7 Drone Stocks to Watch in 2024

The worldwide drone market continues to elevate, with the commercial drone realm expected to grow from $43.4 billion to $60.4 billion by the end of 2024, according to Precedent Research. By 2033, that market should crest at $1.2 trillion, which translates to a 39.1% compound annual growth rate, Precedent reports.

The North American drone market leads the way, with market share reaching 38.3% in 2023. The rotary blade market held 81% of all drone market share in 2023. Meanwhile, the filming, photography, media and amusement, and delivery and logistics segments are all growing significantly, according to the report.

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In broad terms, the market is continuing to ebb away from its military and recreational roots as businesses figure out more ways to generate revenues from airborne drones, and as global governments loosen industry regulations due to more robust safety measures taken by drone manufacturers.

What are the top-tier drone companies from a stock market point of view? While competition increases and manufacturers emerge, these seven drone stocks call for a closer look:

Drone Stock Year-to-date performance as of June 20
Amazon Inc. (ticker: AMZN) 22.5%
EHang Holdings Ltd. (EH) -16.4%
Kratos Defense & Security Solutions Inc. (KTOS) -0.6%
AeroVironment Inc. (AVAV) 61.5%
Boeing Co. (BA) -32.4%
Joby Aviation Inc. (JOBY) -27.8%
Northrop Grumman Corp. (NOC) -6.4%

Amazon.com Inc. (AMZN)

Amazon’s $1.9 trillion market cap shows the Seattle-based digital retail giant remains a top-tier technology powerhouse.

Its drone story keeps expanding, as well. In April, Amazon announced a same-day drone delivery expansion into the Phoenix market later in 2024. Amazon already offers drone deliveries in College Station, Texas, and Lockeford, California. The company is building its drone network carefully, establishing fulfillment centers in small towns near large cities, allowing for easier implementation of same-day deliveries to big markets like Phoenix.

In May, Amazon also received clearance from the U.S. Federal Aviation Administration to fly drones beyond pilots’ visual line of sight. That’s a big regulatory breakthrough for Amazon, as it can now expand delivery options, provide quicker deliveries for customers and up-charge for the upgrade.

EHang Holdings Ltd. (EH)

This China-based digital transport and delivery giant has been trading down so far in 2024, with its share price sliding by 16.4%. The company could use some good news, and it might just be getting it.

For starters, EHang is uniquely positioned to profit from the accelerating drone market growth. Its flying cars are already catching on in the massive Chinese consumer market, which is a big achievement given the expected growth of the global drone market.

EHang is also far along on its electric vertical take-off and landing (eVTOL) unmanned aircraft testing, with encouraging results coming from key international bourses like the United Arab Emirates (where it has already recorded its first successful passenger-carrying flight), Japan and Costa Rica.

The product pipeline is also strong. The company recently put a $410,000 price tag on its EH216-S unmanned aircraft and says it’s ready to meet its customer pipeline demand for approximately 100 aircraft on a 2025-to-2027 timeline.

Industry analysts are taking note. Morgan Stanley recently issued an “overweight” call on EH, with a price target of $27.50. EH closed at $14.05 per share on June 20.

Kratos Defense & Security Solutions Inc. (KTOS)

Kratos shares are down slightly year to date, but they’re up 47% over the past year.

The company manufactures radar, communications systems, rockets and unmanned aircraft and has made particular progress in the military aerial market, especially in drones, missiles and other disposable airborne weapons. The U.S. Air Force is expected to tap KTOS to build its collaborative combat aircraft drones, which leverage artificial intelligence (AI) to support manned Air Force aircraft on military missions. According to industry analysts, that partnership would launch in 2025, with Kratos Valkyrie AI-fueled combat drones a centerpiece of the deal.

Word is getting out on Kratos and its Pentagon links, helping drive revenues up 20% from the first quarter of 2023 to 2024, with its unmanned aircraft vehicle revenue up 24% over the same period.

Recent contracts with the U.S. Navy (for $22.9 million) and the U.S. Space Force’s Space Systems Command (up to $579 million) show that Kratos already has robust government connections. Additionally, the Israel-Hamas conflict in the Middle East and the Ukraine-Russia war have boosted military drone stocks, and Kratos is a big beneficiary.

AeroVironment Inc. (AVAV)

This Arlington, Virginia-based developer of unmanned aircraft systems and electric transportation solutions has seen its shares skyrocket in the first half of 2024, with the stock up 61.5% year to date. Revenues are also up by 40% in the most recent quarter, thanks to the company’s increasingly robust alliance with the U.S. military. Additionally, AVAV’s earnings per share rose to $0.63 — that’s 10% higher than analyst estimates.

