Military drones are becoming a critical component of modern warfare. From small reconnaissance units to large combat-ready aircraft, unmanned aerial vehicles (UAVs) are reshaping military strategies in high-stakes conflict zones. The global military drone market is projected to grow at 13.8% annually (CAGR) over the next five years. In this guide, we’ll cover the top military drone stocks and companies, ranked by pure-play focus.
Note: This article focuses on military drone stocks. For commercial drones, see this article instead.
The main growth driver of the military drone market is the strategic shift towards unmanned systems in modern warfare. The U.S. DoD’s 2018 National Defense Strategy emphasized the need for autonomous systems and AI. The 2023 National Defense Authorization Act (NDAA) further accelerated this trend. It authorized $1.7 billion for unmanned aerial systems and related technologies.
Another key factor driving growth is the cost-effectiveness of drones compared to traditional manned aircraft. Drones can perform many of the same missions at a fraction of the cost, both in terms of acquisition and operation. This allows militaries to expand their capabilities without proportional increases in budgets.
That said, challenges in the military drone sector remain significant. Integration of unmanned systems into existing military infrastructures is a complex process. It requires not only technical integration but also the development of new doctrines, training programs, and operational procedures. The ethical implications of autonomous weapons systems present another hurdle. The United Nations has been debating potential restrictions on such systems. This regulatory uncertainty may affect investment outlook in the sector.
Note: We make every effort to keep our info accurate and up-to-date. However, emerging tech moves fast and company situations can change overnight. This guide is an intro to the military drone & UAV market; but ultimately, do your own due diligence before taking action.
Tier 1: Pure-Play Military Drone Stocks
These pure-play military drone stocks represent companies fully committed to unmanned aerial systems for defense. These firms are often developing niche technologies that larger defense contractors haven’t prioritized. Their focused approach allows them to adapt quickly to changing military needs. They potentially offer more room for growth, but also increased volatility compared to more diversified defense stocks.
AeroVironment (AVAV)
AeroVironment (AVAV) is a primary supplier of UAS to the U.S. military, with a diverse product line including loitering munitions.
AeroVironment, Inc. is a major player in the military unmanned aircraft systems (UAS) and loitering munitions systems (LMS) market. The company has a portfolio of intelligent, multi-domain robotic systems primarily for the U.S. government, the DoD, and allies. AeroVironment’s core products include both small UAS (SUAS) and medium UAS (MUAS). These drones provide situational awareness, remote sensing, and force protection to military customers.
The company’s SUAS products, such as the Raven, Puma, and Wasp, can operate at low altitudes and provide real-time aerial intelligence. Its MUAS offerings like the JUMP 20 provide longer endurance and expanded payloads for extended missions. In the loitering munitions category, AeroVironment’s Switchblade family acts as precision strike options. These diverse product lines position the company as a key supplier across multiple segments of the military drone market.
AeroVironment has established itself as a trusted partner to the U.S. military. In fiscal year 2024, approximately 76% of the company’s revenue came from U.S. government agencies. The company also continues to expand its international sales, much of which is through the U.S. government. In FY 2024, the company spent $97.7 million, or 14% of revenue on R&D, mainly to improve autonomous capabilities.
Kratos Defense & Security (KTOS)
Kratos Defense & Security (KTOS) produces affordable, jet-powered combat drones that can operate alongside manned fighter jets.
Kratos develops next-gen unmanned aerial systems (UAS) for the U.S. military and allies. The company’s internally funded investments have allowed it to rapidly design, prototype, and field affordable jet-powered combat drones. This “first to market” approach has helped Kratos win key contracts with the U.S. Air Force and other military customers.
A key advantage for Kratos is its ability to produce drones at lower costs compared to traditional defense contractors. The company is thus able to offer “affordable mass” – or larger quantities of drones to complement manned aircraft. This strategy aligns with the U.S. military’s vision for flying unmanned “loyal wingman” drones alongside its fighters. In fact, Kratos has already validated its drones alongside F-22 and F-35 jets.
Kratos’ drone business benefits from strong tailwinds. Unmanned systems are a growing element of U.S. military strategy, especially in contested regions against near-peer adversaries. Beyond hardware, Kratos also develops in-house software and AI capabilities for unmanned systems. Kratos’ focus areas also address top modernization priorities for the DoD. These include high-speed combat drones, hypersonic systems, satellite communications, and autonomous systems. With a $1.24 billion backlog and $11 billion opportunity pipeline, Kratos is well-positioned for growth in the military drone market.
