The drone market continues to ascend in late 2024, with the global commercial drone industry valued at $30 billion this year, according to Grand View Research. Growth should continue to escalate, with Grand View pegging the industry’s annual compound annual growth rate at 10.6% from 2025 to 2030.
Still, headwinds are keeping drones from soaring higher as the new year beckons, with industry executives citing a tougher regulatory climate. Data from Drone Industry Insights’ “Global State of Drones Report,” which tracked 964 drone insiders from 94 countries, shows “regulatory obstacles” remaining at the top of the industry leaders’ biggest worries in 2024 — just as it was in 2025.
Drone regulation freezes seem to be thawing in the U.S., however, as the Federal Aviation Administration speeds up efforts to clear commercial drones for liftoff while other countries take months for approval. Delays have sent some smaller drone companies to the sidelines.
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A slow leak in funding is further muddying industry growth. The drones report cites about a 50% decline in industry funding from 2022 to 2023 (from $3.46 billion to $1.67 billion year over year).
Yet the industry is racking up big revenue gains in key sectors like defense and medicine, as big corporate brands continue to fully back their drone operations. That alone could open some doors for drone investors in 2025, with these stocks landing at the top of their holiday wish list:
| Drone Stock | YTD return as of Dec. 3 |
| Amazon.com Inc. (ticker: AMZN) | 40.5% |
| EHang Holdings Ltd. (EH) | -9.6% |
| Kratos Defense & Security Solutions Inc. (KTOS) | 29.9% |
| AeroVironment Inc. (AVAV) | 53.2% |
| Boeing Co. (BA) | -40.5% |
| Joby Aviation Inc. (JOBY) | 18.1% |
| Northrop Grumman Corp. (NOC) | 5.4% |
Amazon.com Inc. (AMZN)
Amazon continues to stack solid wins in the drone market, with a November green light for smaller new aerial delivery vehicles tied to its Prime Air program and a new drone delivery rollout in Phoenix, close to Amazon’s Tolleson, Arizona-based same-day delivery enterprise. Amazon can now unleash its smaller and quieter MK30 delivery drone in the Arizona skies, delivering company products to homes and businesses within an hour while making great strides in the “5 pounds or less” drone delivery market.
The FAA granted approval for the new MK30 drones in early November, giving Amazon even more momentum on its decades-long mission to get its products in drones and in the hands of its customers. AMZN closed at $213.42 per share on Dec. 3, up 40.5% year to date.
EHang Holdings Ltd. (EH)
China-based EHang has picked up steam over the past 90 days, with its share price rising by 11.3%. The stock is still down 9.6% year to date as of Dec. 3.
The drone developer received a late November share-price boost of 6%, following its report that the company delivered 138 units so far in 2024, with 63 units delivered in the third quarter. Consider that EHang only sold five units back in the second quarter of 2023, it looks like EH is on the right trajectory heading into 2025.
The company also announced a $30 million share-buyback campaign in late November, a reasonable sign that company decision-makers are confident that EHang is heading in the right direction. The move should resonate with shareholders, who will presumably see fewer outstanding shares on the market and higher share prices during the program’s 12-month duration.
EH is also ideally suited for a new Hong Kong “low altitude” initiative that promises looser regulations, a strengthening alliance with China, and a new drone infrastructure program that includes takeoff and landing sites and more robust navigation networks.
Kratos Defense & Security Solutions Inc. (KTOS)
Kratos shares just keep on rolling in late 2024, up 29.9% year to date and up 15.3% for the last 30 days alone. In late November, Kratos also reported its fourth-straight profitable quarterly gain, and it is routinely outpacing analyst estimates.
Analysts polled by S&P Global predict that Kratos’ profits will triple over the next three years. That’s fueled upside interest from analysts like Noble Capital, which recently hiked its price target from $26 to $30. KTOS closed at $26.37 on Dec. 3.
The Round Rock, Texas, company works closely with U.S. defense and intelligence agencies via its Kratos Government Solutions and Unmanned Systems segments. Recently, the company inked a pair of defense industry aerial unmanned aircraft deals, one with the Naval Air Warfare Aircraft Division (valued at $34.9 million) and the other with the U.S. Space Development Agency’s Advanced Fire Control program (for $117 million).
Given the steady flow of deals happening, the company’s tight relationship with the U.S. government might be reason enough to take a stake in KTOS in 2025.
AeroVironment Inc. (AVAV)
This Arlington, Virginia-based drone and missile manufacturer has steadied the ship in late 2024, with its share price up 53.2% year to date. The stock picked up steam late this summer after an announced $990 million deal with the U.S. Army involving the company’s Switchblade guided bomb technology. Uncle Sam had suspended that deal after other defense companies protested it, but the Army fully approved the contract in late September.
