3D Systems (DDD): A Strategic Play in Defense Additive Manufacturing Amid Policy Tailwinds and Industry Consolidation

The defense manufacturing sector is undergoing a transformative shift, driven by the rapid adoption of 3D printing technologies to address supply chain vulnerabilities, reduce lead times, and enable on-demand production of mission-critical components. At the forefront of this evolution is 3D Systems (DDD), a company uniquely positioned to capitalize on both structural policy tailwinds and accelerating industry consolidation. With its Aerospace & Defense (A&D) business projected to become its largest and fastest-growing segment, DDD offers a compelling investment case for investors seeking exposure to a high-growth, capital-efficient sector.

Policy Tailwinds: A Catalyst for Domestic 3D Printing

The U.S. government's strategic pivot toward self-reliance in defense manufacturing has created a fertile environment for domestic 3D printing providers. The National Defense Authorization Act (NDAA) for Fiscal Year 2026 explicitly restricts the use of foreign-sourced 3D printing systems for Department of Defense (DoD) programs, a move that directly benefits companies like 3D Systems. This policy shift aligns with broader efforts to secure the defense industrial base, as highlighted by the DoD's 2024 allocation of $350 million to accelerate additive manufacturing (AM) adoption.

3D Systems has proactively expanded its U.S. manufacturing footprint, adding 80,000 square feet to its Littleton, Colorado facility to enhance production capacity and qualify for the America Makes JAQS-SQ framework-a certification program aimed at scaling defense-grade AM capabilities. These investments position DDD as the sole U.S. provider of an end-to-end metal additive manufacturing ecosystem for large-frame systems (over 1 meter print area), a critical differentiator in high-reliability defense applications.

Financials and Earnings Catalysts: Scaling a High-Margin Opportunity

The A&D segment's financial trajectory underscores its strategic importance. Revenue from production printing systems and custom metal parts is projected to exceed $35 million in 2026, building on a 15% year-over-year growth in 2025. This growth is fueled by contracts such as the $7.65 million U.S. Air Force agreement to develop advanced thermal management solutions for spacecraft, leveraging 3D Systems' Direct Metal Printing (DMP) technology.

Moreover, DDD's $18.5 million Air Force-sponsored program to pioneer next-generation laser powder-bed fusion technologies is a key earnings catalyst. Upon completion in 2027, this initiative will solidify 3D Systems' leadership in large-format metal AM, a niche with limited global competition. The company's collaboration with institutions like Penn State University and NASA further enhances its R&D pipeline, ensuring alignment with cutting-edge defense requirements.

Valuation Attractiveness: Undervalued Amid Sector Rebalancing

Despite its strong growth profile, 3D Systems remains undervalued relative to peers. As of late 2025, the stock trades at a P/E ratio of 21.3x, significantly below the industry average of 33.5x. While its EV/EBITDA ratio of -5.9x reflects current profitability challenges, this metric is skewed by non-recurring costs tied to facility expansions and R&D investments. Analysts argue that DDD's forward-looking metrics-particularly its projected 20%+ A&D segment growth in 2026-justify a re-rating.

The defense 3D printing sector is also witnessing consolidation, with peers like Desktop Metal and Firehawk Aerospace securing strategic funding or partnerships. 3D Systems' focus on vertical integration and proprietary technology gives it a durable moat, particularly as the global market is forecasted to grow at a 22.7% CAGR through 2032.

Competitive Positioning: A Defense-First Differentiator

3D Systems' dominance in defense AM is underpinned by its ability to deliver qualified, high-performance components in remote or combat zones-a capability that traditional manufacturing cannot match. The U.S. Navy's 2024 training program for additive manufacturing operations and Firestorm Labs' "xCell" mobile factory-in-a-box exemplify the sector's shift toward industrial-scale deployment, a trend DDD is well-positioned to lead.

Internationally, 3D Systems' European operations and Saudi Arabia-based NAMI joint venture provide localized expertise for global defense clients. This geographic diversification, combined with its exclusive focus on U.S. defense contracts, creates a balanced risk-reward profile.

Conclusion: A Near-Term Buy for Growth-Oriented Investors

3D Systems' strategic alignment with U.S. defense policy, robust financial growth, and undervalued valuation make it an attractive entry point for investors. With the A&D segment poised to outperform in 2026 and industry consolidation accelerating, DDD offers a rare combination of secular growth and near-term catalysts. As the defense sector transitions from experimental to industrial-scale 3D printing adoption, 3D Systems is not just a beneficiary-it is a defining force in this transformation.