Military drones are the logical next step in aerial combat. A human operator may sit in a trailer half a world away or the drone may fly itself with onboard code, but either way the risk and weight of a cockpit disappear. Think of drones as three building blocks: sensing, thinking, and acting. First they collect data—infrared video, electronic emissions, Doppler radar. Next a flight computer and software fuse that information and decide what matters. Finally they act: beam the intel back, drop a bomb, jam an enemy signal, or just loiter until told otherwise. Because the pieces are modular, a commander can mix and match payloads like smartphone apps, tailoring one airframe to dozens of jobs across land, sea, and air. In this report, we highlight the top military drone stocks to watch, grouped by their role within the value chain.
Note: This report focuses on military drone stocks. For commercial drones, see this report instead.
Why military drones, why now?
- Cost, risk, and speed have flipped the value equation. A $3,000 fixed-wing hobby drone fitted with a grenade can knock out a million-dollar tank. When the price of offense collapses, defenses that rely on expensive missiles and manned jets struggle to keep up. Drones shift warfare’s math the way spreadsheets once changed accounting.
- Real-world combat has rammed the point home. In Ukraine, first-person-view quadcopters crash into armor at trench-line distances, while loitering munitions stalk artillery far behind the front. In the Red Sea, inexpensive one-way drones force navies to burn through pricey interceptors. Every viral video is free advertising, spurring copycats from Taipei to Tehran. The lesson is stark: if you don’t field drones, you face them.
- Technology tailwinds pull the timing forward. Smartphone cameras, lithium batteries, and AI chips have spilled out of the consumer market and straight into defense labs, slashing development cycles from decades to months. Commercial satellite constellations provide global broadband links; open-source code turns raw video into target IDs in real time. A lieutenant with a laptop now taps capabilities once reserved for national spy agencies.
- Strategy is walking in lockstep. Great-power planners want “mass at the edge” without bankrupting treasuries or risking pilots. Enter the Pentagon’s Replicator initiative, Australia’s Ghost Bat program, and Europe’s drone rapid-acquisition funds—all aimed at fielding thousands of “attritable” airframes you can afford to lose. In short, drones are not an add-on to traditional forces; they are the new baseline against which future tactics, budgets, and industrial policy will be measured.
Pure-Play Military Drone Makers
Pure-play manufacturers sit at the tip of the spear. These companies design, build, and field the actual flying robots—loitering munitions, stealthy wingmen, backpack scouts. For investors, these military drone stocks are the highest-beta way to ride the demand curve: revenue is tied directly to unit volumes, and a single program win can double the backlog. Expect commensurate volatility.
AeroVironment (NASDAQ: AVAV)
HQ: USA; Pioneer in loitering munitions and tactical drones.
AeroVironment is the pioneer behind the Switchblade “kamikaze” drone, a backpack-sized missile now fielded by U.S. and Ukrainian forces. The newer Switchblade 600 stretches the concept—forty minutes of endurance, an anti-armor warhead, and confirmed hits on Russian Buk and Tor batteries—proof that small loitering munitions can fell big targets. The Pentagon’s Replicator initiative places Switchblade in the first wave of thousands of low-cost drones due for rapid fielding by August 2025, giving AeroVironment a front-row seat as the Pentagon rewires procurement.
Strategically, the company rides two curves at once: disposable aerial munitions that blur missile and drone, and unified control software that turns one operator into a swarm-conductor. The $120 million purchase of Tomahawk Robotics added Kinesis, an open-architecture tablet that can steer everything from a Raven scout to a Switchblade strike drone, fusing hardware and software into a sticky ecosystem. That “one screen, many robots” stack tightens user lock-in and paves the way for optional autonomy as AI rules mature.
The prize is large, but the moat is thin. Garage-built FPV drones in Ukraine cost hundreds, not tens of thousands, and venture-funded rivals such as Anduril promise factory-scale loitering weapons. Supply-chain hiccups already delayed Switchblade deliveries before, spotlighting the grind of scaling advanced electronics. And because the catalog leans toward light, short-range systems, AeroVironment risks being boxed into a niche by competitors fielding longer-range jet drones. Turning an enviable first-mover brand into a durable edge will hinge on volume production, smarter autonomy, and seamless plug-and-play with allied systems.
