U.S. drone stock investors are looking at profitable industry forecasts and outperformance these days. For starters, the global drone market was valued at $83.8 billion in 2025 and is expected to reach $182.5 billion by 2033, at a compound annual growth rate, or CAGR, of 9.5%, according to Grand View Research. What’s more, the U.S. drone market has soared with a dominant market share of over 86% in 2025.
There’s more where that came from. “This surge in demand across industries is expected to be one of the key growth drivers for the drone industry in the coming years, especially as drone technology becomes more accessible and affordable,” the report states.
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Industry stocks seem to be doing just as well, with the benchmark S&P Kensho Drones Index up 28% year to date and up 80.5% over the past year as of March 11.
“The drone market is expected to double by the end of the decade,” says Max Linnington, chief research officer at EPSMomentum, a New York City-based stock market analytics company. “This rapid expansion is being driven by both military and commercial demand, influenced by national defense budgets, national security priorities, global supply chain dynamics, and, particularly for commercial development, regulatory safeguards for public safety and the environment.”
Linnington believes investor attention is largely focused on the military segment, where revenue streams are more consistent, and investors see positive earnings and revenue growth. “Unmanned aerial vehicles (UAVs) have become integral to modern warfare, as evidenced by their pivotal role in the current Ukraine war,” he says. “The battlefield is being totally re-imagined, and this transformation is creating a number of potential opportunities for global investors.”
U.S. regulators have impacted the global drone market, with a recent U.S. security audit leading to a 2025 Federal Communications Commission ban on new imports from international drone makers due to national security risks. “With the recent need to shift to U.S.-made drones for federal and military applications, there has been a recent development and sudden need for unmanned aircraft systems (UAS) manufacturing here in the U.S.,” says James McDanolds, program chair at the School of Uncrewed Technology at the Sonoran Desert Institute.
The burgeoning military conflict in Iran should also impact drone stocks, but experts say drones are sharing the stage with artificial intelligence. The U.S. and Israel have harnessed AI to manage nearly every aspect of the conflict, from collecting intelligence data to selecting targets and the weapons needed to hit them.
“The Iran conflict may raise operational demand and adversary focus on drone systems, but the immediate factor we track is whether companies build security by design for AI-enabled platforms,” says Edith Forestal, founder and cybersecurity specialist at Forestal Security.
The trick for drone investors right now in the market is to pick industry winners in a fast-moving market that favors innovative drone companies that have a demonstrated track record of performance. That list could include the following drone industry names:
| DRONE STOCKS | MARKET CAPITALIZATION* | Earnings Report Date** |
| AeroVironment Inc. (ticker: AVAV) | $10.7 billion | March 10 |
| Ondas Holdings Inc. (ONDS) | $4.7 billion | March 25 |
| Kratos Defense & Security Solutions Inc. (KTOS) | $16.7 billion | May 7 |
| Rocket Lab Corp. (RKLB) | $40.1 billion | May 7 |
| Amazon.com Inc. (AMZN) | $2.3 trillion | April 30 |
| Northrop Grumman Corp. (NOC) | $105.8 billion | April 21 |
| Red Cat Holdings Inc. (RCAT) | $2.0 billion | March 18 |
*As of March 12.
**For earnings reports yet to come, date is estimated.
AeroVironment Inc. (AVAV)
Trading at $208 per share, AeroVironment has seen its shares fall 14.7% over the past 30 days, yet the Arlington, Virginia-based drone company remains a top-of-the-line defense sector play in 2026. On March 10, AeroVironment reported a quarterly earnings miss of 64 cents per share compared with analyst expectations of 69 cents, but it was still a year-over-year increase of 113.3%. Revenues also fell short of expectations, at $408 million, up 143% from the year-ago quarter. However, the drone manufacturer is also expected to be a big beneficiary of President Donald Trump’s recent call for a $1 trillion to $1.5 trillion military budget, which could be expanded given the Iran situation.
“AeroVironment is the clearest pure play in public markets,” says Matt Allen, CEO at BeanWealth Research, an investment research firm specializing in defense technology. “Their Switchblade loitering munitions are already proven in combat. When equipment validates itself on the battlefield, procurement follows.”
Analysts favor the stock, too, with an estimated TipRanks consensus outlook of “buy” and an average price target of $313.54 per share, representing 50% potential upside for the stock.
That’s not to say there aren’t complications. The U.S. Space Force announced it was officially terminating AeroVironment’s $1.7 billion SCAR contract for next-generation antennas to control military satellites. The company confirmed that decision and also lowered its guidance on its March 10 earnings call.
