Defence Holdings PLC (LON: ALRT) has delivered one of the market’s most striking share price recoveries in 2025. After drifting at just 0.0625 pence in May, the stock surged above 0.70 pence in early June, fell back to 0.35 pence in August, and then closed the first week of September at 1.45 pence, valuing the company at around £27.6 million. The volatility reflects the challenges and opportunities of a business reinventing itself, as Defence seeks to position as the UK’s first listed software-led defence company.
For retail investors, the sharp move raises the familiar question: is this momentum sustainable, or is it another short-lived rally in a volatile sector? To answer that, it helps to unpack the last five months, from the corporate reset to partnerships and the unveiling of its first classified AI defence product.
A Rebrand and a Reset
The story really began in the spring, when the company confirmed a fundamental change of identity. In May, the group rebranded as Defence Holdings PLC, moving away from its legacy structures and presenting itself as a new entrant in the defence technology space. Rebrands are often cosmetic, but here the move was accompanied by a deeper strategic rethink.
Within weeks, management laid out a five-year strategic plan focused on building core capabilities in Drone Warfare and Aggregation, AI Agents for Defence Operations, Information and Influence Warfare, and Critical Infrastructure Defence. The ambition was to position the company as a software-driven defence innovator, aligned with UK government priorities around cyber resilience and national security. Unlike traditional contractors tied to hardware and long procurement cycles, the group presented itself as agile and digitally native, aiming to deliver faster innovation and scalable solutions
Retail investors had seen rebrands before, but the scale of the ambition caught attention. A proposed board appointment followed in June, with Andrew McCartney, who previously held senior roles at Microsoft, named to join the leadership team. The operational update released alongside the appointment highlighted progress in accelerating the company’s technical build-out, including investment into its core defence technology platform and preparations for pilot deployments. These moves signalled that the rebrand was more than cosmetic, underscoring a strategic repositioning at a time when governments were placing increasing emphasis on cyber resilience and AI-enabled defence capabilities.
On Monday Defence Holdings PLC announced the appointment of Field Marshal Lord Houghton of Richmond as its new Non-Executive Chairman, effective October 1, 2025. As part of the leadership transition, James Norwood will move into the role of Deputy Chairman, supporting Lord Houghton as the company advances its strategic objectives.
Funding the Transition
Of course, strategic plans need funding, and here Defence made a decisive move. In June, the company completed a £2.2 million gross through a placing, conditional placing, and subscription. The proceeds were earmarked to accelerate product development and pursue strategic partnerships. For investors, it was a familiar LON dynamic: near-term dilution offset by the potential for faster execution of the growth strategy.
The timing of the fundraise added weight to the story. Shortly afterwards, the company drew links between its strategy and the UK’s Strategic Defence Review, which emphasised sovereign capability, AI-enabled systems, and the protection of critical digital infrastructure. By aligning with these themes, Defence positioned itself as directly relevant to national priorities, giving its plans a resonance that belied its modest market cap.
There was also board evolution. In late June, the company proposed the appointment of Anthony “Staz” Stazicker CGC, a decorated Special Forces veteran and co-founder of ThruDark, as a Non-Executive Director, adding further depth to the leadership team. Interim results later in the summer showed a reduction in losses, with revenue remaining modest, reflecting tighter cost control and the early benefits of restructuring. For investors, the key takeaway was that the company had secured a financial platform from which to pursue its ambitious five-year plan.
The next leg of momentum came through partnerships. In August, Defence signed a letter of intent with Whitespace Global, described as a leading provider of AI-driven innovation platforms, before quickly moving to complete a formal strategic partnership. The agreement advanced from intention to execution in a matter of days, and the market response was immediate.
Whitespace’s role was central. Its established position in the AI sector gave weight to the collaboration, and its willingness to align with Defence signalled external validation of the rebranded entity’s strategy. In a late August, the company confirmed that the partnership would extend into the development of classified AI applications, moving the relationship from broad strategic messaging into tangible technical work.
