Macroeconomic uncertainty, evolving trade policies, inflation and supply-chain dynamics are likely to impact the outlook of the Zacks Satellite and Communication industry at least in the near term. Additionally, high capital spending and extended return-on-investment cycles may strain the profitability of existing players and discourage new entrants. Spectrum allocation, orbital congestion and regulatory approvals remain key risks.

However, the prospects seem bright in the long term. The industry is undergoing a transformative phase, driven by the convergence of rapid technological progress and higher global connectivity requirements. Increasing interest in space-based infrastructure is another tailwind. The expansion of the Internet in remote areas through low Earth orbit (“LEO”) constellations, such as Starlink, Eutelsat OneWeb and Amazon Leo is driving demand for satellite broadband services. Meanwhile, direct-to-device (D2D) connectivity and non-terrestrial networks (“NTN”) are increasingly bringing satellite connectivity directly to smartphones and Internet of Things (IoT) devices.

The embedding of AI and machine learning has given rise to multiple use cases across industries such as oil and gas, agriculture, transportation and non-governmental organizations. 

Planet Labs PBC (PL Quick QuotePL - Free Report) , Satellogic Inc. (SATL Quick QuoteSATL - Free Report) and Gilat Satellite Networks Ltd. (GILT Quick QuoteGILT - Free Report) have significant growth potential amid simmering geopolitical tensions, surging defense budgets and demand for high-quality imagery and value-added services. Growing government focus on sovereign satellite infrastructure bodes well for the industry.

Industry Description

The Zacks Satellite and Communication industry includes space technology companies that offer satellite imagery, intelligence services, and spacecraft and robotics for space exploration, research and national security. They assist customers in understanding and navigating the changing planet, provide global broadband communications and explore space. These companies deliver communication services to media businesses, fixed and wireless telecommunications providers, data networking firms and Internet service providers. They also supply commercial satellite communication services to government and military entities. Additionally, the firms offer satellite-based consulting and technical services, covering the entire satellite lifecycle and infrastructure, from satellite and launch vehicle procurement to telemetry and commanding services.

What's Shaping the Industry's Future?

Spending on Space Infrastructure Could Be Affected by Macroeconomic Weakness: With significant exposure to government customers, the industry will likely benefit from increasing defense and space infrastructure budgets amid simmering geopolitical tensions. The explosion of space-based intelligence, surveillance, and reconnaissance and communications is expected to boost government investments in the sector. Governments are also emphasizing sovereign satellite communications infrastructure, particularly for defense, and national security. This bodes well for the industry participants.

However, weakness in global macroeconomic conditions amid tariff troubles could compel customers to lower spending, which does not bode well for industry participants. Volatile supply-chain dynamics and inflation could lead to higher costs and increased lead time, which are major concerns. Also, competition from fiber optics and terrestrial networks, in certain regions, could deter the growth of the industry participants, as these may offer relatively lower-cost and higher-speed alternatives.

Capital-Intensive Sector: The satellite industry is one of the most capital-intensive sectors, requiring substantial upfront investment in satellite manufacturing, launch services and ground infrastructure. Further, an increasing number of satellites is raising concerns about space debris and orbital congestion. Collisions may disrupt operational satellites and the viability of space activities. This makes space traffic management and collision avoidance increasingly important.

Managing these risks requires advanced systems such as improved tracking and collision avoidance and strong co-ordination among satellite operators, adding a layer of operational complexity.      

Advancements in Technology Hold the Key: Rapid technological advancement is the primary catalyst driving the industry’s growth trajectory. Integration of space-based networks with terrestrial telecom networks, as well as cloud computing and AI, marks a new phase of growth. The integration of Geosynchronous Equatorial Orbit (“GEO”) and LEO constellations with terrestrial networks is enabling trade-offs between coverage, latency and capacity. D2D and NTN are extending satellite connectivity directly to smartphones and IoT endpoints. Reusable rockets, mass-produced satellites and low-cost launch systems are significantly improving prospects for the participants.

Countries with comprehensive space programs have distinct military, economic and scientific advantages. However, complexity and barriers to entry into space have allowed only a few to develop notable capabilities. The demand for small satellites across regions is expected to increase over time. North America has the bulk of the market share, followed by the Asia Pacific, Europe and the rest of the world.

North America maintains its dominance with the highest number of small satellite launches by government end users. The companies continue to align their products and services with the needs of the U.S. Department of Defense’s National Defense Strategy and the growing demand for international defense and intelligence.

Subscriber Momentum to Drive Growth: Wide proliferation and cheaper access to space technology have led to diverse end-market users. The companies share a strategic relationship with various government organizations, including military and disaster response agencies and non-governmental organizations, to provide robust, tactical, real-time voice and low-latency data command and control communications. A comprehensive product portfolio enables companies to expand their customer base and offset the losses from one product category with the benefits from another. Network reliability, security, low latency and service availability remain important competitive aspects.

For civil customers, notably NASA, growth is being driven by space exploration programs. For commercial customers, growth drivers include a strong demand for imagery due to new use cases, space-based remote sensing, GEO replacement demand and LEO communications programs. Advanced mobile networks need strong backhaul and global infrastructure, increasing reliance on satellite support for rural and oceanic coverage. 

Zacks Industry Rank Indicates Bleak Prospects

The Zacks Satellite and Communication industry is housed within the broader Zacks Computer and Technology sector. The industry currently has a Zacks Industry Rank #219, which places it in the bottom 11% of more than 247 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates bleak near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than two to one.

Before we present a few satellite and communication stocks you may want to consider for your portfolio, let’s look at the industry’s recent stock market performance and valuation picture.