Ondas Holdings Inc. (ONDS)
Largely trading flat so far in 2026, up only 0.7% as of March 11, Ondas’ shares are still up 1,259% over the past year. The West Palm Beach, Florida-based wireless radio systems company develops unmanned aircraft systems and secure private wireless networking systems, primarily in the U.S., Israel and India.
The company looks fiscally fit, recently reporting preliminary fourth-quarter revenues between $29.1 million and $30.1 million, surpassing earlier guidance provided in January 2026. ONDS also projects full-year 2026 revenues of $170 million to $180 million, ahead of earlier estimates.
Ondas is moving aggressively across multiple drone fronts, landing a $21 million contract as a strategic investor with the U.S. Army to support C100 UAS and multi-mission payloads. Additionally, a merger with Bethesda, Maryland-based Mistral Group, an assembly and integration systems company with deep ties to government contractors, especially in key areas like defense and public safety, gives ONDS another boost.
“We believe (ONDS) revenues north of $100 million in 2026 are now achievable,” says Austin Bohlig, a drone industry analyst at Needham and Co. “We expect this next round of acquisitions to extend beyond drones into adjacent segments such as counter-UAS or maritime systems, supporting Ondas’ broader goal of building a multi-domain defense technology platform.”
Bohlig believes Ondas is entering a new phase of growth, “with multiple catalysts on the horizon and meaningful upside potential to 2026 revenue estimates,” he adds.
Kratos Defense & Security Solutions Inc. (KTOS)
Kratos, a recent addition to the S&P SmallCap 600 Index, has seen its stock price continue to pop in 2026, with shares up 17.1% year to date and up 206% over the past year. On March 9, KTOS saw its share price pop by over 5%, mostly due to a new bullish KeyBanc research note from analyst Michael Leshock that favored U.S. defense industry stocks.
That’s where the Round Rock, Texas-based unmanned aircraft systems company certainly shines. Leshock, who has a “buy” rating on Kratos Defense with a price target of $130, notes that the Iran conflict could lead to “boots on the ground” and adds that increased use of military drones is highly likely, which benefits KTOS, given its rising stature in the drone sector.
Kratos, with $1 billion in annual revenue from its advanced tech tactical drones and electronic warfare solutions, recently reported Q4 results that bested Wall Street revenue expectations, recording sales up 21.9% year over year to $345.1 million. “The company most recently announced a quarter with 17% revenue growth and the prospect of growing earnings in subsequent quarters,” Linnington says. “With the added potential to play an active role in the U.S. government developing a hypersonic missile strategy, we expect improved financials for the company and strong investor demand.”
Rocket Lab Corp. (RKLB)
Long Beach, California-based Rocket Lab is trading around $72 per share, up 13.3% over the past three months. The company, which develops spacecraft and systems and provides launch services for government and commercial customers, is unique in the drone industry because it doesn’t produce pure drones; instead, it builds reusable orbital rockets. Its flagship Electron has 81 launches under its belt and has deployed 248 space satellites. The company’s next spacecraft, Neutron, is set to launch in late 2026 and is expected to haul more substantial payloads, up to 40 times its current capacity.
Rocket Lab shows it can get the job done anywhere and at any time. On March 6, the space launch company placed a commercial satellite into orbit from a launch site in Mahia, New Zealand. Only a week earlier, Rocket Lab launched a separate mission from Wallops Island, Virginia, supporting a hypersonic test flight for the U.S. Defense Department’s Defense Innovation Unit.
TipRanks’ consensus analysis shows eight “buy” calls and three “sell” calls, with an average price target of $89.50 per share, giving investors a roughly 28% potential upside on the stock.
Amazon.com Inc. (AMZN)
Amazon shares continue to fluctuate in 2026, with the stock down 7.9% year to date, but up over 4% in the past 30 days. The company was rocked over the past week with multiple Iranian drone strikes in the UAE and in Bahrain that took three company data centers offline, as Iran takes direct aim at Amazon’s cloud infrastructure.
Beyond an obvious worker safety issue, the primary problem for Amazon is that if the newly launched military conflict lasts long enough, ongoing damage to regional AWS data centers could compromise data and affect millions of AWS users. That scenario could stoke uncertainty for Amazon (and any other technology company in the line of fire) for years to come.
