The stock market is currently taking no prisoners. Megatrends such as AI and high-tech have enabled investors to reap substantial returns over the past two years. But for the past three months, defence and armament stocks have been performing a wild dance on the trading floor.
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With special public programs to upgrade NATO, investors are expecting billions to flow into companies that maintain a defence segment in their business model.
But how can a 600% rise in share prices be justified with just 20% more orders?
What if DroneShield (ASX:DRO) disappoints in September? The Australian hydrogen specialist Pure Hydrogen (ASX:PH2) is currently expanding into the U.S., and much remains to be seen there.
So where are the opportunities for investors?
Nel ASA – Storm clouds on the horizon
Well-known hydrogen stocks from the hype years of 2020 to 2022 have recently attracted renewed attention. In particular, the two former hopefuls, Nel ASA and Plug Power, are struggling with weak momentum, disappointed investors, and challenging conditions. While the US under Donald Trump has significantly scaled back climate protection at the national level, the EU’s unclear subsidy policy is also causing uncertainty. Ironically, however, the United States is one of the world’s largest CO₂ emitters.
Norwegian pioneer Nel ASA could get back on track with the help of the recently announced EU climate and infrastructure programs. However, progress was still bumpy in the second quarter of 2025. Revenue fell by 48% to NOK 174 million, and operating income was once again deep in the red at NOK -86 million. At least cash reserves remain solid at just under NOK 1.93 billion, which leaves room for manoeuvre. Strategically, Nel is now focusing on PEM electrolysers and sees opportunities on an industrial scale if the EU plans become reality. In any case, Nel’s share price is not far from its all-time low. Technically, it could jump upwards without any major reason, as the market seems to have dried up completely after years of sell-offs.
Pure Hydrogen – Paving the way for the green hydrogen economy in Australia
In an increasingly unstable world, independent energy production is becoming more and more important. Australian hydrogen specialist Pure Hydrogen is pursuing this exact path and establishing itself as a leader in innovation for clean energy solutions. The goal is to reposition Australia as an energy nation through regional production and global export of emission-free hydrogen. Its activities focus on three technologies: green hydrogen from renewable energies, turquoise hydrogen from methane pyrolysis with fixed carbon binding, and the still young category of emerald hydrogen, whose low-emission production is currently being tested in several pilot projects. Studies show that hydrogen-based solutions in combination with existing gas infrastructure are often cheaper and faster to implement than a purely electric transformation. Very exciting!
Pure Hydrogen is already developing a wide range of applications, from hydrogen-powered commercial vehicles and generators to mobile refuelling solutions. The Company is thus addressing both the industrial and mobility sectors. In parallel, Pure Hydrogen is working with Botswana H2 and Botala Energy on an energy project in southern Africa.
Another milestone is the recently approved gas exploration in the Cooper Basin, which provides its subsidiary, Real Energy Queensland, with 25 years of production security, a strategic foothold for stabilising the transition to a hydrogen economy.
The next step in expansion is now underway in the U.S. Pure Hydrogen has signed a term sheet with Riverview International, a leading US commercial vehicle dealer based in California, for the purchase of a hydrogen-powered garbage truck. Under this agreement, Riverview has committed to purchase a TG23-110 H2 fuel cell vehicle. The vehicle, which complies with CARB (California Air Resources Board) certification and other US standards, will be assembled in Australia and shipped to the Riverview plant in West Sacramento. The truck, valued at AUD 600,000, will initially serve as a demonstration vehicle for potential US customers. Pure plans to work with Riverview to organise test drives at various customer locations to demonstrate the vehicle’s performance and overall suitability for fleet applications. The Company hopes to secure larger orders for entire fleets of garbage trucks. This development follows participation in ACT Expo 2025, North America’s largest event for clean and advanced commercial vehicle technology.
With its clear focus, technical breadth, and ambitious projects, Pure Hydrogen is well-positioned to play a leading role in the growing hydrogen market. The stock is currently trading at around AUD 0.10 in Australia and is also listed on the Frankfurt Stock Exchange. For forward-thinking investors, this offers a speculative entry point into an exciting sector with a promising future. The valuation is still low!
DroneShield – Flying high until the crash landing
A quick word about Australian defence company DroneShield. According to reports, the hyped defence technology specialist is investing another AUD 13 million to triple its production capacity. This is a drop in the ocean given the size of the industry, as the market for anti-drone technology, estimated at over USD 10 billion, is growing twice as fast as other defence segments.
An even more sobering look at the fundamentals: With estimated revenue of around AUD 200 million, the Company is currently valued at around AUD 3.2 billion. This translates into a price-to-sales ratio of 16. DroneShield’s share price has increased sixfold in just five months.
The Company will release its Q2 figures at the beginning of September. If no dramatic jump in revenue and order intake can be reported, the stock could face a sharp sell-off.
So those looking to seize the moment may want to realise their profits before the Q2 report is released.
Industry rotation is underway. While defence stocks are gradually giving up gains, alternative energy producers such as Nel ASA, Plug Power, and Pure Hydrogen are back in demand. DroneShield’s share price appears to be overvalued, so be cautious of a shift in sentiment here. In short, selection is therefore key once again.
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