Cathie Wood is the head of wealth management firm Ark Invest and is best known on Wall Street for her bullish stances on emerging technologies in artificial intelligence (AI) and genomics. One of Wood's higher-conviction investment themes resides in the electric vehicle (EV) industry. Not surprisingly, Ark's top EV position is Tesla.

Outside of EV cars, Wood also appears to optimistic over another pocket of the electric transportation realm, called electric vertical take-off and landing (eVTOL) aircraft. Across three of Ark's exchange-traded funds (ETFs), the company owns a position in eVTOL leader Archer Aviation (ACHR -1.32%).

Archer shares have soared by 82% in 2024, and its current share price of $11 is near its highest levels in three years. While these moves could suggest that investors have missed out, I see an interesting catalyst for Archer going into 2025.

I'm going to explore a new partnership that Archer recently formed and outline why this particular deal could serve as a major tailwind for the company as President-elect Donald Trump and his administration approach Washington.

Archer's stealthy opportunity

For much of its history, Archer has been seen as an airborne alternative to traditional ride-hailing services such as Uber or Lyft. Unlike premium services offered by the likes of Blade Air Mobility, Archer's primary use case has been focused on decongesting areas that experience abnormally high levels of traffic (i.e., cities) by offering an alternative platform to taxis or subways.

However, in this video, Archer Chief Executive Officer Adam Goldstein explains an under-the-radar opportunity for the company in the public sector.

Why Archer could soar under President-elect Trump

As part of Archer's defense ambitions, the company partnered with autonomous systems company Anduril. Anduril is the brainchild of Palmer Luckey, a serial entrepreneur most famous for selling his virtual reality start-up, Oculus, to Meta Platforms. Anduril develops a series of new-age rockets and drone technologies. I think the partnership between Anduril and Archer makes a lot of sense, given the overlap these companies have in the aviation sector.

What makes Archer a particularly nice fit with Anduril is that the company's eVTOL aircraft emit very little sound, making them an attractive vehicle choice during military stealth operations. And while such an opportunity in the public sector may seem niche, keep in mind that the estimated market sizes for stealth operations and military robotics is expected to reach more than $100 billion by early next decade.

When speaking about the incoming administration, Goldstein himself said he thinks Trump could be "very positive" and a "big benefit" to companies such as Archer as it pertains to regulatory approvals needed to further commercialize the business, as well as get more involved with public sector operations.

A military soldier in an aircraft.

Image source: Getty Images.

Is Archer stock a buy right now?

One of the hardest things to do in investing is making the distinction between a real business and an alluring narrative. I see Archer as smack in the middle of this divide.

While the opportunities for Archer are intriguing, the company is in a pre-revenue state. And although it's signed billions worth of purchase orders, the company has not yet scaled.

Could Trump pave the way for more streamlined regulatory frameworks and speed up Archer's commercialization timeline? Maybe, but it's not entirely known yet if an issue like this is anywhere near the top of the priority list for the incoming administration.

Moreover, while Archer's use cases in the public sector make a lot of sense, it could be years before its aircraft are used anywhere.

I am curious and ever-so-slightly cautiously optimistic that Archer could emerge as a winner during the next four years. However, I think an investment in Archer is best for those who can afford a small allocation in their portfolio for speculative opportunities. If that type of risk is too much for you, I'd encourage you to move on and identify more mature opportunities in the EV or defense sectors.