Kratos Defense (NASDAQ: KTOS)
HQ: USA; Builder of jet-powered, attritable drones like Valkyrie.
Kratos Defense is betting that tomorrow’s fighters will come in flocks. Its XQ-58A Valkyrie is a stealthy, jet-powered drone meant to fly beside crewed jets, carry bombs, and, if needed, die cheaply. Recent trials with the Air Force and Marine Corps showed it releasing smaller drones from its bay and flying in formation with an F-15, while a fresh landing-gear variant enables runway ops and quick turnarounds. Kratos says it can build hundreds of Valkyries a year at a price low enough to make attrition acceptable, a figure underpinning the Pentagon’s “collaborative combat aircraft” plan. Early combat autonomy trials under the Air Force’s Skyborg program showcased basic manned-unmanned teaming.
The firm’s edge is speed. By using commercial-style digital design and its own factory, Kratos iterates hardware almost as fast as software. That agility lets customers trial electronic-decoy, strike, and missile-carrier payloads in real flights, accelerating doctrinal buy-in. And because Valkyrie can launch from trucks, rails, or ships as well as runways, it fits the growing need to disperse airpower against peer threats.
The flip side is that much remains experimental. Valkyrie has logged only a handful of flights since 2019, and full-rate production awaits a formal program of record. Competing primes—Boeing, Lockheed, General Atomics—bring deeper integration and lobbying muscle. Kratos also shoulders heavy upfront tooling; if orders slip, per-unit costs could climb. In essence, Kratos offers a head start in attritable wingmen, but turning prototypes into a fleet will demand steady funding and flawless reliability.
Red Cat (NASDAQ: RCAT)
HQ: USA; Maker of DoD-cleared quadcopters and control software.
Red Cat Holdings is the small-cap pure-play on U.S. tactical drones. Through its Teal and FlightWave units, it builds palm-sized quadcopters and hand-launched fixed-wings cleared under the Pentagon’s Blue UAS list—free of Chinese parts and preapproved for government networks. Teal’s Black Widow won the Army’s Short Range Reconnaissance program, beating larger incumbents to supply backpack drones that pipe live video directly to infantry squads. Edge 130, a longer-endurance fixed-wing, has already drawn new orders from U.S. agencies, hinting at demand beyond the flagship deal.
The value proposition is focus and iteration. Unburdened by sprawling portfolios, Red Cat zeroes in on sub-25-pound drones and the software hub that manages them, enabling rapid feedback from users. A new factory aims to turn out 150 Edge 130s and scale Black Widow capacity to 1,000 units a month—serious volume for small systems if the Army commits. Owning both hardware and an open mission-app layer could let Red Cat become “Android for small drones,” where outside coders add AI target tracking or mesh networking.
But risks loom. The brand is young and must battle well-funded rivals like Skydio, while garage FPV rigs keep closing the performance gap at hobbyist prices. The Army award, though pivotal, is not yet a locked multi-year run, and defense budgets sway with politics. Finally, racing from prototypes to sustained volume will test supply chains and cash. If Red Cat meets those hurdles, it could own the lightweight corner of America’s drone arsenal; if not, it stays an interesting footnote.
Military Drone Enablers & Subsystems
Enablers and subsystem suppliers sell components that turn an airframe into a combat asset: thermal cameras, mission computers, secure radios, and power modules. These military drone stocks behave like semiconductor or tooling plays. They benefit from rising drone adoption across many platforms, spreading risk and capturing recurring retrofit revenue while avoiding the winner-takes-all brutality of airframe competitions.
L3Harris Technologies (NYSE: LHX)
HQ: USA; Supplier of optics, comms, and counter-drone kits.
L3Harris is the defense world’s plumbing expert: it builds the sensors, radios, and defensive “plumbing” that let any drone see, talk, and survive. Its WESCAM MX-series gimbals—now flying on MQ-9B SkyGuardian and dozens of other unmanned aircraft—give crews 20-inch-diameter, high-altitude eyes that can read license plates from miles away. Beyond sensing, the firm supplies secure datalinks and—since 2023—VAMPIRE counter-UAS pallets that bolt to a pickup, fire laser-guided rockets, and are being rushed to Europe under fresh Pentagon orders.
