U.S. Defense Policy Fuels Aggressive Growth Trajectory for 3D Systems' Aerospace & Defense Division

3D Systems Corporation (DDD) is positioning itself as a major beneficiary of both sustained government business investment and protectionist regulatory measures within the defense sector. The company’s Aerospace & Defense (A&D) segment, which has delivered year-over-year growth exceeding 15% throughout 2025, is projected to accelerate at a rate surpassing 20% in 2026, driven by a confluence of favorable policy conditions and increased capital deployment by defense contractors.

Policy-Driven Market Expansion Creating Domestic Advantage

The National Defense Authorization Act for fiscal 2026 has introduced significant restrictions on foreign-sourced additive manufacturing systems utilized across Department of Defense programs. This regulatory environment has effectively created a protective market niche for domestic manufacturers, with 3D Systems positioned as a primary domestic supplier. The restriction essentially guarantees continued business investment from U.S. defense and aerospace entities seeking compliant manufacturing solutions.

The company’s production printing systems and precision metal parts divisions—core revenue generators—are on track to exceed $35 million in annual revenues by 2026. These figures reflect the tangible impact of policy support combined with organic demand growth across multiple defense verticals.

Accelerating Demand Across Defense Platforms

Strong market demand is emanating from diverse segments within the defense ecosystem. Crewed and uncrewed aircraft programs, naval platform modernization initiatives, advanced defense systems, rocket propulsion applications, and satellite manufacturing all represent growth vectors for 3D Systems’ solutions. This diversified demand base reduces concentration risk and provides multiple levers for revenue expansion.

The A&D business, which has maintained consistent double-digit expansion metrics over several years, is anticipated to become DDD’s largest industrial segment and fastest-growing operating unit in 2026.

Strategic Capacity and Technology Investments

3D Systems is executing a substantial infrastructure expansion, adding 80,000 square feet to its manufacturing facility in Littleton, Colorado. This capacity augmentation is strategically aligned with projected demand acceleration and positions the company to capture additional market share.

The Littleton facility has achieved certification under the America Makes JAQS-SQ framework, signifying compliance with stringent aerospace and defense manufacturing standards. Concurrently, the company is progressing through a multi-phase, $18.5 million development initiative sponsored by the U.S. Air Force. This program focuses on advancing next-generation laser powder-bed fusion technologies specifically designed for large-format, high-efficiency metal component production.

Upon completion in 2027, 3D Systems will hold distinction as the sole U.S.-based provider of an integrated, fully-domestic metal additive manufacturing ecosystem capable of producing large-frame components exceeding one meter in print area. This technological monopoly positions DDD advantageously within the defense industrial base.

Distributed Global Manufacturing Footprint

The company’s integrated business investment across multiple continents strengthens its competitive positioning:

• United States: System design capabilities in San Diego, California; advanced printer manufacturing in Rock Hill, South Carolina; and certified metal parts production with application development in Littleton, Colorado
• Europe: AS9100-certified aerospace-focused design and application expertise in Leuven, Belgium, supported by metal printer production facilities in Riom, France, serving European, Korean, Japanese, and other international defense markets
• Middle East: The NAMI joint venture in Saudi Arabia extends 3D Systems’ reach into emerging strategic markets

This geographically diversified operational structure enables the company to serve regional defense ecosystems while maintaining supply chain resilience.

Financial Challenges Amid Broader Market Headwinds

Despite operational momentum within the A&D segment, 3D Systems’ overall financial trajectory has faced headwinds. DDD shares have depreciated 33.1% over the trailing twelve-month period, underperforming the Zacks Commercial Printing industry’s decline of 31.8% and lagging the broader Zacks Industrial Products sector’s appreciation of 9.2%.

The stock underperformance reflects macroeconomic uncertainty, particularly surrounding tariff policy, which has constrained customer capital expenditure decisions across non-defense segments. However, management has implemented rigorous cost discipline initiatives, targeting $50 million in annualized savings by year-end 2025.

Fourth-Quarter and Full-Year 2025 Outlook

3D Systems projects sequential revenue growth of 8-10% in the fourth quarter of 2025, supported by accelerating new printer system sales, elevated materials consumption, and anticipated improvement in customer capital spending. The consensus net sales estimate for Q4 2025 stands at $98.5 million, representing an 11.3% year-over-year decrease. The consensus loss projection remains at 10 cents per share, compared to a 19-cent loss in the year-ago quarter.

For full-year 2025, consensus net sales estimates total $379.2 million, indicating a 13.9% decline from 2024. The consensus loss estimate is pegged at 47 cents per share versus a 62-cent loss in 2024, suggesting margin improvement through the cost reduction initiatives.

Personalized health services division is anticipated to deliver strong growth in Q4 2025 and post double-digit annual growth for the full year, providing diversification benefits beyond the defense-focused A&D operations.

Investment Perspective and Valuation Positioning

3D Systems currently carries a Zacks Rank #4 (Sell) designation, reflecting cautious analyst positioning relative to near-term valuation and macroeconomic sensitivity. Within the broader Industrial Products sector, alternative opportunities include stocks with higher conviction ratings, though the A&D business momentum and policy tailwinds warrant monitoring as near-term headwinds dissipate.

The combination of regulatory protection, substantial government-sponsored technology development, and integrated domestic manufacturing capabilities positions DDD’s defense operations for sustained expansion, though near-term financial metrics may remain constrained by broader economic conditions and competitive business investment dynamics within non-defense segments.