nLIGHT, Inc. LASR

Key data

The business

nLIGHT builds high-power lasers, and unlike most rivals it makes the whole stack itself: the semiconductor laser diode that is the actual light-emitting chip, the fiber lasers built around those chips, and, increasingly, complete systems. That vertical integration is the moat claim. Two businesses sit on top of it. The larger one, still most of revenue, sells industrial lasers that cut, weld and 3D-print metal, a commodity-leaning market where Chinese makers like Raycus spent 2021 to 2024 cutting prices and gutting nLIGHT's sales. The smaller, faster one is aerospace and defense: directed energy, meaning the laser weapons and beam systems the US military funds to knock down drones and missiles. Owning the diode and being American-made is worth little in a Chinese-dominated factory market and worth a great deal to the Pentagon, which cannot buy the Chinese part. The whole thesis is the mix shifting toward the second business.

The numbers

The recent sequence is a recovery story.

Revenue grew 34% year over year to $82.6M in Q2 2026. Q1 2026 printed a small profit, the first in years, before slipping back to a $1.3M loss in Q2. On an adjusted basis management has beaten the thin analyst estimate four quarters running, most recently $0.15 against $0.14.

The five-year picture is why the stock is contentious. Revenue peaked at $270M in 2021, fell three straight years to $199M as Chinese pricing bit, then rebounded 32% to $261M in 2025. Every one of those years lost money. The lens that matters for a laser maker is where it sits in the chain and where its cycle turned, and gross margin, the cleanest read on the industrial price war, is the tell.

Margin collapsed to 16.6% in 2024, then climbed to 29.8% for 2025 and held near 31% through the first half of 2026. The question left open a couple of days ago, whether that jump was a real run rate or a one-quarter spike, resolves toward run rate: Q2 sat within two points of Q1 and both are near double the 2024 trough. Now the arithmetic on the 2028 target. Analysts model $420M of revenue and $1.00 of EPS, which on about 56M shares is $56M of net income, a 13% net margin, against a slightly negative margin today. Getting there is almost entirely the defense mix, because industrial lasers do not earn 13% and directed-energy systems can. That is the market pays 6.4 times sales, a defense multiple, for a business still mostly industrial, and the single print that settles it is aerospace-and-defense revenue converting from backlog.

Management

Scott Keeney founded nLIGHT and runs it, and the insider record is the loudest signal in the file. Over twelve months insiders bought nothing and sold $59M across 76 transactions. Keeney himself sold $6.8M on August 24 and $5.3M on August 21, on top of $3.2M in May, and the Form 4s carry no plan-status disclosure. He is selling hard into a stock down 54% from its high. Against that, the balance sheet got much stronger: a roughly $200M equity raise in early 2026 lifted cash and marketable securities to $330M against almost no debt, which funds the defense build-out but dilutes holders at the same moment the founder cashes out. Read those two facts together.

How it fails or surprises you

Defense conversion (right tail). If directed-energy programs move from development into production, aerospace-and-defense revenue ramps at margins industrial cannot touch, and the 13% net margin baked into the 2028 estimate becomes real rather than hoped. The market pays for the industrial recovery today, not this. First proof: A&D segment revenue and backlog in the next two filings.

Chinese pricing returns. The 2021-to-2024 collapse from $270M to $199M was Chinese fiber-laser makers cutting prices. The margin recovery assumes that stabilized. If Raycus and peers re-cut, or the industrial cycle stalls, gross margin rolls back toward 20% and the breakeven line goes red again. First proof: industrial gross margin quarter over quarter.

The founder is selling. The fact the case for owning it explains least well: if defense is as good as a 40-times-forward multiple says, why did the founder sell $15M in three months with zero insider buying anywhere in the file? Either the selling is scheduled and benign, or insiders read the industrial-plus-hope valuation the way a skeptic does. First proof: whether any Form 4 discloses a plan.

Closing thoughts

The margin recovery has held two quarters, so the industrial floor looks real, and the balance sheet can fund years of defense development without another raise. What is unresolved is whether the defense business ever grows enough to justify 40 times earnings and 6.4 times sales. The left tail is well-mapped and the stock has already walked it: industrial margin rolls back, defense stays in the lab, and a barely-breakeven company priced for growth halves again, as it did from $87. The right tail is a directed-energy production ramp no factory-laser comp would price. Which tail is fatter is judgment, not a number, and the honest read is that you pay a defense multiple for a P&L still two-thirds industrial.

The bet is still that the United States military keeps buying laser weapons, that nLIGHT builds the complete laser system itself from the semiconductor diode up to the finished directed-energy weapon, and that the lasers that cut and weld metal in factories keep recovering at higher gross margins. It breaks if industrial gross margin rolls back toward 20% while aerospace-and-defense revenue stays stuck in development. The one pair of numbers that tells you first: A&D revenue against industrial gross margin, side by side, in the next two 10-Qs. Until defense shows up in the top line, the founder's selling is a more honest guide to the multiple than the analysts' 2028 line.