Why AST Shares Rallied Over 50% at the Start of 2026

Satellite communications stock AST SpaceMobile (NASDAQ: ASTS) emerged as one of the market’s top performers in early 2026, driven by a combination of sector momentum and company-specific catalysts. The stock climbed more than 50% during the opening month of the year, though the path to these gains proved anything but smooth, with investors experiencing significant price volatility throughout the period.

Securing a Major Defense Breakthrough

The most significant catalyst for AST’s rally came from a defense sector win. In mid-January, the company announced it had been awarded a contract under the U.S. Missile Defense Agency’s SHIELD program (Scalable Homeland Innovative Enterprise Layered Defense). This represents a notable diversification of revenue streams for the satellite operator, which has primarily focused on commercial broadband services.

According to the company’s announcement, the contract “encompasses a broad range of work areas that allows for the rapid delivery of innovative capabilities to the warfighter with increased speed and agility.” For AST, this signals an opportunity to tap into the defense and government sectors—a market segment with potentially substantial long-term value. The stock surged 14.5% immediately following this news on January 16.

Beyond the contract announcement, AST also revealed that its BlueBird 7 satellite is scheduled for launch in late February, with projections to have 45-60 satellites operational by year-end. The BlueBird 7 maintains the same specifications as its predecessor, the BlueBird 6, representing a continuation of the company’s deployment roadmap.

Competition Intensifies in the Satellite Race

Not all January news proved supportive for AST shareholders. On January 21, Blue Origin—Jeff Bezos’s aerospace venture—announced its own competing satellite designed to deliver symmetrical data speeds up to 6 Tbps globally. This competitive development briefly pulled back AST’s stock price, as investors weighed the implications of intensifying competition in the burgeoning satellite internet market.

The emergence of well-funded competitors underscores the growing attention focused on satellite-based broadband solutions. While this added noise to AST’s otherwise positive month, the market’s overall sentiment toward the sector remained constructive heading into February.

Valuation Questions Amid Growth Projections

With a current market capitalization hovering near $40 billion, AST SpaceMobile presents an interesting paradox. The company is only in the early stages of meaningful revenue generation, yet carries a substantial valuation that typically exceeds more mature telecommunications and broadband operators.

Analysts expect the company’s revenue to reach approximately $39.5 million as satellite commercialization accelerates, though profitability remains a distant goal. This raises important questions about whether AST’s valuation can be justified without significant expansion of its addressable market.

The broadband and telecom sectors historically trade at conservative multiples, and many established operators maintain market caps that are surprisingly similar to AST’s current valuation—despite decades of revenue generation and profitability. For AST to command premium valuations long-term, the company may need to prove it can expand revenue opportunities beyond traditional broadband services into adjacent markets like defense contracting or specialized communication solutions.

What Investors Should Consider

The January rally was substantial, but sustainability depends on execution. AST’s fourth-quarter earnings report, expected within the coming weeks, will provide insight into the company’s commercialization progress and help clarify the path to profitability.

Investors should weigh the excitement surrounding satellite technology and the strategic importance of defense contracts against the very real risk of a high-growth, unprofitable company. AST remains a speculative bet on long-term sector growth rather than a cash-generating investment today. The volatility witnessed throughout January likely represents just a preview of the price swings investors may expect as the company moves through its critical growth phase.