nLIGHT's Evolving Mix: Defense Programs and Sensing Fuel Next Phase

nLIGHT LASR builds the high-power laser building blocks that are increasingly central to modern defense systems. The company’s position spans directed energy lasers and optical sensing, alongside a smaller commercial footprint in advanced manufacturing.

The key theme for investors is the mix. In 2025, aerospace and defense became the dominant driver of revenue and visibility, supported by funded backlog, late-stage programs, and a sensing portfolio that began moving from design wins into production.

nLIGHT’s 2025 Mix Shows Defense as the Center of Gravity

In 2025, total revenue was $261.3 million, up 31.6% from 2024. Laser Products accounted for 68.6% of revenue, while Advanced Development contributed 31.4%. The end-market mix underscores where the center of gravity sits. Aerospace and defense represented 67% of 2025 revenue, while microfabrication and industrial comprised 18.1% and 14.9%, respectively. nLIGHT’s top customers include BAE Systems, Northrop Grumman, Raytheon Technologies, and the U.S. Government.

Defense momentum accelerated through 2025 and culminated in record fourth-quarter aerospace and defense performance tied to HELSI-2 shipments and the DE M-SHORAD delivery. The DE M-SHORAD milestone included delivery of a 50-kilowatt coherent beam-combined high-energy laser and beam director. That milestone dynamic is also why quarterly outcomes can move around: development revenue can surge when deliveries land and then reset as milestones roll forward.

Visibility increasingly hinges on funded backlog. Funded backlog was about $162 million as of Dec. 31, 2025, essentially flat year over year, and management pointed to it as a key support for continued growth. The setup also matters for 2026, with late-stage programs such as HELSI-2 viewed as a substantial contributor as deliveries expand.

nLIGHT’s Laser Sensing Adds a Second Defense Growth Track

Sensing became a more tangible growth track in 2025 as programs progressed from design wins to production. A $50 million contract signed in the third quarter of 2025 for a long-running U.S. missile program highlighted embedded positions tied to munitions restocking.

In the fourth quarter of 2025, the company began low-rate initial production on a new classified sensing program. Management also pointed to near-term growth from existing programs already in full-rate production, alongside a broader mix as additional programs move through low-rate initial production over the next one to two years.

Strategically, sensing helps diversify defense exposure beyond directed energy. As programs mature, the portfolio can reduce reliance on milestone-driven development swings and support a higher-value mix driven by product shipments.

LASR’s Manufacturing Footprint and Capacity Plans

Capacity and execution readiness are central because directed energy deliveries and sensing ramps require dependable throughput. nLIGHT is building out additional capacity in Longmont, Colorado, adding 50,000 square feet of leased manufacturing and office space intended to more than double current capacity and enable multiple simultaneous beam-combined laser builds.

The company is also investing in internal manufacturing and supplier takt-time improvements to reduce lead-time risk. That focus is meant to tighten schedules and improve delivery reliability as volumes scale on large, milestone-driven programs.

Balance sheet strength supports this buildout. A February 2026 follow-on offering strengthened liquidity, with gross proceeds of roughly $201 million before fees and management citing more than a quarter-billion dollars of pro forma cash to fund capacity expansion and supply chain investments.

LASR’s Outlook and Management Commentary

For the first quarter of 2026, nLIGHT expects revenues between $70 million and $76 million, with an expected mix of approximately $54 million in product revenue and $19 million in development revenue. Development revenue is guided down sequentially due to the 4Q’25 delivery of the DE M-SHORAD 50-kW module.

The Zacks Consensus Estimate for first-quarter 2026 revenues is pegged at $70.6 million indicating 36.6% growth from the figure reported in the year-ago quarter. The consensus mark for earnings is currently pegged at 8 cents per share, up couple of cents over the past 30 days. LASR reported loss of 4 cents per share in the year-ago quarter.

nLight Price and Consensus

nLight price-consensus-chart | nLight Quote

For 2026, nLIGHT expects total revenue growth versus 2025, with A&D expected to grow double digits year over year, supported by existing backlog. The company highlighted a ~$25 million to $30 million fiscal 2026 revenue headwind from the exit of cutting and welding, with modest contribution in the first half and near zero by the second half.

Zacks Rank & Stocks to Consider

nLIGHT currently has a Zacks Rank #4 (Sell).

Guidewire Software GWRE, Applied Materials AMAT and Qnity Electronics Q are some stocks worth buying in the broader Zacks Computer and Technology sector. All three stocks currently sport a Zacks Rank #1 (Strong Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.

Long-term earnings growth for Guidewire, Applied Materials and Qnity Electronics is pegged at 12.6%, 20.2% and 11.5%, respectively. In terms of share price movement, Guidewire shares have declined 20.9%, while Applied Materials and Qnity Electronics have surged 44.9% and 43.7%, respectively, on a year-over-year basis.

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