The Observer

The Trump administration just confirmed it is in active talks to fund US drone companies. The Pentagon has been in discussions for months. The WSJ broke it today. $RCAT up massive $AVAV up massive. $KTOS up massive. $ONDS up massive. Even more. Every drone offense stock running. And the market is completely missing the most obvious beneficiary. When drones proliferate at this scale the single most important question for every military on earth is not how do we launch more drones. It is how do we stop them. That is $EOS.AX. The directed energy counter-drone stack. Apollo directed energy weapons destroying drones for pennies per shot. NiDAR AI software already battle proven defeating Shahed drone and missile attacks in active conflict. The full detect, decide, defeat system now complete after the MARSS acquisition. Every dollar the US government puts into drone offense creates demand for counter-drone defense. Every new drone program funded today becomes a threat that adversaries field tomorrow. The counter-drone procurement cycle follows the offense cycle with a lag. EOS does not just benefit from drone proliferation. They are the solution to it. A$726 million order book. €102 million Middle East contract just signed. Battle proven technology. The complete counter-drone stack under one roof. The drone funding news sent offense stocks flying today. The defense side of that trade is $EOS.AX.

If you're new to $EOS.AX, here's everything that matters. I think this is a prime in the making. Here's why. What they actually do Electro Optic Systems is an Australian defence technology company with four decades of experience in lasers, optics, and weapons systems. They build remote weapon stations, high-energy lasers, counter-drone systems, and space domain awareness infrastructure; and now the AI command-and-control layer to connect all of it. Land EOS has sold over 2,500 remote weapon stations globally. Their R400 Slinger is battle-proven in Ukraine; 160 systems deployed, with the Ukrainian Ambassador visiting EOS headquarters this week and publicly confirming the Slinger is receiving positive operational feedback from the battlefield. General Dynamics selected EOS as sole partner to integrate the R400 autonomously onto the M1 Abrams tank. Thousands of platforms, $3B addressable market over 15 years. Counter-drone Apollo is their 100kW high-energy laser. The Netherlands signed the world's first 100kW HELW export contract at €71.4M, and it's running six months ahead of schedule. Their Slinger cannon system is the kinetic layer. EOS has recently acquired MARSS, bringing NiDAR; an AI-enabled command and control system with 60+ fielded systems globally as the brain connecting everything. EOS can now sell a full integrated kill chain - detect, decide, engage. Sea EOS doesn't build ships. What it does is provide the weapon layer on unmanned surface vessels. R400 RWS demonstrated on BlackSea Technologies' USV at Sea-Air-Space in April alongside Lockheed Martin. A €31M order for Slinger counter-drone systems configured for naval deployment; EOS's largest ever naval RWS contract, funded by a Western European government. Space This is the part most people miss. EOS has been tracking objects in orbit from Mount Stromlo for four decades. Atlas Space Control - unveiled at IAC 2025 - weaponises that capability. Ground-based high-energy lasers, fixed or mobile, scalable from surveillance through to active engagement. As Russia parks military satellites 500 metres from commercial imaging assets supplying Ukraine, this stops being a niche product. They just appointed Air Vice-Marshal (Ret'd) Catherine Roberts to the board; inaugural Commander of Defence Space Command in Australia, 40 years of aerospace engineering, and oversight of $16B in major programmes. They're stacking the deck to own the space domain. C2 - the connective tissue Without command and control, EOS is a components vendor, but MARSS NiDAR changes that. It fuses sensors and orchestrates effectors across all domains at machine speed. The integrated EOS-MARSS stack has already defeated Iranian Shahed drones defending Gulf infrastructure in active conflict. Netherlands World's first export contract for a 100kW high-energy laser weapon @ €71.4M and running ahead of schedule. The Dutch client is already signalling readiness for serial production orders before first delivery. This is NATO reference architecture. Germany Defence Minister Pistorius visited Mount Stromlo in March 2026. CEO Schwer presented binding offers for 10 Apollo 100kW systems (€380M) plus Atlas. EOS pitch - twice the power, half the price, half the time. A German CEO with Rheinmetall executive pedigree doesn't walk into those rooms by accident. Middle East 500+ EOS remote weapon stations already in Emirati service. Calidus - Abu Dhabi's major defence integrator - took a A$40M strategic stake in EOS and is co-producing systems in a UAE manufacturing hub. Their joint system DAMITA is the UAE's first indigenous integrated counter-drone platform; EOS laser, EOS turret, MARSS NiDAR brain. This is the Gulf reference architecture, with a clear replication path into Saudi Arabia, Kuwait, Qatar, and Bahrain. Africa MARSS is finalising a >US$190M C4I programme with Nigeria's Ministry of Defence; NiDAR as a national command architecture, regional hubs, ISR UAVs. One of the largest defence programmes ever commissioned in Africa, with both sides publicly confirming they're moving toward contract signature. When it converts, it pushes the combined order book toward A$1B. The ITAR advantage US laser and defence companies are world class but export restricted, whereas EOS is ITAR free. They can sell to Europe, the Middle East, and Asia without years of Washington approval. That's not a minor detail; it's the entire competitive moat in a market where every NATO ally is scrambling to rearm. The numbers Order backlog - A$700M+ and growing. Gross margins - 76%. Net cash: ~A$235M post capital raise. A$190M institutional raise just completed with Calidus as strategic anchor investor. The setup The market is still pricing this like a small Australian manufacturer. The order book, the partnerships, the product depth, the combat validation, and the geopolitical tailwinds say something else entirely. Air, land, sea, space, and the brain to run them. That's the company EOS is becoming.

