Signal Boost: 2 Key Satellite Stocks Driving Industry Growth

Key Points

• The satellite communication industry is experiencing substantial growth driven by the global demand for enhanced connectivity solutions.
• Leading satellite companies are innovating with advanced technologies, offering unique and compelling investment opportunities.
• Investing in this sector allows participation in the expansion of global communication networks, benefitting diverse industries and communities.

 

The global demand for seamless connectivity is soaring, fueling a multi-billion dollar boom in the satellite communication sector, which is projected to grow from $220 billion to $630 billion over the next seven years. This unprecedented growth is driven by the need for reliable communication access to even the most remote locations, and it presents a unique opportunity for investors. But with multiple companies employing a diverse range of technologies and strategies, how can investors effectively navigate the volatile sector terrain and identify the best opportunities for growth?

Orbiting the Possibilities

A foundational understanding of satellite technology is crucial before exploring specific investment opportunities. Satellite constellations utilize different orbital types, each with its advantages and limitations. Geostationary Earth Orbit (GEO) satellites remain stationary above a fixed point on Earth, offering high bandwidth but higher latency (delay in transmission or PING time) because it takes longer for the signal to travel to the higher orbit and return to Earth. 

Medium-earth orbit (MEO) satellites balance bandwidth and ping and offer a wider coverage area than GEO. Low-earth orbit (LEO) satellites offer lower latency and improved global coverage but typically provide lower bandwidth per user.

All three satellite technologies serve multiple market segments. The satellite industry also caters to government clients requiring secure communication solutions, the maritime sector needing reliable connectivity at sea, and the aviation industry seeking high-speed internet for passengers and real-time access to flight data. 

The rapidly developing Internet of Things (IoT) and Artificial Intelligence of Things (AIoT) sectors further fuel the industry's growth, as these technologies rely on consistent and widespread connectivity for data transmission and remote management. Direct-to-device (D2D) satellite communication technology (satellite to car, phone, tablet, computer etc) continues to advance rapidly, further expanding the market's potential.

Iridium Communications: A Constellation of Opportunity

Iridium Communications NASDAQ: IRDM operates a unique global network of LEO satellites, providing a truly ubiquitous communication service. This network's strength lies in its unparalleled global coverage, low latency ping time, and resilience to atmospheric interference, offering superior performance compared to traditional geostationary systems. Iridium's business model hinges on subscription revenue generated from a diversified customer base spanning maritime, aviation, government, and IoT/AIoT sectors.

Iridium's earnings report for the third quarter of fiscal year 2024 (Q3 FY2024) exceeded expectations across key metrics. Service revenue, which mainly stems from recurring subscriptions, grew steadily, reflecting a healthy and expanding subscriber base. This growth was driven by consistent demand and the successful introduction of innovative products and services. The launch of the Iridium Certus™ 9704 module, the smallest and most powerful IoT module from Iridium, represents a significant technological advancement. It offers increased data transfer speeds and larger file sizes, enhancing efficiency and expanding potential applications, especially within the AIoT sector. 

Additionally, the launch of the Iridium Certus® GMDSS (Global Maritime Distress and Safety System) service signifies a major step forward in maritime safety, positioning Iridium as a critical provider of reliable communication solutions for the global shipping industry. As AIoT applications become more prevalent, Iridium's low latency, global coverage, and resilient network uniquely position it to capitalize on this expanding market opportunity.

Viasat Inc.: High-Throughput and Strategic Acquisitions

Viasat NASDAQ: VSAT employs a different strategy, focusing on high-throughput satellite systems, predominantly utilizing GEO and MEO satellites to provide high-bandwidth broadband services to multiple sectors. This approach provides high data transfer rates but might offer limited coverage in remote areas compared to Iridium's LEO network. Viasat's service offerings include broadband internet access, government solutions, enterprise connectivity, aviation and the aerospace sector.

Viasat's financial performance reveals a more complex picture. Viasat’s earnings report for the second quarter of 2025 (Q2 FY2025) showed a decrease in revenue that was primarily driven by decreased communication service revenue offset by growth in their Defense and Advanced Technologies segment. This decline, however, was partially influenced by a one-time contribution from a prior litigation settlement. 

Despite this, Viasat's substantial backlog and record-setting new contract awards in Q2 FY25 signal continued demand for its technology and services. The acquisition of Inmarsat is a key milestone, greatly expanding Viasat's global reach, particularly within the maritime and aviation sectors. This acquisition positions Viasat to benefit from the growth of these markets. 

Furthermore, Viasat continues to make strides in direct-to-device technology, paving the way for increased efficiency and cost-effectiveness in satellite communications. The company's aggressive investment in advanced technologies like free-space optical and phased array terminals, combined with its strategic partnerships and committed government contracts, indicates its commitment to innovation and long-term growth. Viasat's aggressive investments in next-generation technologies position it to address high-bandwidth demands, specifically in the growing aviation and emerging air taxi sectors.

A Comparative Look: Iridium vs. Viasat

While both operate within the satellite communication sector, Iridium and Viasat offer distinctly different investment propositions. Iridium presents a more stable investment opportunity, focusing on a strong, established global network that provides consistent, reliable connectivity. Its financial performance has been consistently strong, and its expansion into the burgeoning IoT/AIoT market offers considerable growth potential. 

Viasat, on the other hand, represents a higher-growth, potentially higher-risk proposition. While its technology provides high bandwidth capabilities and its recent acquisition of Inmarsat has significantly expanded its market reach, its financial performance has shown more volatility. Investors seeking a more established, lower-risk investment may find Iridium more attractive. In contrast, those with higher risk tolerance and a longer time horizon might find Viasat’s higher-growth potential more appealing.

A New Era of Connectivity

The satellite communication industry is poised for substantial growth, driven by the ever-increasing demand for global connectivity. Companies like Iridium and Viasat offer unique investment opportunities, catering to distinct market needs and employing diverse technological approaches. While Iridium presents a more stable, lower-risk investment, Viasat offers a potentially higher-growth path. Whether prioritizing consistent returns or aiming for potentially higher rewards, these companies provide compelling pathways for participating in the dynamic and expanding satellite communications sector.