By skyforbes 
The Red Queen Hypothesis and Unfair Advantages
I used to work as an engineer in a highly competitive (but also technical) sport. It’s where I witnessed how powerful the Red Queen hypothesis is. In evolutionary biology, the Red Queen hypothesis proposes that organisms must constantly adapt and evolve just to maintain their current fitness in a rapidly changing environment. In sport, this means that every new piece of equipment that confers an advantage eventually becomes table stakes. In business, the metaphor fits companies that offer a technology to a hyper-competitive industry that is seen as an “unfair advantage”. Those that don’t adopt fast enough get left behind. Ten baggers are the companies that create and embed an advantage so powerful that their technology becomes necessary rather than optional for survival in the competitive arena.
Think about NVDA and the AI arms race:
A company builds a technology that rivals cannot easily replicate and that customers must adopt to keep up.
Over time, keeping up becomes, in effect, the bare minimum and those who lag pay a price (either margin pressure, share loss or extinction).
The industry’s motion forces everyone to “run faster” just to stay in place; the “winner” runs ahead and thus outpaces everyone else, like the Red Queen’s race.
For shareholders, this dynamic can produce sustained growth, margin expansion and ultimately multi-bag returns when the market begins to price in the inevitability of dominance.
To use this as a filter for finding a potential “next NVDA,” one should ask:
Is the company offering a true step-change technological advantage?
Is the advantage serving a high-stakes, high-volume industry where the cost of not adopting is meaningful?
Are there structural tailwinds (regulatory, geopolitical, market) that make adoption likely and widespread?
Are there barriers to entry (patents, manufacturing scale, regulatory approvals, systems integration)?
Can the company transition from early-proof to scale production to cash-flow positive?
When these align, the company and its products shift from nice to have must have, and if you can time the inflection, the upside can be dramatic.
Why I think this is where AMPX (Amprius Technologies, Inc.) and the Drone Market stand today
Let’s walk through how AMPX fits this Red Queen model, focusing on the drone / unmanned aerial systems (UAS) sector, which is undergoing a structural shift.
Unfair advantage: high-energy-density silicon-anode batteries
Amprius has developed silicon-anode lithium-ion cells (its SiCore® platform) that deliver very high energy density (cited at ~450 Wh/kg) and are shipping to drone / UAS customers. The advantage: for drones, endurance, power-to-weight ratio, reliability in demanding environments all matter. A battery that lets a drone fly longer, carry more, or operate in harsher conditions becomes a competitive differentiator.
To give you a practical sense of how much of an advantage these batteries are: Nordic Wing (a recently announced customer) claimed that these batteries increased flight time by 90%. Nearly double. If you’ve ever flown a drone: flight time is a major limitation and a doubling is an unfair advantage.
The thesis: If military/commercial drone OEMs adopt Amprius’ cells as a required component to stay competitive (i.e., “we must use this battery tech or our drone cannot keep up”), then Amprius may be in a position to become a “must-supplier” in a fast-moving industry.
Industry: drones / defence procurement is entering a leap
Lots has been written about drones on WSB so I won’t go too deep into the industry details. I would only go into one headline that you may have missed because you were too busy mourning your ports:
The United States Army recently announced that it is targeting procurement of at least one million drones over the next 2-3 years compared to its current rate of ~50 000/year. This is not the “10-20% CAGR” that analysts have been modeling. This is a tenfold increase.
The drone industry is not just growing, but entering a step-change in scale and procurement behaviour. In such environments, component suppliers that supply the “secret sauce” tech (like high-density batteries) can benefit disproportionately.
Fit: Amprius meets the criteria
AMPX is shipping cells to advanced drone customers and already qualified some of its modules for leading defense tech.
The company claims partnerships and orders from UAS manufacturers (e.g., a recent ~$35 million follow-on purchase order from a drone customer).
The tech has meaningful performance claims (450 Wh/kg, long-endurance drones) that allow drone makers to differentiate.