As drone buyers lean into AI-powered unmanned aircraft, a robotics company like AeroVironment makes sense for companies looking for useful AI-technology drone delivery options. A consensus outlook from five Wall Street brokerage companies pegs AVAV as either a “buy” or “strong buy”, suggesting some upward share-price momentum from professional stock watchers.

AVAV is also closely linked with the U.S. military, primarily due to its high success rate with munitions systems and high-altitude satellites. But it’s also earned interest from commercial unmanned aircraft buyers, who have the potential to drive the global service robotics market from $34 billion in 2022 to an estimated $134 billion by 2031, according to Skyquest.

The company recently stated that more robust AI-based unmanned systems controls will boost drone performance and contribute to revenue growth going forward. Simultaneously, the Israel-Hamas military conflict should boost AVAV’s share price, as would a prolonged war in Ukraine, where AVAV’s Switchblade drones are frequently used as smart artillery devices.

[SEE: 8 Best Defense Stocks to Buy Now]

Boeing Co. (BA)

Arlington, Virginia-based Boeing faces increasing criticism over the safety of its 787 Dreamliner jets. The issue exploded in January when an emergency door plug malfunctioned on an in-air Boeing 737 Max 9 jet flown by Alaska Airlines. Then, in late May, Fitch Ratings lowered its 2024 financial outlook on BA after the company’s safety woes and declining production.

“The delivery forecasts were affected by the Civil Aviation Administration of China’s (CAAC) decision to restrict certain aircraft model deliveries to Chinese customers while it requests additional documentation regarding voice recorder and battery information,” Fitch said. “Fitch’s forecast adjustments also reflect the Federal Aviation Administration’s decision to maintain oversight within Boeing’s factories while individually certifying newly produced aircraft.”

The issue abated in June 2024, and analysts are edging back into supporting Boeing. RBC Capitalist Kenneth Herbert held his “buy” rating on BA, calling for a $210 target price, well above its June 20 closing price of $176.30.

Boeing’s efforts in the drone aircraft space have helped the company, especially a $94.5 million deal with the Naval Air Systems Command F/A-18E/F and EA-18G aircraft. Additionally, a new aircraft maintenance alliance with the Air Force to test autonomous drone technologies with the latter’s C-5 aircraft has successfully concluded, and Boeing seems to have recovered from its multiyear supply chain struggles. Look for investors to act quickly in buying the dip in one of the defense industry’s most celebrated stocks.

Joby Aviation Inc. (JOBY)

Santa Cruz, California-based Joby, which specializes in building all-electric, vertical take-off vehicles, received some good news in March with the FAA’s decision to certify its eVTOL aircraft for air-worthiness. That decision clarifies the FFA’s stance on eVTOL aircraft standards, making them easier to build, and clears U.S. government regulatory standards. More specifically, the FAA call requires no redesign of Joby aircraft.

The company also has $900 million in reserve cash, which allows it to build more eVTOL aircraft on a tighter schedule. It recently announced an exclusive deal with Dubai that gives Joby air taxi rights for six years starting in 2025.

Ultimately, it’s the technology driving Joby forward, although the FAA green light should boost JOBY’s fortunes. Its flagship air taxi can carry five occupants at speeds close to 200 miles per hour, which can bring passengers from Dubai International Airport to Palm Jumeirah, the country’s famed artificial archipelago, in 10 minutes, compared to 45 minutes by car.

Northrop Grumman Corp. (NOC)

Like Boeing, Northrop Grumman is busy winning defense industry drone contracts, including a recent deal to build state-of-the-art drones for the Navy.

The aviation industry is also buzzing over Northrop Grumman’s unpiloted stealth RQ-180 drone that is “invisible to enemy radars, infrared sensors and acoustic detectors, and (able) to fly at high altitudes and long ranges,” according to the company.

The RQ-180 reportedly could add $100 billion to Northrop Grumman’s 2015 $200 billion B-21 bomber contract with the U.S. Air Force. The drones are already in significant demand as support aircraft for the new $750 million (per plane) B-21 Raiders being built by Northrop.

The Falls Church, Virginia-based advanced aircraft systems developer also offers a solid 1.9% dividend yield, which provides income to its shareholders. Analysts estimate that NOC’s share price could rise as high as $585 next year from its June 20 closing price of $434.48.

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7 Drone Stocks to Watch in 2024 originally appeared on usnews.com

Update 06/21/24: This story was previously published at an earlier date and has been updated with new information.

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