The good news is that Amazon continues to test its transport drone technologies, recently opening up a new channel in Ruskin, Florida. There, any Amazon consumer within an eight-mile radius of the Ruskin fulfillment center can begin accepting drone-delivered packages. Currently, Amazon’s drone delivery program, Prime Air, is on track to deliver packages in under 30 minutes, with a 7.5-mile delivery radius and top speeds of 50 miles per hour. The program is up and running in about 10 major U.S. cities, with plans to expand to 50-plus cities globally, aiming to curb last-mile delivery costs by up to 40%.
Northrop Grumman Corp. (NOC)
This stock is up 29% year to date, and Falls Church, Virginia-based Northrop Grumman is seriously outperforming not just the S&P 500 (trading down 1% year to date) but also the overall drone industry so far in 2026. The Iran issue could make NOC an immediate winner, as U.S. Department of Defense leaders meet with top-tier U.S. defense companies on March 13. Media reports say the Pentagon could add $50 billion in new defense spending geared toward the Middle East, making Northrop Grumman an immediate “buy” opportunity for investors.
Meanwhile, the company’s drone operation is gaining ground at the right time. “Northrop Grumman’s Aeronautics Systems division represents a broader, lower-risk way for investors to gain exposure to UAV growth, generating $3.1 billion in quarterly revenue, with $850 million to $1.2 billion from UAVs,” Linnington says. “International UAV revenue surged 18% in Q2 2025 and 16% year to date, fueled by allied nations increasing their national defense budgets and likely proving strong tailwinds for future demand.”
Red Cat Holdings Inc. (RCAT)
Up an eye-popping 227.13% over the past year, this San Juan, Puerto Rico-based drone services company is coming on fast. The small-cap company specializes in software systems for drones and other robotics products. Its navigation and mapping business provides imaging tools to collect detailed location and mapping data. The company also develops systems that plan and control flight operations and analyze data in real time.
The company saw a 17% boost in its shares immediately after the joint U.S.-Israel military strike on Iran in late February, as the operation relied heavily on one-way unmanned attack drones to take out Iran’s nuclear arsenal, which turned investor attention to drone providers like Red Cat. Investors had already expressed burgeoning interest in Red Cat’s international business, particularly as NATO allies ramped up spending. In late 2025, the company’s Red Cat Holdings subsidiary, Teal Drones, received the green light to have its Black Widow small unmanned aircraft systems installed in the NATO Support and Procurement Catalogue, allowing NATO members to purchase access to the system.
“We believe Red Cat is well positioned to secure its first NATO order with initial deal sizes likely ranging from $2 million to $20 million per country as European defense ministries look to rapidly replenish ISR and tactical drone inventories,” says Bohlig. “Overall, we view Red Cat as one of the more compelling plays in the unmanned defense space.”
He’s not alone. On March 3, Ladenburg Thalmann analyst Michael Legg hiked his RCAT price target from $15 to $20 and issued a “buy” call on the stock.
A Rapidly Shifting Global Landscape
One big mistake investors could be making with drones right now is treating them like just another defense subcategory. “Drones are doing to warfare what AI did to software. They are fundamentally rewriting how conflicts are fought and won,” Allen says.
That shift is playing out in real time.
Since the Iran conflict escalated, Iran and its proxy forces have launched more than 2,000 attack drones across Israel and neighboring countries. “That has forced Israel, the U.S. and several Gulf allies to rapidly expand counter-drone infrastructure, because traditional missile defense systems were never designed to neutralize swarms of small, low-cost drones flying at low altitude in large numbers,” Allen notes. “The lesson from both Ukraine and the Iran conflict is the same: Modern warfare is migrating from a few expensive weapons to thousands of cheap autonomous drones.”
Investors should also note that the drone bottleneck threat isn’t demand anymore; demand is exploding. It’s production. “Modern drones rely on lithium batteries, rare earth magnets, sensors and semiconductors sourced from global supply chains still heavily tied to China,” Allen says. “Those same materials are being consumed by the AI and data center buildout. Drones and AI infrastructure are now competing for the same inputs, slowing production ramp-ups and forcing governments to rethink sourcing.”
Consequently, drone stocks are also being overlooked because of the AI frenzy. Many investors are chasing chips and hyperscalers, but drones are one of the clearest real-world applications of AI, Allen says. “Autonomy, targeting, navigation and swarm coordination are all AI-powered. The irony is that the most tangible AI use case on the planet is being ignored by most retail investors.”
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7 Best Drone Stocks to Buy for 2026 originally appeared on usnews.com
Update 03/12/26: This story was previously published at an earlier date and has been updated with new information.
