For decades, high-energy laser weapons lived in the same neighborhood as flying cars — perpetually five years away. That is no longer the case, and the shift is starting to show up in how investors value defense companies.
From test range to battlefield
Israel's Rafael delivered its first operational 100-kilowatt Iron Beam system to the military late in 2025, and within weeks it was used in combat in early 2026, intercepting rockets and drones over northern Israel. The economics are the headline: a laser interception costs only a few dollars in electricity, against tens of thousands of dollars for a conventional interceptor missile. That cost-exchange math is what has caught the attention of military planners — and analysts.
The cost-per-shot revolution
Militaries have long faced an asymmetric problem: a cheap drone can force the launch of a missile costing hundreds of thousands of dollars. Directed energy flips that. Britain's DragonFire laser — built by a consortium led by MBDA — costs roughly $13 per ten-second engagement, Breaking Defense reported, and in 2025 trials destroyed drones flying at highway speeds. The U.K. has since funded its integration onto a Royal Navy destroyer, targeted for 2027.
In the United States, Lockheed Martin delivered its HELIOS laser to the Navy in 2022; it is installed aboard a destroyer and has hit drone targets in testing in 2024 and 2025. An earlier prototype, the Laser Weapon System, was tested aboard the USS Ponce in the Persian Gulf years ago. Crucially, HELIOS remains in development testing — it has not been used in combat.
Who holds the contracts
The supply chain is consolidating around the familiar defense primes — Lockheed Martin, which also won a U.S. Army contract for a far more powerful 300-kilowatt prototype, and RTX (Raytheon), which is fielding its own high-energy system — alongside specialized photonics firms. One that has drawn outsized investor attention is nLIGHT, which makes the fiber lasers at the heart of these weapons and has reported sharp growth in its defense segment, though it trades at a steep premium and is not consistently profitable.
The thesis, and the caveats
Market researchers project the global military-laser market will roughly double over the next decade, and the bull case rests on three legs: the drone threat forcing cheaper defenses, accelerating real-world fielding (Iron Beam being the clearest example), and AI-assisted targeting. The bears counter that, outside Israel, most systems remain in testing or development, and that scaling from one operational weapon to a global supply chain is an enormous engineering and procurement challenge — defense programs being famous for delays and overruns. (Market-size forecasts vary by firm and should be read as projections.)
For investors used to the steady dividends of the big primes, directed energy is a different kind of bet — not a replacement for the incumbents, but a new growth vector inside them, and a reason to look hard at the photonics suppliers who build the guts of the weapons. The science-fiction chapter, at least, is closed.