Strategically, L3Harris is wiring itself into the Pentagon’s “Replicator” push for cheap, swarming drones. A November 2024 prototype award tasks the company with the core software stack for autonomous air, land, and sea swarms—proof that Washington sees it as a neutral integrator able to connect many vendors’ robots. The mix of high-end optics, mid-tier comms, and low-cost defensive kits means L3Harris makes money every time a drone is bought, flown, or shot at.
Risks tilt toward execution, not ideas. Sensor barrels and laser seekers require exacting supply chains, and any hiccup delays fielding. Big primes like RTX and Northrop can replicate capabilities and bundle them with airframes. And because L3Harris sells subsystems, not full drones, its fate is entwined with partners’ program wins. If it keeps delivering plug-and-play gear at speed, however, the company should remain the go-to toolbox for the Pentagon’s growing unmanned fleet.
Mercury Systems (NASDAQ: MRCY)
HQ: USA; Provider of rugged mission computers and RF modules.
Mercury is the silent silicon inside many U.S. drones. Its specialty is mission computers and RF modules that survive vibration, sand, and cyber attack while crunching sensor data in real time. In May 2025, it debuted ROCK3, the first safety-certifiable, SOSA-aligned mission computer for aviation: open-architecture hardware that lets customers swap in new apps the way you update a phone. Under-the-hood compliance with FACE, SOSA, and other DoD standards means a Reaper, Black Hawk, or future eVTOL can share the same processing backbone.
Mercury’s deeper moat is trust. It fabricates sensitive micro-electronics in secure U.S. facilities and lobbies hard for CHIPS-Act incentives, framing itself as the home-grown alternative to offshore fabs. That domestic pedigree resonates as Washington tightens supply-chain rules for autonomous weapons.
Headwinds come from scale. Mercury sells boards, not complete boxes, so every design win must be repeated program by program. Integrating bleeding-edge Intel chips into rugged enclosures is complex; delays or errant solder joints can wipe margin. And open standards, while freeing customers, also lower switching costs—any rival that meets the spec can bid. If Mercury keeps hitting its “trusted, open, edge-compute” trifecta, it stays the default brain for next-gen drones; miss a beat, and larger primes with captive fabs could crowd it out.
Teledyne Technologies (NYSE: TDY)
HQ: USA; Leader in thermal sensors and onboard AI imaging.
Teledyne lets drones see heat, not just pixels. Its Hadron 640R+ module marries a 64-degree HD visible camera with a radiometric thermal core the size of a candy bar, all tuned for edge AI via Prism libraries. That package just won the U.S. Army’s Short-Range Reconnaissance program on Red Cat’s Black Widow quadcopter, cementing FLIR as the go-to eye for pocket drones.
FLIR’s playbook is simple: pair world-class infrared sensors with open software so integrators—from hobby shops to primes—can bolt them on in days. Ongoing expansions of the Hadron line and a $74 million contract to modernize the Army’s NBCRV recon vehicle with SkyRaider drones show how the company scales from five-inch quadcopters to 30-pound Group-3 platforms. Owning both hardware and AI middleware lets FLIR push new features (auto-target classification, multi-sensor fusion) with a firmware update, locking users into its ecosystem.
Yet the thermal throne is contested. Chinese micro-bolometers undercut FLIR on cost, and export controls limit some high-end cores. Imaging chips draw on the same constrained semiconductor supply as phones, exposing delivery risk. And if primes develop in-house sensors, FLIR becomes a vendor, not a partner. Still, as long as warfighters need to spot a warm rifle at midnight, lightweight thermal plus onboard AI keeps FLIR’s catalog indispensable.
Counter-UAS Specialists
Counter-UAS specialists make the nets, radars, jammers, and lasers that knock hostile drones out of the sky. As cheap quadcopters flood battlefields and city skylines, demand for defenses is matching, often backed by emergency budgets. Investors in these military drone stocks are effectively buying the pick-and-shovel trade on drone proliferation.
Leonardo DRS (NASDAQ: DRS)
HQ: USA; Specialist in compact radar and laser countermeasures.
