DroneShield Ltd (ASX: DRO) shares are back near their lowest level in a year after another fall on Wednesday.

The counter-drone stock finished the session down 2.83% at $1.72, taking its 2026 decline to around 44%.

It has been quite a reversal from last year, when DroneShield shares climbed as high as $6.71.

There was some hope of a turnaround in early August when the share price pushed above $2.20, but that bounce didn’t last long. The stock has since drifted lower again and is now only around 5% above its 52-week low of $1.62.

Still, I think the setup is becoming much more interesting at these levels.

Here’s why.

Revenue keeps climbing

The recent half-year result certainly gave investors a few things to worry about.

Underlying EBITDA swung to a $12.4 million loss, while DroneShield reported a statutory net loss of $32.2 million.

But the top line continues to move in the right direction. First-half revenue jumped 74% to $125.8 million, while recurring revenue increased 229% to $11.5 million.

DroneShield also had $240 million of committed FY26 revenue as at 21 August. That covers between around 90% of its full-year revenue guidance of $250 million to $270 million.

There is another $43 million already committed for FY27 and beyond, while the company finished June with $180 million in cash and term deposits and no debt.

More growth ahead?

I also like what the company is doing on the product side.

DroneShield recently launched its new RfAI-3 software engine and flagship RfRecon hardware, which is designed to identify, locate and assess radio-frequency activity.

Bell Potter believes these products can help drive more contract wins, particularly in Europe, and said the top end of FY26 revenue guidance “looks achievable”. The broker kept its ‘buy’ rating after the half-year result, although it trimmed its price target from $2.50 to $2.40.

From yesterday’s closing price, that suggests potential upside of around 40%.

Canaccord Genuity is even more bullish with a $2.60 target, although not every broker agrees for now. Jefferies sits at $1.45 and Ord Minnett at $1.50.

Why I’d be buying

DroneShield is clearly not a low-risk stock. It is still losing money, margins need to improve, and short interest remains very high at 15.5%.

But a lot has also changed in the share price.

At $1.72, investors are paying a very different price to the $6-plus levels seen last year, while revenue, committed orders and the product pipeline continue to grow.

I wouldn’t try to pick the exact bottom. But if I wanted long-term exposure to the counter-drone sector, I’d be comfortable buying a small position around these levels.

The post DroneShield shares have fallen 44% in 2026. Here’s why I’d buy the dip appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Quantum computing has become one of the most interesting themes to buy into for tech-savvy investors.

The companies behind this trend that are actually building the machines are mostly listed in New York.

Despite this, Australia has world-class research, although none of the company’s monetising this is publicly traded.

For example, Silicon Quantum Computing, Diraq, and Q-CTRL are all private.

That leaves three practical routes for ASX investors to get exposure.

The one ASX quantum computing pure play

Archer Materials Ltd (ASX: AXE) is the closest thing the local market has to a direct exposure.

The company is developing a semiconductor qubit chip and employs just eight people.

It carries a market capitalisation of roughly $55 million and the shares trade at 20 cents, against a 52-week range of 18 cents to 50 cents.

In July, the company announced some significant news.

Archer signed a three-year agreement with IonQ (NASDAQ: IONQ), the Nasdaq-listed quantum hardware business, giving it access to IonQ’s cloud platform, its Forte-class systems and its upcoming Tempo-class machines.

Archer pays US$250,000 on signing and US$250,000 every six months, for US$1.5 million across the initial term.

The two companies will also study the feasibility of deploying an IonQ quantum computer inside Australia.

The agreement was funded alongside a $7 million placement and a $3 million share purchase plan.

Chief executive Dr Simon Ruffell was very bullish on the news:

Quantum compute power is no longer a horizon technology, but a strategically critical utility ready for commercial deployment.

The ETF route

The simplest option came to the ASX last month.

VanEck listed Australia’s first quantum computing ETF on 6 August, the Vaneck Quantum ETF (ASX: QNTM).

The fund tracks the MarketVector Quantum Computing Ecosystem Index and charges 0.65% a year.

The index targets businesses building quantum hardware, businesses writing quantum software, and the companies supplying components to both.

For most investors, this is the sensible way to own the theme, because it removes the risk of picking the wrong machine individually.

The infrastructure angle

Quantum computers still need somewhere to be housed.

NextDC Ltd (ASX: NXT) is the obvious beneficiary if any sovereign machine is deployed here.

FY26 net revenue rose 16% to $405.0 million with underlying EBITDA of $248.8 million.

Contracted utilisation more than tripled to 740.1 megawatts against built capacity of 288 megawatts.

FY27 revenue guidance is $615 million to $640 million, though capital expenditure guidance of $5.25 billion to $5.75 billion is enormous against a $10.5 billion market capitalisation.

The risks worth naming

Timelines in this field slip constantly.

Archer has been developing its chip for years and still generates no revenue from it.

The IonQ agreement is an access deal rather than a revenue contract, and the feasibility study may conclude nothing.

Similarly, funds like QNTM diversifies the single-company risk without removing the sector risk, since every holding is priced on a future earnings that are highly volatile.

Foolish takeaway

I would treat quantum computing as a small satellite position rather than a core holding.

The ETF is the route I would choose for most portfolios, because it spreads the bet across an entire ecosystem for 0.65%.

Archer is the speculative stock, at 20 cents with eight employees.

