Archer Aviation Inc. ACHR recently revealed a partnership agreement with Palantir Technologies Inc. PLTR to accelerate the scaling of ACHR’s aircraft manufacturing capabilities with artificial intelligence (AI) at its facilities in Georgia and Silicon Valley. This deal should further strengthen Archer Aviation’s footprint in the rapidly evolving aviation industry.  

In particular, this partnership will involve Archer and Palantir to co-develop next-gen software utilizing AI to improve a range of aviation systems, including air traffic control, movement control and route planning. 

With AI expected to play a key role in all aviation domains, ranging from aircraft maintenance to remote flight operations, the aforementioned partnership news might attract Gen Z investors looking for aviation stocks that are increasingly deploying AI in their operations to choose ACHR. 

However, before making any hasty decision, it would be prudent to take a look at how ACHR has performed in terms of share price return over the past year, the stock’s long-term prospects, as well as risks (if any) to investing in the same. This would help investors make a more insightful decision.

ACHR Stock Outperforms Its Industry, Sector & S&P500

Archer Aviation’s shares have surged a solid 0.7% over the past year, outperforming the Zacks Aerospace-Defense industry’s decline of 5% as well as the broader Zacks Aerospace sector’s gain of 3.1%. It also surpassed the S&P 500’s return of 10.1% in the same time frame.

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A similar stellar performance can be seen in the shares of other industry players like Rocket Lab USA RKLB and Embraer ERJ, which have witnessed a surge of 377.5% and 132.7%, respectively, over the past year.

What’s Been Pushing ACHR Stock Up?

Archer Aviation has made some significant progress in recent times in relation to launching its Midnight aircraft in the commercial market and developments associated with it. Notably, ACHR ended last year by finishing construction of its high-volume manufacturing facility, which is connected to the Covington Municipal Airport in Georgia. With production at this facility having begun in early 2025, the company aims to ramp up the production rate to two aircraft per month by the end of the year.

In February 2025, Archer Aviation received the Federal Aviation Administration certification to launch its pilot training academy. This certificate now allows ACHR to train and qualify pilots as part of its newly launched training academy, with plans to build a pipeline of pilots in preparation for its planned commercial air taxis services with its Midnight aircraft.

In the same month, the company announced a comprehensive “Launch Edition” commercialization program for its Midnight aircraft. Abu Dhabi Aviation will be ACHR’s first Launch Edition customer, with plans to deploy an initial fleet of Midnight aircraft beginning later this year. 

All these achievements must have boosted investors’ confidence over the past year. This is likely to have resulted in ACHR’s share price gain (mentioned above).

What Lies Ahead for ACHR Stock?

With increasing traffic congestion in urban cities, the demand for sustainable and low-carbon emission transport solutions is rising, which, in turn, has been boosting the market growth opportunity for electric vertical take-off and landing (eVTOL) aircraft like Midnight. To this end, it is imperative to mention that the global eVTOL aircraft market is projected to witness a CAGR of 55% from 2025 to 2034 (as predicted by the Precedence Research firm).

Once Archer Aviation starts delivering its eVTOL aircraft to its commercial customers, we may expect the company to generate notable revenues, allowing it to earn solid gross profit and, thereby, register bottom-line growth. 

A sneak peek at ACHR’s near-term earnings estimates reflects the same.

Earnings Estimates for ACHR

The Zacks Consensus Estimate for first-quarter and full-year 2025 earnings indicates a year-over-year improvement. The consensus estimate for 2026 also mirrors a similar trend. 

However, the consensus mark for first-quarter and full-year 2025 earnings reflects a downward revision, which indicates declining investor confidence in this stock’s earnings growth capabilities. 

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Image Source: Zacks Investment Research

Risks to Consider Before Choosing ACHR Stock

ACHR offers promising near-term prospects, but whether its business will be sustainable in the long run remains uncertain. This is because the eVTOL aircraft market is still in its early stages, and ACHR's success depends not only on its ability to design, develop and certify eVTOL aircraft but also on how the demand for these vehicles evolves. 

Public acceptance of eVTOLs as an alternative to traditional transport methods could face hurdles related to safety, noise and affordability concerns. Without widespread recognition, ACHR's growth potential may be constrained.

The company has yet to generate revenues, which also might be a cause of concern for its investors as it might not be able to offer attractive returns to its shareholders unless it can make a profit from its own business. Its negative Return on Invested Capital (ROIC), which also lags the industry’s ROIC, further justifies that.

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What Should an Investor Do?

Investors interested in Archer Aviation stock should wait for a better entry point, considering its negative ROIC and a downward revision in near-term earnings estimates.  

However, those who already own this Zacks Rank #3 (Hold) stock may continue to do so, taking into account the stellar performance of its shares over the past year and year-over-year improvement reflected by its upcoming earnings estimates. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
 

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Embraer-Empresa Brasileira de Aeronautica (ERJ) : Free Stock Analysis Report

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Archer Aviation Inc. (ACHR) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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