Leonardo DRS is the radar and laser shield that guards troops from hostile drones. Its RADA-built Multi-Mission Hemispheric Radar fits on a pickup yet tracks mortar rounds and quadcopters simultaneously—software-defined AESA tech that Army units have fielded on Stryker and Israeli Iron Dome batteries. In October 2024, DRS and BlueHalo proved a directed-energy Stryker that zapped Group 1-3 drones in live fire, showing the radar can cue both kinetic and laser weapons from one truck.
The strategy is layered defense. DRS supplies sensor kits, signal-processing software, and power modules that stitch into larger air-defense webs—land, sea, or base perimeter. Counter-UAS mission-equipment packages for Navy ships and expeditionary radars for Marines extend reach beyond the Stryker fleet. By focusing on open interfaces, the company positions itself as the snap-together Lego of drone defense, able to plug into whoever wins future missile or laser contracts.
Challenges lie in timing and competition. Directed-energy weapons remain prototypes; scaling from demo to depot-level sustainment is expensive. Heavyweights like RTX and Northrop pitch their own radars, and emerging Israeli startups nip at the low-cost end. Budget swings could delay large production runs, raising unit costs for DRS’s compact AESA sets. Even so, the firm’s radar-plus-laser combo tackles a trillion-dollar problem—how to swat cheap drones without firing $100 k missiles. If it stays affordable and open, DRS could own the nerve center of tomorrow’s counter-UAS networks.
DroneShield (OTCMKTS: DRSHF)
HQ: Australia; Full-stack counter-drone vendor with jammers and AI.
DroneShield is the Australian up-start helping frontline units swat cheap drones before they drop a grenade. Its catalog runs from the rifle-shaped DroneGun Mk4 jammer to radar-RF fusion towers and a DroneSentry-C2 software brain that stitches every sensor together. More than a thousand of these systems are already in Ukrainian hands, with engineers in Sydney pushing weekly firmware tweaks as Russian tactics morph—a rare combat feedback loop in defense tech. Recent wins include a US$32 million bundle for an Asia-Pacific ally and new orders from both U.S. federal and Australian law-enforcement agencies, showing the gear scales from war zones to stadiums.
DroneShield sells a full “detect, track, defeat” stack but keeps it modular: swap a camera, bolt on a directed-energy pod, or run the cloud-based AI that spots novel drone signatures in seconds. The handheld jammer weighs just seven pounds yet disrupts control links and GPS across multiple bands—proof the company can squeeze electronic-warfare punch into soldier-carried kit. Continuous over-the-air updates let operators upload new threat libraries without sending hardware back to base, turning every deployed unit into a learning node.
Headwinds remain. Export rules bar sales of the flagship jammer to most U.S. civilian buyers; deep-pocket primes like L3Harris and RTX can bundle their own defeat effectors with radar they already sell; and the cat-and-mouse race against DIY first-person-view drones forces perpetual R&D spend. If DroneShield can keep iterating faster than the threat—and keep proving it in live combat—it stays a vital pick-and-shovel player in drone-defense.
QinetiQ (OTCMKTS: QNTQY)
HQ: UK; Dual-play in drone detection and laser weapons.
QinetiQ is the British science house turning decades of radar and laser research into practical drone defense. Its Obsidian 3-D “staring” radar fixes a quadcopter’s position every half-second and tracks swarms out to 3.5 km—even straight overhead—without relying on RF emissions. The U.S. Army just tapped QinetiQ US for a three-year, US$41 million task order to fold those sensors and data-fusion tools into the service’s layered counter-UAS architecture, underscoring the firm’s role as a neutral integrator rather than a single-box vendor.
Strategically, QinetiQ plays both scout and shooter. The company co-leads the UK’s DragonFire high-energy-laser program, which in 2024 melted aerial targets for less than £10 a shot—a tantalizing antidote to firing six-figure missiles at $500 drones. Because the laser cues off Obsidian’s precision tracks, QinetiQ can offer governments a one-throat-to-choke kill chain: detect, classify with AI, and zap or jam, all in seconds. Its long heritage running live test ranges and building target drones gives it real-world data others lack.
Risks sit at the commercialization phase. DragonFire still needs weather-proofing and ruggedization before fielding, and export approvals on directed-energy tech can drag. Bigger primes like RTX, Rheinmetall, and MBDA are racing to integrate their own radars, jammers, and lasers, and budgets for advanced point defense spike only when headline drone attacks occur. If QinetiQ can translate prototypes into truck-mount kits at an acceptable price, it could become the preferred brains—and sometimes the brawn—of Western counter-UAS networks.