The addressable market is large and rising, and procurement cycles are shifting from “nice” to “need.”
Because the advantage is embedded in a complex hardware component (battery chemistry + manufacturing scale + safety + certification) it is harder to replicate quickly.
Where the “Red Queen” effect kicks in
Drone OEMs and militaries are under pressure: adversaries are using expendable drones, swarms, long-duration UAS, etc. To keep up, incumbents must adopt superior batteries, sensors, autonomy, etc. Amprius’ tech thus becomes not just a bonus, but potentially part of the minimum standard to compete. That means the company might avoid being just another supplier and instead become a foundational supplier: giving it leverage on pricing, margins and volume.
If the transition from “prototype” to “volume orders” happens (and Amprius seems to be making that move), then the stock might see the kind of multi-bag move one hopes for when the market re-rates based on future dominance.
BuT tHe sToCK Is AlrEAdY uP:
Yes, yes, the stock has run. I actually tried to post about it late last year but it was under the allowable market cap. This is a real company: and real companies can continue to go up if earnings back it up. Here are some numbers to back valuations:
Q3 2025 (ended Sept 30) revenue: $21m. EPS of –$0.03 vs –$0.06 estimate.
Growth: This was a ~42% quarter-on-quarter increase and ~173% year-over-year (for the quarter)
Gross margin: The company has reported a positive gross margin ( +15% in Q3) that is expected to expand
Orders/customers: A ~$35 million order from a recurring drone customer. 80 customers added in Q3 and $53m in backlog orders.
Production capacity: The firm has stated ~1.8 gigawatt hours of capacity through partners. This translates to $1-2B of revenue at full capacity.
Conservative profitability scenario:
Let’s assume the following:
Revenue for full year 2026 grows, not exponentially, but moderately (say ~100% vs 2025). If 2025 full-year revenue ends up around ~$75m (given Q1-Q3 numbers and ramp), then 2026 might hit ~$140-200m in revenue.
At say a 15% gross margin (which is already achieved and is expected to expand), and modest operating expense growth, the company could move from net loss to near breakeven or modest profit. In Q1 or Q2 2026.
Given the order backlog and ramp in drone battery shipments, the margin expansion may happen without assuming extraordinary growth.
In other words: if the market begins to believe that Amprius can deliver $150m+ revenue with 15%+ gross margin, then the path to profitability seems credible and that tends to shift the valuation multiple upward (especially for a “must-supplier” in a fast growth market). Even if the company is not free-cash-flow positive today, the market will begin to treat it as more than an R&D story.
Risks: standard and obvious. Company is not profitable yet. (It has also been stuck in a momentum basket which has made it quite volatile, though it seems to be losing tracking now)
Summary & PT
Without getting too deep into the numbers: having been on earnings calls and seen analyst PTs and modeling a small increase in growth, my 2026 PT is $25. (This is a tenbagger from when I first got in, sorry) though I’ve added at $7 and again at $11. There is no reason, should they continue to execute, that AMPX can’t be a 5-10B company.
Position attached plus another 2k shares in an account I can’t see online (you’ll have to take my word for it)
Putting it all together: The Red Queen lens tells us: look for companies whose advantage becomes a baseline “must have” in a fast-moving market.
Amprius appears to fit: high-density silicon-anode batteries, serving drone/UAS manufacturers in an environment where drones are rapidly becoming indispensable.
Macro tailwinds are strong: military procurement of drones is ramping (US Army, executive orders, etc), the global drone market is growing, domestic supply-chain shifts favour US-based component providers. Personally, on a macro level, I think monetary and fiscal policy will be pro-risk asset in the beginning of 2026 as well.
If the market begins to price in that Amprius will be the dominant supplier (or among the few key suppliers) to the drone industry, then the valuation upside could be meaningful. The key is timing the inflection from “growth story” to “earnings story” once profitability (or credible path to profitability) is visible, the multiple expansion often follows.
Hang in there, and see you in Valhalla.