For investors, partnerships can often be double-edged, easy to announce, harder to deliver. In this case, however, the rapid shift from LOI to signed agreement reassured many that Defence was not just name-dropping but laying the groundwork for execution. That reassurance set the stage for what came next.
The AI Reveal: A Turning Point
Momentum accelerated with the unveiling of Defence’s first classified AI product. The reveal, tied to the run-up of the DSEI 2025 exhibition in London, was framed as the UK’s first listed company presenting sovereign AI defence software. For retail investors, this marked the first concrete evidence that Defence could deliver more than strategy papers and partnerships.
The announcement described how the software would support sovereign infrastructure, a theme that resonated with both government policy and broader investor interest in AI defence applications. Media coverage, including Share Talk amplified the story, noting that shares jumped more than 30% on the day.
This was the moment when sentiment shifted decisively. Retail investors, who had been watching from the sidelines, saw confirmation that the rebrand, partnerships, and funding were leading to actual product delivery. For many, it transformed Defence from a speculative story into one with tangible proof points.
Market Volatility and Investor Psychology
The share price journey tells its own story. From just above 0.06 pence in May, to 0.71 pence in June, back to 0.35 pence in August, and finally to 1.45 pence in early September, the swings reflect both the opportunity and the risk of an exploration plays. Defence is not drilling holes in the ground, but the psychology is the same: thin liquidity, retail-led momentum, and sharp re-ratings on news flow.
For retail investors, the lesson is clear. Positive updates can create sudden surges, but the same volatility can reverse just as quickly if expectations are not met. Those who bought the June highs experienced a painful summer drawdown before the September recovery. That pattern is familiar to anyone who has followed main listing stocks, and Defence’s story has become a textbook case of news-driven volatility.
What makes this case different is the underlying theme. AI in defence is a long-term growth market, with governments under pressure to invest in sovereign technologies. That tailwind could provide Defence with resilience that many small-cap peers lack. But it also raises the stakesm any misstep in execution could see sentiment turn as fast as it rose.
Risks and Opportunities Ahead
The risks are clear. Defence remains loss-making, though its interim results showed a reduction in losses after restructuring, and the annual results confirmed that further funding will be required to scale its ambitions. The £2.2 million raise earlier this year bought time, but partnerships and new product development will demand significant capital, making further dilution likely.
Execution is another challenge. Partnerships with Whitespace provide credibility, but turning concepts into deployable products that satisfy the Ministry of Defence sets a high bar. Competition is intense, with established defence contractors also pivoting towards AI. Investors must therefore ask whether a small-cap like Defence can carve out a sustainable niche.
The flip side is the opportunity. Sovereign AI software is moving rapidly up the national security agenda, and Defence has already achieved a level of visibility unusual for a newcomer. If the company can continue to turn strategy into tangible delivery, the market may well justify its recent re-rating, and perhaps a lot more.
Outlook: A Company with Attention, but Still on Trial
Defence Holdings has re-emerged as one of the most closely watched companies in 2025. From a rebrand in May to partnerships, fundraising, and the unveiling of its first classified AI product, it has delivered a steady stream of catalysts that explain the dramatic share price rise.
The months ahead will be critical. Investors will want to see further detail on the AI product, potential contracts, and whether the company can convert early momentum into recurring revenue. Any sign of commercial traction could consolidate the stock’s gains and open the door to a larger re-rating.
For retail investors, the choice is whether to ride the volatility as a short-term trading vehicle or back Defence as a longer-term play on sovereign AI defence software. Either way, the stock has captured attention, and the next few updates will determine if September’s momentum was the beginning of a sustainable story or simply another twist in the rollercoaster cycle.
Disclaimer: The information presented in this article represents the views and analysis of the author and is provided for informational purposes only. It should not be interpreted as financial, investment, or legal advice. Investors should conduct their own due diligence and consult a qualified adviser before making investment decisions. Investing in AIM-listed companies involves risk, and past performance is not indicative of future results.
