The global drone market is taking flight in 2023, with an estimated 38.6% compound annual growth rate from 2023 to 2030, according to data and consulting firm Grand View Research. Global shipments of enterprise drones, or unmanned aerial vehicles (UAVs), are expanding into business sectors from real estate to emergency response to military security and defense.
Meanwhile, artificial intelligence and machine learning have muscled their way into drone products, helping industry manufacturers to solve complex problems with little or no human contact.
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Imagine an AI drone reviewing hard-to-access but highly critical infrastructures in mining or oil exploration. Or consider a drone that can help farmers calculate future crop yields in seconds.
The future is now for drone technologies, and investors are lining up to get in on the action, with these seven stocks gaining the most attention in mid-2023:
| Drone stock | YTD return as of June 13 |
| Amazon.com Inc. (ticker: AMZN) | 50.8% |
| EHang Holdings Ltd. (EH) | 62.6% |
| Kratos Defense & Security Solutions Inc. (KTOS) | 35.6% |
| AeroVironment Inc. (AVAV) | 12.5% |
| Boeing Co. (BA) | 15.7% |
| Joby Aviation Inc. (JOBY) | 133.1% |
| Northrop Grumman Corp. (NOC) | -16.7% |
Amazon.com Inc. (AMZN)
No, Amazon isn’t a pure drone play, as the company earns most of its revenues by dominating the digital retail market. Yet the company deserves a spot on the “best drone stocks” list due to its rising visibility in the drone delivery sector. Earlier in 2023, Amazon unveiled its Prime Air drone delivery service in two pilot markets in California and Texas. That process is going slow, as the company made just over 100 deliveries through May, mostly due to federal government air-space restrictions, which Amazon is making limited progress in resolving.
Even so, it’s usually smart business to bet on Amazon, a company with a $1.3 trillion market capitalization and a track record of steady performance. AMZN shares are already up 50.8% in 2023 as of June 13.
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EHang Holdings Ltd. (EH)
Like Amazon, EHang is off to a flying start in 2023, with shares rising by 62.6% year to date as of June 13. The China-based autonomous aerial vehicle (AAV) technology company saw its first-quarter revenues clock in at a 41.6% gain with a quarterly gross margin of 63.9%, slightly narrower than its 66.1% margin in the fourth quarter of 2022.
Like many Chinese companies, EHang is just now emerging from government-imposed COVID-19 lockdowns, and company executives are bullish on EHang’s direction. “As anticipated, we witnessed increasing demands for our AAVs upon the post-pandemic recovery of the tourism industry in China. In the first quarter, we achieved more customer orders and deliveries, leading to remarkable revenue growth of 42% quarter over quarter and 283% year over year,” said CEO Huazhi Hu, EHang’s founder.
Kratos Defense & Security Solutions Inc. (KTOS)
This San Diego-based drone manufacturer is also popping in 2023, with its share price rising 35.6% so far this year. That trend is expected to roll on after the company announced a $46.7 million contract with the U.S. Navy to undergo ground testing of thermal protection materials and produce flight hardware for the Naval Surface Warfare Center Dahlgren Division.
The company also outperformed in the first quarter, raking in $231.8 million in quarterly revenues against analyst expectations of $224 million. Revenues also rose 18.1% on a year-to-year basis.
Market watchers seem fairly bullish on Kratos’ stock, with analyst Joe Gomes of Noble Capital Markets reaffirming his “buy” call on KTOS in early June.
AeroVironment Inc. (AVAV)
This unmanned aircraft systems manufacturer is in growth mode so far in 2023, with its share price up by 12.5% through June 13. The company’s unmanned air defense products are being used in the ongoing Russia-Ukraine conflict, with no sign of that military confrontation slowing down anytime soon. The U.S. military is watching how AVAV drone technologies, specifically its Switchblade 300 and 600 unmanned aerial systems, are aiding Ukraine in its home-front defense campaign.
In April, AVAV stock received a boost from RBC Capital Markets’ Kenneth Herbert, who reiterated his “buy” rating with a $115 price target. The stock is trading at $96.38 as of June 13.
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Boeing Co. (BA)
This aerospace titan just reported positive sales numbers over the past two quarters, due mostly to a significant rise in consumer and business air travel. That helped BA shares rebound from a loss of 8.8% between Feb. 15 and March 15 to a gain of 15.7% year to date as of June 13.
On the drone side, Boeing’s subsidiary Insitu recently rolled out its Integrator unmanned aerial system, which can take off and land in vertical air mode. Boeing’s new unmanned aerial system can operate in tough weather conditions, on high seas and in strong winds on land. “Customers can finally have it all: vertical launch and recovery with industry-leading payload capacity and endurance for their most critical missions, even in the most extreme maritime environments and sea states, without sacrificing valuable transport, deck or hangar space,” said Diane Rose, president and CEO of Insitu.
Joby Aviation Inc. (JOBY)
Joby seems to have survived a rocky start to 2023, with the company reeling from “sell” calls from Deutsche Bank in March and a previous share price-cut call from JPMorgan in late 2022. A June “buy” stance from Canaccord Genuity analyst Austin Moeller helped JOBY stock rise by 13.5% in early June, and the company’s stock is up 133.1% on a year-to-date basis.
Sustainability has been a big driver of Joby’s price hike in the second quarter, with Moeller citing its all-electric aircraft’s vertical takeoff and landing capabilities as having the potential to “substantially reduce carbon emissions in major urban areas and break up traffic congestion by taking to the air.”
Northrop Grumman Corp. (NOC)
Northrop Grumman has underperformed the market so far in 2023, and its share price has been meandering along at a 3% clip over the past month, but don’t let the temporarily sluggish gains fool you. Analysts expect the aerospace giant to soon report quarterly revenues rising by 5.7% on a year-to-year basis with total revenue landing at $9.33 billion, and that’s coming off a revenue and earnings-per-share beat last quarter. The company also announced an 8% hike to its quarterly dividend in mid-May, its 20th consecutive annual increase.
NOC continues to make inroads in the unmanned aerial systems market, recently announcing that it’s been chosen by the U.S. Army to participate in Increment 2 of the future tactical unmanned aircraft system (FTUAS) program. Working with technology partner Shield AI, Northrop Grumman is “developing an enhanced-capability version of the innovative V-BAT aircraft to replace the Army’s long-serving RQ-7B Shadow tactical UAS,” the company said in a March 28 release.
The V-BAT will aid the vertical takeoff and landing (VTOL) UAS, “capable of persistent aerial reconnaissance for U.S. Army Brigade Combat Teams, Special Forces and Ranger battalions,” the company stated.
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7 Best Drone Stocks to Watch in 2023 originally appeared on usnews.com
Update 06/14/23: This story was previously published at an earlier date and has been updated with new information.