Industry Outperforms the Sector and the S&P 500

In the past year, the Zacks Satellite and Communication industry outperformed the S&P 500 composite and the broader Zacks Computer and Technology sector.

The industry has gained 37.4% over this period compared with the S&P 500’s rise of 16.8%. The broader sector has moved up 26.1%.

One-Year Price Performance

 

Industry's Current Valuation

The industry has a trailing 12-month price/book ratio of 2.75X compared with the S&P 500’s 7.22X. The sector’s trailing 12-month price/book ratio stands at 9.19X.

In the past five years, the industry has traded as high as 9.24X and as low as 0.37X, with a median of 2.09X, as the chart below shows.

 

3 Stocks to Add to the Watchlist

Planet Labs: PL provides daily satellite imagery and geospatial solutions.  Revenues surged 58% year over year to $116 million in the second quarter of fiscal 2027. Defense and Intelligence revenues (including satellite services revenues) rose more than 90% year over year, while commercial and civil-government revenues increased over 15% and 5%, respectively.

The handover of the Pelican satellite to the Swedish Armed Forces supported top-line growth. In August, the company was awarded a satellite services tender by Germany’s Federal Ministry of the Interior, making the country the first civil government to procure Planet Labs’ dedicated Constellation Services. The tender includes options and has a maximum possible value of €25 million over five years.

The company had a backlog of approximately $815 million, up about 11% year over year at the end of the fiscal second quarter. Roughly 50% of the backlog applies to the next 12 months and 70% to the next 24 months. Remaining performance obligations (“RPO”) totaled approximately $753 million, up 9% year over year.

Management estimates that executing contracts already in backlog could generate more than $400 million in revenues over the next four quarters, excluding new business and renewals. The company added that it is confident of sustaining “high growth rates in future years” supported by near-term visibility and pipeline strength.

This visibility is important as Planet Labs ramps up its satellite services business. On the last earnings call, management added that it had identified more than $4 billion in satellite-services opportunities, with over 25% qualified as near term.

Planet Labs is also expanding capacity to support this opportunity. The company recently opened its Berlin manufacturing facility, which is expected to produce Pelican satellites and eventually scale to as many as 60 satellites per year.

PL currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. 

The bottom-line estimate for fiscal 2027 stands at a loss of 5 cents, unchanged over the past seven days. The stock is up 44.5% in the past year.

Price and Consensus: PL

Gilat Satellite Networks: Based in Petah Tikva, Israel, Gilat provides satellite-based broadband services, including the design and manufacture of advanced equipment and innovative technology. Gilat’s solutions support a range of applications, including broadband access, cellular backhaul, enterprise services, in-flight connectivity, maritime, trains, defense and public safety, all while meeting high service standards.

Strength in the Defense segment bodes well for Gilat as demand for defense SATCOM solutions grows amid geopolitical shifts. Management expects Defense revenues to be higher in the second half of 2026 than in the first half, supported by firm backlog, scheduled deliveries and expected book-to-ship activity.

In June 2026, Gilat announced the strategic acquisition of Comtech Telecommunications Corporation's Satellite & Space Communications segment for $157.5 million in cash. The deal will expand Gilat’s presence in the United States and will boost its exposure to more complex defense and space programs.

The Commercial segment is another major growth driver, particularly the in-flight connectivity business. Demand for SkyEdge platforms is expected to benefit from satellite operators’ transition toward next-generation, multi-orbit networks.
Management reiterated its 2026 revenue guidance of $500-$520 million and adjusted EBITDA view of $61-$66 million, implying roughly 13% year-over-year revenue growth and 19% adjusted EBITDA growth at the midpoints.

However, stiff competition in this space remains a concern, along with integration risks from M&A activity. The strengthening Israeli shekel against the U.S. dollar is expected to increase second-half operating expenses by roughly $3-$5 million.

GILT currently carries a Zacks Rank #3 (Hold). The earnings estimate for 2026 stands at 74 cents per share, unchanged over the past seven days. The stock has lost 14.6% in the past year.  

Price and Consensus: GILT

Satellogic: SATL is a vertically integrated Earth-observation and geospatial intelligence company. 

Strong global sovereign demand is creating a durable tailwind. In the last reported quarter, Space Systems delivered $8.8 million in revenues (comprising 55% of total revenues) driven by sovereign satellite deliveries. Europe accounted for 58% of Satellogic's second-quarter revenues, supported by deliveries under Portugal's $18 million CEiiA program. 

Data & Analytics revenues also increased 54% sequentially to $7.1 million, reflecting growing adoption of persistent monitoring services. Satellogic is also ramping production for its Merlin, NewSat and NextGen programs as defense demand grows.

The company ended the second quarter of 2026 with $80.7 million in contracted non-cancellable RPO, including $45.8 million expected to be realized within the next 12 months. 

On the last earnings call, management added that the broader Space Systems pipeline remains around $1 billion. Recently, Satellogic announced that it will launch two new NewSat Mark VI satellites equipped with inter-satellite link technology and one additional NewSat Mark V satellite in October 2026. The Mark V satellite is intended to add capacity to its sovereign Space Systems program.

However, Satellogic faces execution and revenue-timing risks. Space Systems contracts can be lumpy, with management noting that sovereign deals can take anywhere from four to six months to as long as three years to convert.

SATL currently carries a Zacks Rank #3. The bottom-line estimate for 2026 stands at a loss of 2 cents, unchanged over the past seven days. The stock is up 77.1% in the past year. 

Price and Consensus: SATL