AML3D share price surges another 38% today! What's going on?

The defence sector is catching some strong bids.

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Investors in ASX defence stocks are buzzing as the AML3D Ltd (ASX: AL3) share price surged another 37.7% to close at 14 cents apiece on Wednesday. This follows an enormous run for the ASX small-cap stock, which has rallied more than 125% in a month.

It is up almost 70% this week alone.

Comparatively, the benchmark S&P/ASX 200 index (ASX: XJO) has lifted 6.8% over the past 12 months.

Let's dive into what's driving this performance and whether it's a trend that could continue.

Why is the AML3D share price soaring?

The impressive rally in the ALM3D share price is most likely attributed to several positive developments for the company.

This week, AML3D announced a $1.1 million sale of its 2600 Edition ARCEMY system to Laser Welding Solutions, a supplier to the US Navy.

This system will support Laser's alloy qualification program, which has been operational under a lease agreement since September 2023. The deal includes a one-year service and maintenance contract, adding to AML3D's recurring revenue stream.

Earlier in the year, back in February, AML3D reported a 936% increase in half-year revenues to $1.51 million, compared to $146,115 in the prior corresponding period.

In May, the company secured a $350,000 contract with the Australian Government, alongside a $1.54 million order from the US Department of Defence.

AML3D then received a $1.12 million grant from the South Australian Economic Recovery Fund to develop its proprietary metal 3D printing technology.

These achievements have positioned the AML3D share price front and centre of the ASX aerospace and defence basket at the start of FY25.

What's next for AML3D?

While AML3D has been making headlines, it's worth noting that other ASX defence-related stocks, like DroneShield Ltd (ASX: DRO), have also seen significant gains.

DroneShield shares, for instance, have posted a 617% increase over the past year and more than 410% return year-to-date in 2024. It, too, had a number of recent contract wins with the US Government.

The question is, will AML3D's contract wins and rapid revenue growth suggest its share price has a similar potential for future outsized returns as well?

AML3D is focused on getting its advanced manufacturing technology in with the US Navy supply chain. Its announcement on the ARCEMY sale to the Navy on Tuesday made a detailed note of this.

The company's CEO, Sean Ebert, expressed confidence in AML3D's ability to capitalise on opportunities within the US Defence sector, saying:

The continuing momentum within our US scale-up strategy underpins the investment we are making in our US manufacturing hub and headquarters at Ohio. We are looking to maximize the opportunities we have across the US Defence sector, especially the Navy's submarine industrial base, but also across US-based, global Tier 1 Oil & Gas, Marine and Aerospace companies.

Foolish takeaway

AML3D's recent performance and promising outlook could make it an exciting prospect for investors.

However, as with any high-growth stocks, potential investors should remain mindful of the risks and volatility involved. Keep an eye on AML3D's future announcements to gauge whether this upward momentum can be sustained.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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