Red Cat (RCAT)
Red Cat (RCAT) specializes in American-made small drones for nighttime military operations with thermal imaging capabilities.
Red Cat specializes in American-made small unmanned aerial systems (SUAS) for nighttime military operations. The company’s flagship product, the Teal 2 drone, is equipped with high-resolution thermal imaging. This allows it to “Dominate the Night” in military and security operations. Red Cat’s specialized focus on nighttime drone operations fills a critical niche in the defense sector.
The company is positioned to capitalize on regulatory tailwinds and government initiatives. The Teal 2 drone has secured key certifications, including Blue UAS designation, Authority to Operate (ATO) from the DoD, and listing on the General Services Administration (GSA) schedule. The company’s 100% U.S.-based manufacturing also aligns perfectly with the U.S. military’s push to reduce reliance on foreign-made drones. In fact, Red Cat’s is one of only two Blue UAS systems in mass production.
Red Cat’s growth potential is tied to major military drone programs. The company is one of two finalists for the U.S. Army’s Short Range Reconnaissance Tranche 2 (SRR T2) program. If won, it would lead to substantial production orders. Red Cat is also competing for NATO drone programs in multiple European countries. With a state-of-the-art manufacturing facility capable of producing over 1,000 systems per month and a current backlog of $7.4 million, Red Cat is scaling up to meet growing demand.
Tier 2: Defense Contractors with Strong Drone Divisions
This tier comprises established defense companies that have made major investments in military drone technology. These military drone stocks offer a balance of stability and innovation. With their deep pockets and existing relationships with defense departments, these firms can quickly scale drone programs and integrate them with other military systems. However, their drone divisions must compete internally for resources.
Northrop Grumman (NOC)
Northrop Grumman (NOC) develops high-altitude, long-endurance drones for intelligence and surveillance missions.
Northrop Grumman is one of the leading defense contractors developing and producing military drones and unmanned systems. The company’s Global Hawk and Triton high-altitude long-endurance drones provide critical intelligence, surveillance and reconnaissance capabilities to the U.S. military and allies. Northrop Grumman is also developing next-generation drone systems like the MQ-4C Triton maritime surveillance drone and the MQ-8C Fire Scout unmanned helicopter. With decades of experience in aerospace and defense systems, Northrop Grumman has the technical expertise and manufacturing capabilities to remain at the forefront of military drone technology.
The company’s strong financial position and large defense contracts provide stability and resources for continued innovation in unmanned systems. Northrop Grumman reported $39.3 billion in sales for 2023, with a backlog of $83.1 billion. Its Aeronautics Systems segment, which includes drones and unmanned aircraft, generated nearly $11 billion in 2023 sales. The company’s focus on developing autonomous systems and artificial intelligence capabilities positions it well to meet evolving military needs for networked, intelligent drone swarms and autonomous operations. Northrop Grumman’s broad portfolio across air, land, sea and space domains also allows for integration of drone systems with other military platforms.
Textron (TXT)
Textron (TXT) offers tactical UAS for reconnaissance and surveillance, leveraging its aviation and defense expertise.
Textron offers exposure to the military drone market through its Textron Systems segment, which develops unmanned aircraft systems for defense and commercial applications. The company’s Shadow tactical unmanned aircraft system has been widely used by the U.S. Army and other military forces for reconnaissance and surveillance missions. Textron is also developing next-generation drone capabilities like the Aerosonde small unmanned aircraft system for maritime operations. While a smaller player than Northrop Grumman, Textron’s experience in both military and commercial aviation provides a strong foundation for unmanned systems development.
The company’s diverse portfolio across aviation, defense and industrial products provides stability and potential for leveraging technologies across segments. Textron reported $12.9 billion in revenues for 2023, with its Systems segment generating $1.2 billion. Its Bell helicopter division also offers potential for developing unmanned rotorcraft technologies. Textron’s focus on developing multi-domain unmanned systems that can operate across air, land and sea aligns with military priorities for flexible, networked drone capabilities. The company’s smaller size compared to prime defense contractors may also allow for greater agility in developing and deploying new unmanned technologies to meet evolving military needs.
Elbit Systems (ESLT)
Elbit Systems (ESLT) provides complete UAV solutions including air vehicles, ground control stations, and payloads.
Elbit Systems is a leader in military UAVs, with a portfolio ranging from small tactical drones to larger systems. The company’s Hermes family of UAVs, including the Hermes 900 and 450, have seen widespread adoption by militaries globally. Elbit’s strength lies in its ability to provide complete UAV solutions, including the air vehicles, ground control stations, payloads, and supporting systems.