Diversified Primes with Major UAV Programs
Big defense primes treat drones as one product line among many, yet their scale gives them unmatched lobbying muscle, global supply chains, and integration know-how. For investors, these military drone stocks offer steadier cash flow than niche players: drone upside is layered onto a broad revenue base, while dividends, buybacks, and decades-long support contracts cushion setbacks in any single unmanned program.
Northrop Grumman (NYSE: NOC) — Northrop Grumman wrote the modern playbook for big drones. Its RQ-4 Global Hawk proved a jet can loiter above 60,000 feet for more than a day; the MQ-4C Triton adds maritime sensors and is now flying for the U.S. and Australian navies. The Fire Scout unmanned helicopter gives surface ships their own airborne scout, while secretive high-altitude stealth designs reportedly broaden the catalog. Northrop also builds the radars and mission computers inside many allied UAVs. In short, if a mission demands range, altitude, or ocean coverage, Northrop is usually the yardstick—that depth makes it the Pentagon’s default high-end UAV partner.
Lockheed Martin (NYSE: LMT) — Lockheed Martin is turning fighter pedigree into an autonomous playbook. Skunk Works still ships small drones like Stalker and Indago, but the real shift is toward “collaborative combat aircraft” that fly beside F-35s. Test work shows an F-35 command up to eight autonomous wingmen through a secure mesh. Speed Racer, a cheap jet demonstrator, proves Lockheed can print and iterate airframes fast. Mix that with decades of sensor-fusion software and you get a prime positioning itself as quarterback—not just builder—of the future drone swarm for the U.S. Air Force.
Boeing (NYSE: BA) — Boeing brings carrier decks and global supply chains to the drone age. Its MQ-25 Stingray, now in low-rate production, will refuel Super Hornets at sea and stretch the Navy’s punch by hundreds of miles. In Australia, the MQ-28 Ghost Bat loyal wingman has flown more than a dozen sorties and sparked U.S. interest in attritable partners. Subsidiary Insitu still pumps out ScanEagle and Integrator scouts for 30 nations. From pocket ISR to jet tanker, Boeing knits drones into the same logistics web that sustains its crewed aircraft and future joint-force ops.
Elbit Systems (NASDAQ: ESLT) — Israel’s Elbit Systems supplies unmanned eyes and ears to over 30 militaries. The Hermes family—450, 900, and the new 900 “Starliner” certified for civilian airspace—covers medium-altitude, long-endurance surveillance from Gaza to the Arctic. At battalion level, hand-launched Skylark scouts and SkyStriker loitering munitions give troops organic ISR and strike. Elbit’s open-architecture ground control and sat-links mesh with NATO networks, while onboard AI turns video into alerts. Combat use by Israel and allies drives constant upgrades, keeping the fleet lethal and exportable despite a crowded global market and tight U.S.–Israel tech ties worldwide today.
Textron (NYSE: TXT) — Textron punches above its weight by fielding reliable workhorses. The RQ-7B Shadow—flown for two decades—just received a digital Block III upgrade with manned-unmanned teaming links. Aerosonde and Nightwarden variants give Marines and special operators runway-free ISR from ship decks and dirt strips. Behind them sit Lycoming engines, Bell helicopters, and a services arm that can deploy launch crews worldwide in days. While others chase stealthy prototypes, Textron’s edge is deliver-now logistics: millions of flight hours, spares in depot, and contracts that pay per mission, not per idea. It’s the soldier’s everyday certainty.
RTX Corp (NYSE: RTX) — RTX—formerly Raytheon Technologies—supplies the sensors and stingers that make drone ops possible. Its AESA radars ride inside MQ-4C and MQ-9, while gallium-nitride jammers shield them from missiles. The same labs build the Coyote family—tube-launched drones that scout, swarm, or slam into enemy UAVs; Block 3, fielded in 2025, doubles range and adds an AI seeker. At the kill-chain edges, RTX datalinks, GPS-free navigators, and AIM-9X seekers equip allied UAVs. The firm’s strength is breadth: from silicon wafers to warheads, it sells a component every time a drone takes off or is shot down somewhere worldwide.