Leonardo DRS wins $25 billion defense technology contract
Ten-year Advanced Technology Support Program V contract positions aerospace & defense contractor for next-gen military systems
Leonardo DRS has secured a position on a potential $25 billion defense contract that will support the U.S. military's rapid deployment of emerging technologies, bolstering the company's position in the aerospace and defense sector.
The indefinite-delivery/indefinite-quantity (IDIQ) engineering solutions contract, awarded under the Advanced Technology Support Program V (ATSP5), carries a total potential value exceeding $25 billion over ten years. Leonardo DRS is one of thirteen companies selected for the multiple-award contract, which was formally awarded on December 30, 2025, by the Defense Microelectronics Activity (DMEA).
Shares of Leonardo DRS rose 1.3% to $44.40 in Monday afternoon trading, extending their gains for the year. The stock has outperformed broader market indices, trading near its 52-week high of $48.98 and well above its 52-week low of $27.92.
The ATSP V contract aims to accelerate next-generation electronic systems for the U.S. military by rapidly fielding emerging technologies, quickly closing capability gaps, and addressing electronics obsolescence. Under this framework, Leonardo DRS can provide work in critical areas including advanced sensing, computing, and integrated mission systems.
The contract also positions the company to contribute to research and development in cutting-edge fields such as quantum computing, nanoelectronics, three-dimensional and additive manufacturing methods, and submicron engineering for circuit design. These technologies are increasingly critical as the U.S. military seeks to maintain technological superiority against near-peer competitors.
Leonardo DRS, which has a market capitalization of $11.7 billion and trailing-twelve-month revenue of $3.65 billion, has demonstrated strong operational momentum. The company reported robust first-quarter results for the period ending March 31, 2025, with revenue increasing 16% year-over-year to $799 million and net earnings surging 72% to $50 million.
The ATSP V award follows a series of significant contract wins for Leonardo DRS in 2025. Earlier this year, the company received a $45 million investment from the U.S. Navy Submarine Industrial Base to expand its naval propulsion manufacturing facility in Goose Creek, South Carolina. The U.S. Naval Sea Systems Command also awarded the company a $41 million contract for combat management system hardware supporting the Aegis combat system and ship self-defense system for U.S. Navy surface combatants and allied naval forces.
Analysts maintain a broadly positive outlook on Leonardo DRS stock. The company carries a consensus rating of "Moderate Buy" with an average price target of $50.33, suggesting upside of approximately 14% from current levels, according to MarketBeat data. Of the 12 analysts covering the stock, 9 rate it a buy while 3 recommend hold, with price targets ranging from $47 to $59.
The $25 billion ATSP V contract, while shared among thirteen companies, represents a significant opportunity for Leonardo DRS to build on its existing relationships with the U.S. Department of Defense. IDIQ contracts of this type provide flexibility for the government to order services as needed without predetermined quantities, potentially leading to substantial revenue streams over the contract's decade-long duration.
Leonardo DRS, which is majority owned by Italian defense contractor Leonardo S.p.A., has positioned itself as a key player in the modernization of U.S. military technology infrastructure. The company's focus on electronic and sensor systems, advanced communication solutions, and software development aligns with the Pentagon's increasing emphasis on networked warfare and rapid technological adaptation.
With defense spending remaining elevated amid global geopolitical tensions, contracts like ATSP V underscore the continued importance of government work for aerospace and defense contractors. The program's focus on emerging technologies suggests that companies with established research and development capabilities and proven execution records will be well-positioned to capture a meaningful share of the funding.