Elbit develops its advanced drone technologies in-house. The company invests consistently in R&D, spending about 7% of sales annually. This has allowed Elbit to pioneer innovations like its THOR multi-rotor tactical drone and the Skylark family of man-portable UAVs. Elbit’s technological edge extends to areas like electro-optics, electronic warfare, and communications – all critical for enhancing drone capabilities.
Elbit benefits from its position as Israel’s largest defense company and its close relationship with the IDF. The operational experience with the IDF gives Elbit a competitive advantage in developing and refining its drone systems. The company has leveraged this expertise to expand globally, with a strong presence in key markets like the U.S., Europe, and Asia-Pacific.
L3Harris (LHX)
L3Harris (LHX) integrates diverse UAS platforms with broader military systems and networks.
L3Harris offers a wide range of unmanned aerial systems (UAS) for defense applications. L3Harris has a diverse portfolio of tactical UAS like the FVR-90 and Iver4, as well as larger systems like the RQ-15 HawkEye. A key advantage for L3Harris is its ability to integrate its drone platforms with other defense systems and networks. The company’s expertise in areas like communications, electronic warfare, and sensors allows it to connect drone systems to broader military architectures.
L3Harris benefits from its strong relationship with the U.S. DoD, which accounts for a significant portion of its revenue. L3Harris also has a global presence, with 24% of 2023 sales coming from international customers. This provides opportunities to expand drone sales to U.S. allies.
L3Harris offers exposure to military drones as part of a larger, diversified defense portfolio. The company’s $20.4 billion order backlog and consistent profitability provide financial stability. While drones are not broken out as a separate segment, they contribute to growth in areas like Space & Airborne Systems. L3Harris’ ongoing R&D investments and strategic acquisitions also position it to capitalize on emerging drone technologies.
Tier 3: Aerospace & Defense Giants with Drone Programs
The aerospace and defense behemoths in this tier view military drone stocks as part of a wider portfolio of defense technologies. Their approach to drones is often more strategic, focusing on how unmanned systems can enhance their existing product lines or fill specific military capability gaps. While these companies may not be as agile in drone development, their vast resources and cross-domain expertise enable them to tackle complex, large-scale drone projects that smaller firms cannot.
Lockheed Martin (LMT)
Lockheed Martin (LMT) focuses on advanced stealth drones and autonomous systems for military applications.
Lockheed Martin has established itself in the military drone market through its development of advanced unmanned aerial systems. The company’s RQ-170 Sentinel, a stealth surveillance drone, has been used in high-profile missions by the U.S. Air Force. Lockheed’s focus on cutting-edge technology and its strong relationship with the Department of Defense position it well in the competitive drone market.
The company’s diversified portfolio, which includes other aerospace and defense products, provides stability and potential for cross-pollination of technologies. Lockheed’s ongoing research into autonomous systems and artificial intelligence for military applications suggests continued innovation in the drone sector. This broad approach to defense technology could drive future growth in its unmanned systems division.
Boeing (BA)
Boeing (BA) is developing the MQ-25 Stingray, an unmanned aerial refueling aircraft for naval operations.
Boeing’s presence in the military drone market is marked by its development of the MQ-25 Stingray, an unmanned aerial refueling aircraft for the U.S. Navy. This program represents a significant step in the integration of unmanned systems into naval operations. Boeing’s expertise in both commercial and military aviation allows it to leverage technologies across sectors, potentially leading to advancements in drone capabilities.
The company’s investment in autonomous technologies extends beyond aerial drones to include unmanned underwater vehicles, indicating a comprehensive approach to unmanned military systems. Boeing’s global presence and relationships with various defense departments worldwide could provide opportunities for international sales of its drone technologies, expanding its market reach in this sector.
Raytheon (RTX)
Raytheon (RTX) specializes in counter-drone technologies and drone-based missile systems.
Raytheon’s strength as a military drone stock lies in its focus on counter-drone technologies and drone-based missile systems. The company’s Counter-Unmanned Aircraft System (C-UAS) offerings address the growing concern of drone threats in military and civilian contexts. This positions Raytheon as a key player in both offensive and defensive drone technologies.
Raytheon’s expertise in sensors, radars, and electronic warfare systems complements its drone offerings, allowing for integrated solutions in military operations. The company’s collaboration with other defense contractors and its ongoing research into swarm drone technologies suggest potential for future innovations in unmanned systems. Raytheon’s broad technological base in defense electronics provides a strong foundation for adapting to evolving military drone requirements.