Amprius Lands Nokia Drone Deal, But Scale-Up and Financial Risks Remain Paramount

What happened

Amprius announced that Nokia has selected its SiCore batteries for next-generation drone systems after qualification, adding a high-profile customer in the aviation sector. The DeepValue report notes Amprius is commercializing silicon-anode batteries with strong revenue growth to $47.8M in 9M25, yet it remains loss-making with a Q3 net loss of $3.9M and relies on third-party manufacturing. This deal supports the 'WATCH ITEMS' on demand conversion, potentially enhancing backlog visibility beyond the current $53.3M in remaining performance obligations. However, critical execution risks around manufacturing yields, cost reduction, and funding persist, as the company scales via >1.8 GWh of third-party capacity with non-finalized terms. Overall, while the Nokia integration validates Amprius' technology in drones, it does not materially de-risk the near-term challenges that underpin the HOLD rating.

Implication

Investors should view this news as a positive step in demand validation, potentially leading to increased order visibility and repeat business in the drone market. However, manufacturing scale-up remains a critical hurdle, with reliance on third-party partners introducing margin uncertainty and yield risks that could impede profitability. Funding challenges persist, as Amprius continues to use ATM equity financing and faces delays on the Brighton facility, raising concerns about dilution and capacity timelines. The deal does not alter the fundamental financial outlook, with net losses expected to continue during expansion, and it highlights the need for progress on cost targets to broaden markets. Ultimately, while this enhances the growth story, investors must closely monitor conversion of qualifications into sustained orders and manufacturing milestones before considering a more bullish position.

Thesis delta

The Nokia qualification improves Amprius' customer base and demand visibility in aviation, aligning with its growth strategy and supporting the 'WATCH ITEMS' on order conversion. However, the investment thesis remains largely unchanged, as core risks around manufacturing scale-up, third-party reliance, and funding uncertainties are unaffected and continue to temper upside. This news provides incremental validation but does not shift the risk/reward balance enough to warrant a rating change from HOLD.