Military drone.
Drones become ammunition.

The Pentagon plans to buy about 60,000 drones from nine companies for roughly $300 million. That's around $5,000 a drone, and it's not an aircraft budget. It's an ammunition budget.

The numbers came out of Gauntlet II, a competition in the Pentagon's new Drone Dominance program, and the top spots went to little-known startups like Neros and Perennial Autonomy rather than the established drone makers. The wars explain the shopping list. In Ukraine, a $500 quadcopter can kill a $5 million tank. In the Middle East, $50,000 Iranian drones forced the US to fire $3 million interceptors. So the Pentagon wants cheap drones by the tens of thousands, systems that shoot down everyone else's, and jet-powered robot wingmen to fly next to fighters.

The urgency is real, but the money is arriving slower and messier. Most of the $54.6 billion the Pentagon asked for its new autonomous-warfare office rides on a separate $350 billion package rather than the regular budget. And the fiscal year started on October 1 under a stopgap bill that freezes spending and blocks new programs until at least December 11.

That leaves military drone stocks split. AeroVironment beat earnings in September and posted a record backlog, while the small caps kept falling and the private leaders kept getting pricier. Anduril was reported in talks at about $100 billion.

When drones turn into ammunition, the money moves too. The military drone stocks below are sorted by what each company sells into that new math:

• Munitions: drones built to be used up.
• Small drones: scouts and the parts inside them, bought by the thousands.
• Robot wingmen: jet drones that fly alongside fighters.
• Shields: systems that find and kill other people's drones.
• Private: the companies setting the pace and the valuations.

Drones built to fly once. The Pentagon wants them cheap and in huge numbers, which means volume matters more than margin.

AeroVironment NASDAQ: AVAV

AeroVironment makes the Switchblade loitering munition you've seen in Ukraine footage, and it's proving it can grow without breaking. First-quarter revenue was $480.5 million, funded backlog hit a record $1.5 billion, and gross margin recovered to 26% after last year's slide. It reaffirmed fiscal 2027 revenue guidance of $2.125–2.225 billion.

The open question is price. AeroVironment didn't qualify for the Pentagon's Gauntlet II competition, where the winners sell drones for $3,500 to $4,500. It's a premium weapons maker in a market that increasingly wants bulk pricing.

Aevex NYSE: AVEX

Aevex makes Phoenix Ghost, the loitering munition the US shipped to Ukraine. It went public in April at $20 a share, raising $368 million with the underwriters' option. It's the newest public way to bet on the Pentagon buying one-way drones by the thousands.

The scouts and the parts inside them. The Army has said it wants a million small drones over the next few years, and federal rules ban Chinese components.

Red Cat NASDAQ: RCAT

Red Cat makes Black Widow, the small scout drone the Army picked for its Short Range Reconnaissance program. That one win turned a tiny company into one guiding to $150–180 million of revenue this year, and Q2 revenue rose 527%.

It's burning cash fast to pay for the growth, though it has about $326 million in the bank. Q2 net loss was $35 million, first-half operating cash burn was $79 million and gross margin was 16%. At that pace, the cash buys roughly two years for the volume to show up.

Unusual Machines NYSE American: UMAC

Almost every cheap drone part on earth is made in China, and US military buyers aren't allowed to use them. Unusual Machines builds compliant motors, flight controllers and cameras in the US, and its Orlando factory is ramping toward 1,500 motors a day. Q2 revenue was up 687%, and it has about $230 million in cash with no debt. If the Army's million-drone ambition turns into orders, somebody has to make the motors.

Jet-powered drones that fly alongside crewed fighters at a fraction of the cost. Fewer units, bigger contracts.

Kratos NASDAQ: KTOS

Kratos builds the XQ-58 Valkyrie, and with Northrop it won the Marine Corps' drone-wingman development contract in January. It's targeting about 18 Valkyries a year in 2027 and expects another Marine order by year-end.

Drones were only $79 million of its $459 million in Q2 revenue. The rest is rockets, hypersonics, engines and electronics. Buy Kratos for drones and you're mostly buying a defense-tech conglomerate that also makes them, one that raised about $1.4 billion in stock in early March to build capacity.

Northrop Grumman NYSE: NOC

Northrop is the prime on the Marine Corps wingman program, supplying the autonomy and mission systems around Kratos's airframe. It already builds the biggest unmanned aircraft in the US inventory, the Global Hawk and Triton. It's drone exposure with decades of dividend increases attached.

Every cheap drone the other side builds is a problem someone gets paid to solve.

Ondas NASDAQ: ONDS

Ondas went from wireless radios to a counter-drone and strike-drone roll-up in about a year. Q2 revenue was $83.8 million, up from $6.3 million, with full-year guidance of $525–550 million, a $757 million pro forma backlog and about $1.4 billion in cash. In September alone it bought five more companies in two deals, for about $261 million up front plus earnouts. Hitting guidance requires huge second-half jumps, so the next two quarters will show whether the pieces fit together.

DroneShield ASX: DRO

DroneShield is the purest counter-drone stock and the clearest lesson in this watchlist. First-half revenue grew 74%, full-year guidance is A$250–270 million, and recurring software revenue tripled. The stock is still down more than 70% from its 2025 high, after guidance missed expectations, margins slipped and Australia's corporate regulator opened an investigation into its November 2025 announcements and share trading. When a stock is priced for perfection, "great" counts as a miss.

The companies setting the pace for military drone stocks, and the prices, aren't public yet.

Anduril

Anduril is the benchmark every name above is measured against. It has an Army contract worth up to $20 billion over ten years, its Fury wingman drone is in production at its Arsenal-1 factory in Ohio, and The Information reports it told investors to expect about $4.3 billion of revenue this year. It was reported in talks to raise at about $100 billion in July. Its leaders have said an IPO in the middle of a hype cycle would be a mistake, which tells you they think it's a hype cycle.

Shield AI

Shield AI makes Hivemind, the AI pilot that flies drones without GPS or a link back to a human. It flies Anduril's Fury, and it projects more than $540 million of revenue this year. In September it signed a letter of intent to build its X-BAT drone fighter in Poland, and it was reported in talks to raise at $20 billion or more, up from $12.7 billion in March.

Helsing

Europe's rearmament is the second engine under this theme, and Helsing is its leading company. It raised money at an $18 billion valuation in July. Germany picked it for loitering munitions under a framework now worth up to about €1 billion, starting with a €269 million order, and Japan's army has reportedly been field-testing its drones. It's priced like Europe's Anduril. Now it has to deliver like one.

In a war of attrition, factory capacity is the moat.

Artillery already proved it. When Russia invaded Ukraine, the West discovered it couldn't make enough 155mm shells. The company that could, Rheinmetall, saw its stock rise about twentyfold at its peak. It didn't have the best shell. It had the most shell factories.

Drones are on the same path. Ukraine goes through them by the hundreds of thousands, and the Pentagon is now buying them for under $5,000 apiece with the explicit goal of pushing that price lower. At that price, nobody wins on per-unit margin. The winners will be the companies that can turn out tens of thousands a month, reliably, with no Chinese parts, under multi-year contracts that pay for the factory.

So in 2027, stop valuing military drone stocks like aircraft programs and start valuing them like ammunition makers. Ask about monthly output, factory utilization and how long the contracts run. The best drone won't win the market. The biggest factory will.