public safety technology platform. Its products and services span body cameras, digital evidence management, drone systems, and AI-powered software tools for law enforcement and first responders.

That evolution is showing up in the financials. Axon’s total revenue increased 33.47% year over year, and the company is aggressively embedding AI into its product suite. Its software and services revenue is growing even faster, reinforcing the platform’s stickiness with government clients.

Axon’s current P/E ratio stands at approximately 258x. That’s well above the Industrials sector average and most of its peers. That is a steep multiple by any measure. However, based on 13 Wall Street analysts, the average 12-month price target for Axon is $700.18, representing roughly 88% upside from current levels. Some forecasts are even more aggressive, with the highest target reaching $825.

The bull case rests on Axon’s expanding total addressable market. As AI tools become standard in law enforcement and public safety operations, Axon’s platform is positioned as the infrastructure layer. That gives it durable pricing power and high switching costs. That combination tends to support premium valuations over time.

Palantir Technologies: Ignore the Noise, Focus on the Fundamentals

Palantir has been in the headlines recently for the wrong reasons. Famed investor Michael Burry posted on social media, suggesting that Anthropic is “eating Palantir’s lunch” in the enterprise AI market. Palantir shares fell roughly 6% following Burry’s warning, with trading volume well above average.

But analysts say the sell-off reflects a misunderstanding of what Palantir actually does. Palantir’s platforms — Gotham, Foundry, and its Artificial Intelligence Platform (AIP) — are purpose-built for mission-critical, often classified environments. Anthropic builds large language models. These are different products serving different needs.

BofA analyst Mariana Perez maintains a Buy rating and calls the sell-off a short-term reaction to headlines, citing Palantir’s position in mission-critical government data as a durable advantage.

At a forward P/E of around 115x, Palantir trades well above its sector median of 21x. That premium is not lost on skeptics. But Palantir delivered 70% revenue growth in its most recent quarter, and the fundamentals remain robust. The average analyst price target holds at approximately $194.61, implying around 38% upside from recent levels. For growth investors with a longer time horizon, the dip created by Burry’s comments may represent a buying opportunity in disguise.

Kratos Defense: A Drone and Hypersonics Pure-Play in an Era of Rising Threats

Kratos Defense & Security Solutions is a defense technology company focused on some of the most strategically important areas in modern warfare: unmanned aerial systems, hypersonic vehicles, rocket propulsion, and electronic warfare. Its customers include the U.S. Department of Defense, intelligence agencies, and international military partners.

The business fundamentals are strong. Kratos has grown from $150 million to $1.5 billion in annualized revenue under its current leadership, and it carries a backlog exceeding $4 billion. Organic growth rates are expected to accelerate from roughly 14–15% in 2025 to 18–23% by 2027 as hypersonics and AI-driven defense systems ramp up.

Jefferies recently upgraded Kratos from Hold to Buy, citing stronger growth prospects in tactical systems and unmanned platforms, with hypersonics and sustained drone demand as key earnings drivers.

Canaccord Genuity set a price target of $125 for KTOS, representing approximately 43.78% upside from recent prices. The consensus across analysts is firmly bullish. The 17 analysts covering KTOS have a consensus rating of Strong Buy, with an average price target of $96.71. In an era of rising global threats and expanding defense budgets, Kratos is well-positioned to benefit from sustained government investment in next-generation military technology.

What Black Swans Could Emerge and How Should Investors Prepare?

Even with strong analyst backing, high P/E stocks carry elevated risk. A few black swans deserve serious consideration.

First, an unexpected slowdown in government spending, whether from budget reconciliation battles in Congress or shifts in defense priorities, could undercut revenue for all three companies. Axon and Kratos both rely heavily on government contracts, and Palantir generates a significant share of its revenue from federal agencies.

Second, a broad market re-rating of growth and technology stocks could compress multiples sharply and quickly. Stocks trading at 100x to 250x earnings have very little margin for error. Any earnings miss or a reduction in guidance could trigger an outsized decline.

Third, genuine AI competition could disrupt Palantir’s commercial business more than bulls currently expect, even if the government-side moat remains intact.

To prepare, investors should consider sizing positions conservatively, diversifying across all three names rather than concentrating in one, and thinking in terms of multi-year holding periods. Dollar-cost averaging into these positions can help smooth out the volatility that comes with high-multiple stocks.

Patience Is the Price of Entry

High P/E stocks are not for everyone. They demand tolerance for volatility, conviction in the growth thesis, and the patience to let that thesis play out over years — not months. Axon, Palantir, and Kratos all trade at valuations that price in substantial future success. If that success materializes, the rewards for risk-tolerant investors could be significant.

Analysts see meaningful upside in each name despite today’s elevated multiples. For investors who do their homework and manage risk carefully, these high P/E stocks may still have a great deal to offer.