AeroVironment's record quarter (+10.7%) and a Wedbush bull-call ignited a broad defense-prime rally, while the edge-AI silicon chokepoint (Ambarella −11.3%) got caught in the second-day chip rout.

AeroVironment (AVAV) closed up 10.7% at $190.89 — off an intraday premarket spike near 32% — after reporting record fiscal fourth-quarter revenue of $641.6 million, more than double a year earlier and comfortably ahead of the roughly $557 million consensus. Wedbush initiated coverage with an Outperform and a $250 target, calling AV a long-term winner in defense tech. AeroVironment spans several of this vertical's chokepoints at once — airframes and primes, interceptors and effectors, and RF/EW detection — and the print is the clearest evidence yet that loitering-munition and small-UAS demand is converting into delivered revenue at the prime layer, not just sitting in backlog.

The basket's worst name was the silicon feeding those platforms. Ambarella (AMBA) fell 11.3% to $78.36 as the second-day semiconductor selloff hit the autonomy-compute chokepoint. Ambarella's edge-AI vision SoCs are the onboard eyes and brains of autonomous drones; the stock dropped with the broader chip complex — the Philadelphia Semiconductor Index lost 6.7% on the session — on profit-taking, not any AV-specific news. The split is the session's tell for this vertical: the prime and integrator layer re-rated higher on real earnings while the silicon that feeds it de-rated on valuation, after a weak June jobs report (+57k payrolls) rotated the tape toward defensives and steered the Dow to a record close.

The defense-prime rally was broad. Kratos (KTOS) +4.4%, which Wedbush also initiated at Outperform with an $85 target; Elbit (ESLT) +5.7%; BAE Systems' US line (BAESY) +6.5%; L3Harris (LHX) +3.4%; RTX +3.9%; Leonardo DRS (DRS) +2.4%; and Mercury Systems (MRCY) +2.6% — the RF/EW, EO/IR and datalink chokepoints all bid. The pain was concentrated in the component chokepoints most exposed to the chip tape: the battery names Amprius (AMPX) −8.9% and Enovix (ENVX) −8.4%, optics maker LightPath (LPTH) −8.4%, and PNT/datalink small-cap NextNav (NN) −8.3%.

The calendar ahead is policy- and print-heavy. The House is set to vote on the FY27 NDAA (H.R. 8800) around July 15, with Senate Armed Services markup expected July 8 — the authorization backdrop for the drone-procurement surge. RTX's Q2 (July 28) and the promised roughly 90-day detail on the Army–Coyote multi-year framework, guided to mid-July, test the interceptor chokepoint, while Teledyne's July 22 print is the first read after its LASSO award. Further out, the Pentagon's "Gauntlet II" drone down-select is expected in late August.