Three small-cap defense tech firms secure Pentagon contracts, signaling growth beyond AI hype.

BigBear.Ai, Palladyne AI, and Ondas are three small-cap defense technology companies gaining traction with significant Pentagon contracts. BigBear.Ai reported a 14% increase in contract backlog to $281.9 million in Q1 2026 and expects 17% revenue growth this year. Palladyne AI formed a strategic partnership to supply loitering munitions to the U.S. Department of War, with Q1 revenue up 107% year-over-year. Ondas raised its 2026 revenue forecast after a 10-fold Q1 revenue surge, driven by autonomous defense platforms and recent military contracts. These firms highlight a defense-focused AI growth area with signed contracts and expanding backlogs, despite risks like execution challenges and government budget sensitivity.