$EOS.AX The MARSS Nigeria C4I programme is moving from MoU toward signed contract - and both sides just said so. MARSS hosted a Nigerian MoD delegation, led by Defence Minister Gen. Christopher Musa, at its UK lab for live NiDAR demos. Two quotes out of the visit: MARSS: "This visit has set us on a clear path towards delivery." Nigerian MoD: "...committed to accelerating delivery of this programme." Brief history: → 19 Mar 2026 - MARSS signs a >US$190M MoU in London with the Nigerian MoD and local partners, backed by the UK Government and UK Export Finance → Scope: NiDAR AI-powered national C4I - Nigeria's first fully integrated national defence architecture (national command centre, regional hubs, expeditionary platforms, ISR UAVs) → Among the largest defence programmes ever commissioned in Africa Next step: per Janes, MARSS is now finalising timescales with the Nigerian MoD - and the first milestone is setting a date for contract signature. Once the MoU converts to a signed contract, the ~US$190M flows into EOS's order book - pushing total backlog to almost A$1B.

Decentralized power supply for AI data centers is currently one of the hottest themes in the market, and the relevant stocks have been moving rapidly higher. In fuel cells, $BE is the clear market leader, while $FCEL and Ceres Power are trying to position themselves as alternatives. On the combustion side, the situation is different: the major gas turbine manufacturers such as GE Vernova, Siemens Energy, and Mitsubishi Power are effectively sold out, with multi year backlogs extending well into the second half of the 2020s. The obvious alternative is gas engines, where several established players are active, including $CAT, Wärtsilä, INNIO and its Jenbacher platform, Cummins, and 2G Energy. One advantage of gas engine solutions over fuel cells receives far too little attention in the current debate: they are dispatchable and therefore combine naturally with solar power. The engine ramps up when solar generation falls away. Fuel cells cannot do this. They are fundamentally baseload assets and do not tolerate rapid load changes or frequent start stop cycles. This matters more for AI workloads than many investors realize. Pure baseload power is primarily needed during full scale training runs, and even there, workloads create second by second load transients. Inference is even more dynamic because it follows user demand and therefore exhibits a clear daily utilization profile. This is exactly where dispatchable gas engines excel, especially when paired with a modest battery energy storage system. Some of these engines can already operate on hydrogen, further strengthening their long term relevance. The downside relative to fuel cells is clear: lower efficiency and higher emissions because fuel is combusted. There is one particularly interesting German company in this space that already has a strong position in decentralized energy infrastructure for the energy transition through combined heat and power systems, biogas solutions, and large scale heat pumps: 2G Energy $2GB.DE According to management, the company is currently close to signing several US data center contracts in the high double digit to low triple digit megawatt range, with each individual order potentially worth up to €100 million. That is highly meaningful for a company currently guiding for €440-490 million in annual revenue. For larger competitors, deals of this size would barely move the needle. The stock is already up roughly 50% ytd. That is not insignificant, and on absolute numbers it is not cheap. But relative to peers it still looks highly attractive: P/S 2026e of approximately 2.1x EV/EBIT 2026e of roughly 22x EV/EBIT 2027e of roughly 18x Compare that to $BE at roughly 11 to 13x forward sales, or GE Vernova with a market cap near $293 billion and a forward earnings multiple around 32x. Based on its current business alone, 2G is not cheap. But the data center optionality is still not reflected in the valuation. The concrete advantages of 2G’s solutions include: Standardized modular units manufactured in house and deliverable within roughly 9 to 18 months. This is the critical advantage while turbine supply remains constrained. The Gas2Power platform covers backup power, prime power, and grid services, with full load step capability within 10 seconds. This makes it ideal for pairing with solar generation. The waste heat can be used for absorption cooling, directly supporting data center thermal management. Approximately 55 dB(A) at 10 meters, which materially improves permitting prospects for sensitive sites. What makes the business model especially compelling is its focus on high margin recurring service revenue. A triple digit megawatt installed base generates maintenance and service revenue over more than a decade. That recurring stream is the real compounding engine behind what initially appears to be a one time equipment sale. For investors looking at decentralized AI infrastructure power, this company is worth a look.