NextDC is the least direct and the most commercially proven of the three.

Owning a theme this early means accepting that the payoff may be a decade away, or may never come at all.

The post How to invest in quantum computing on the ASX appeared first on The Motley Fool Australia.

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Motley Fool contributor Mark Verhoeven has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Is this the end of moats?

Okay, that’s a deliberately provocative question… but perhaps not as provocative as it first seems.

But first, let’s define our terms.

Warren Buffett made the idea of an economic ‘moat’ famous: a sustainable competitive advantage that protects a business from competitors and allows it to earn attractive returns over a long period of time.

It might be a strong brand. Scale. High switching costs. Network effects. Intellectual property. Regulation. Or simply being able to do something more cheaply or effectively than everyone else.

Find a company with a wide moat, buy its shares at a reasonable price and – assuming the moat remains intact – time can do much of the hard work for you.

It’s a simple idea. And a very powerful one.

But AI is forcing us to reconsider which moats will continue to be sustainable now that we’re a very different technical world.

Is AI going to destroy them all?

No.

Will it leave them all untouched?

Also no.

—

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In reality? Some moats will probably remain largely unaffected. Some will narrow. And some might disappear altogether.

Which ones? And when?

I have no idea. Not with any certainty, anyway.

And nor does anyone else, despite the very confident predictions currently being made about what AI will and won’t do.

But we can (and should!) think in probabilities. We can consider where the risks are highest and ask whether the assumptions we’ve made about individual companies still hold.

I’d start with businesses whose advantage is mostly based on being able to do something others can’t.

Writing software. Producing advertising. Analysing documents. Creating images. Answering customer questions. Turning large amounts of information into something useful.

Until recently, those things required scarce skills, large teams, huge scale, or years of accumulated expertise.

Now? AI is making many of them cheaper, faster and more widely available.

That doesn’t mean software companies, creative businesses or consulting firms suddenly become irrelevant..

But it does mean that some of the capabilities that helped distinguish them may become easier for competitors – and customers – to replicate.

If your moat is essentially “we know how to do a thing”, what happens when the thing becomes much less difficult?

Then there are switching costs.

Some companies retain customers because leaving is genuinely difficult. Data has to be moved. Systems need to be rebuilt. Staff must be retrained. New software needs to be connected to everything else.

It’s expensive. It’s disruptive. And it can go wrong.

So customers stay put, even if they’re not particularly happy.

Those switching costs won’t disappear overnight. But AI can already help write code, translate data, build integrations and teach people how to use unfamiliar systems.

The moat may remain. It just might not be as wide as it used to be.

Brands could also come under pressure.

A trusted brand helps us decide what to buy. We recognise the name, know roughly what it stands for and feel reasonably confident we’ll get what we expect.

But what happens when an AI assistant makes the decision for us?

If I ask an AI agent to compare every insurance policy, mobile phone plan or retailer and choose the one that best meets my needs, familiarity might count for less.

Worse for the company, the primary customer relationship might belong to the AI platform that makes the recommendation, rather than the business that provides the product.

And I’d be wary of cost advantages that come largely from processing routine work more efficiently than competitors. If similar AI tools are available to everyone, today’s low-cost operator might find its rivals catching up.

Which brings me to something I’ve said before: simply using AI probably won’t be a competitive advantage.

It’ll be the ticket to the dance.

Oh sure, early adopters might enjoy a temporary boost to productivity and profit. But if competitors have access to much the same technology, those benefits will probably be competed away through lower prices, better products or both.

Good for customers. Good for society.

But not necessarily a wider moat.

Still, some competitive advantages look much less exposed than others.

AI can create a property website. It can’t recreate REA Group Ltd (ASX: REA)’s listings and audience.

It can assist medical research. It can’t quickly replicate CSL Ltd (ASX: CSL)’s plasma collection network, manufacturing capability, regulatory approvals and accumulated know-how.

And while AI can improve banking technology, it can’t simply hand a new entrant Commonwealth Bank of Australia (ASX: CBA)’s licence, deposit base, customer relationships and public trust.

Nor can it manufacture scarce mineral deposits, prime locations, physical distribution networks or genuine economies of scale.

That doesn’t make those moats invulnerable, by the way.

A company might retain its network but lose control of the customer interface. A trusted incumbent might keep its customers while finding its products easier to compare and its margins harder to defend.

So, what should investors do?

Don’t predict. Prepare.

Ask what the moat is actually made of.

Does the company own something genuinely scarce, or does it merely possess a capability that AI could commoditise?

Are its switching costs structural, or is changing providers just difficult and annoying?

Does it own the customer relationship, or could an AI assistant insert itself between the business and its customers?

And if AI makes the whole industry more productive, who keeps the benefit?

The company?

Maybe.

But it could just as easily be its customers, suppliers or competitors.

And, as always, valuation matters. A wonderful company can be a lousy investment if its share price assumes the moat will last forever.

If the future of that moat has become less certain, investors should demand a larger margin of safety.

The other thing? You don’t have to become a futurist, today. You don’t have to know, with any certainty, what things will look like in five or ten years. But the preparation I talked about earlier means understanding potential risks and weaknesses, so you’ll be more likely to notice if and when they start to impact a company’s profits or prospects.

No, AI probably isn’t the end of moats.

But it might be the end of taking their permanence for granted.

Fool on!

The post Is AI about to kill company moats? appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.