Jim Cramer on CNBC called defense technology company AeroVironment the next “Palantir of hardware” on Wednesday morning, and the stock went on to soar even higher after his commentary. Shares of AeroVironment, which makes unmanned aircraft systems, were already up 6% in the premarket after the company reported strong earnings after Tuesday’s close. By the time Cramer finished touting the stock, it was 11% higher. Cramer heaped high praise on AeroVironment by likening it to high-flying Palantir , which has big defense software contracts. AeroVironment stock went on to extend its gains to almost 30% on the session — and at the highs of the day at $250 per share, surpassed Cramer’s prediction of a breakout to $240. The stock market value of the company jumped nearly $2 billion in Wednesday trading. The stock was on pace to close at a record high. “This is a company that’s our primary drone company,” said Cramer, pointing out that NATO allies agreed on Wednesday morning to double the defense spending target, going from 2% of annual gross domestic product to 5% by 2035. “This may be the biggest winner in the NATO budget,” Cramer added, at a time of heightened global tensions, including the Israel-Iran war and the ongoing war between Ukraine and Russia. AeroVironment, a leading supplier of drone technology to the United States military, posted record-breaking fiscal year revenue of nearly $821 million, up 14% from last year. Last month, the company closed a $4.1 billion deal to acquire defense tech company Blue Halo, which Cramer believes would allow it to consolidate drone defense weapons across the industry. AVAV YTD mountain AeroVironment YTD “We have purpose-built this company for the critical strategic priorities of the U.S. national security and our allies,” AeroVironment CEO Wahid Nawabi told Cramer in a “Mad Money” interview on Tuesday evening. To be sure, the magnitude of Wednesday’s surge in AeroVironment was also likely partially due to a “short squeeze,” because 14% of the company’s outstanding stock float coming into the session was short. That’s a high short interest level for any stock. A short-seller is someone who borrows shares and hopes to sell them at lower levels and pocket the difference. The “short squeeze” occurs when people are forced to close their positions by buying shares at higher levels than what they borrowed them at. That can result in artificially high buying activity. Trading volume in AeroVironment shares was already well above their 30-day average.