Investors weren’t as happy about AeroVironment’s November acquisition of privately held defense sector company BlueHalo. The stock slid after the news, but don’t blame BlueHalo, whose cutting-edge work in space technology and electronic warfare expands on AVAV’s drone technology capabilities. The bigger issue was the deal value, at $4.1 billion. That’s a hefty price tag for a company with a market cap of $4.5 billion.
Analysts seem to remain on board. Jefferies analyst Greg Konrad boosted AVAV from “hold” to “buy,” with a price target of $230 per share. The stock traded around $198 per share as of Dec. 4.
Boeing Co. (BA)
Boeing’s shares are still struggling over the past three months, with shares off 40.5% year to date after a spate of bad news for the defense industry giant. In early 2024, Arlington-based Boeing was facing increasing criticism over the safety of its 787 Dreamliner jets when an emergency door plug malfunctioned on an in-flight Boeing 737 Max 9 jet operated by Alaska Airlines. In late May, Fitch Ratings lowered its 2024 financial outlook on BA based on the company’s safety-related woes and declining production.
The beatdown triggered a widely reported tongue-lashing by Boeing’s new boss. In late November, Boeing CEO Kelly Ortberg told staffers in a company-wide meeting that Boeing could no longer afford blunders, noting that the Boeing brand was damaged. Ortberg also said that the company culture had devolved into a toxic workplace environment where workers spent “more time arguing amongst themselves” than figuring out ways to beat the competition.
Yet Boeing seems to have stanched those self-inflicted wounds with a slew of new deals, including a $113 million contract with the U.S. Army to remanufacture the Block I CH-47F Chinook helicopter and a $2.4 billion pact with the U.S. Air Force to build 15 KC-46A Pegasus refueling tankers. The company also has a $500 million order backlog that, as long as all obligations are met, should lift the company’s financial fortunes.
Analysts appear to agree. Jefferies recently maintained its “buy” rating on the stock and plunked a $200 price target on BA shares, which represents a hefty upside. BA shares closed at $154.95 on Dec. 3.
Joby Aviation Inc. (JOBY)
JOBY shares are up a whopping 61.2% over the past month, as the Santa Cruz, California-based company looks set to finally start generating revenue in 2025. In October, the company’s airborne vehicle fleet was approved for takeoff by the FAA, which triggered JOBY’s share upswing.
Equally impactful was Needham’s “buy” rating and $8 price target. Needham cited Joby’s ongoing deal with Uber Technologies Inc. (UBER), which pairs the company with Uber Elevate, the transport company’s emerging electric vertical take-off and landing, or eVTOL, ride-sharing outfit. Needham analysts also forecast that air taxi revenue growth will crest $3 billion by 2029. With the FAA on board and airborne taxis on the way, JOBY is well positioned to take full advantage, and stampeding shareholders want in on the action.
Joby 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.
Some big Wall Street names are also buying JOBY. In November, Ark Invest’s Cathie Wood snapped up 304,000 shares, which likely helped accelerate interest.
Northrop Grumman Corp. (NOC)
Northrop Grumman shares are down 6.8% over the past three months, after generally positive share-price movement over the first half of 2024. The lull is likely a pullback on defense industry stocks, which could face tariff troubles from the incoming Trump administration, although no concrete tariff policies have been announced.
Yet analysts aren’t heading for the exits. In fact, it’s the other way around. According to a consensus call from 22 sector analysts, the baseline NOC 12-month target price is $563 per share, which represents a nice double-digit upside, as NOC trades at about $485 per share. Not for nothing, NOC also offers investors a 1.7% forward dividend yield.
Northrop is also gaining ground on the defense contract front. In November, it inked a $541 million missile defense contract with the U.S. government and a separate $200 million deal with the U.S. Navy centered on Northrop’s electronic “smart” general purpose bomb fuse, which has tested well in “defeating enemy structures that require high-velocity impact performance,” Northrop reports.
On Wall Street, big defense contracts matter. The Biden administration requested $850 billion for the Defense Department budget for fiscal year 2025, up from $841 billion in 2024. Drones should make up a growing share of that pie, and Northrop has been making news on that front. Earlier this summer, Northrop rolled out a low-cost guided ammunition system called Cannon-Based Air Defense, which defends against aerial threats including drone swarms and cruise missiles.
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7 Drone Stocks to Buy for 2025 originally appeared on usnews.com
Update 12/04/24: This story was published at an earlier date and has been updated with new information.
