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Defense applications are the mainstay for the adoption of unmanned aerial vehicle (UAV) technology. Governments worldwide are now increasingly deploying UAVs for surveillance and reconnaissance missions and combat operations. Drone swarm technology is another eye-catching development. Drone swarms are a synchronized operation of numerous autonomous drones working in tandem and using AI and real-time communication to achieve common objectives. In an asymmetric fight, a well-coordinated swarm attack could subdue enemy air defenses, giving the smaller armies an edge.
In addition to defense and military use, drones are now increasingly deployed across various industries. Drones have become integral to various sectors like mining, infrastructure monitoring, real estate, oil and gas exploration, logistics and even filmmaking. From aerial photography and agricultural mapping, drones are transforming how businesses collect data and operate across sectors
Retail behemoths like Walmart and Amazon (AMZN - Free Report) are increasingly deploying drones in logistics. Amazon uses drone delivery to deliver one package (up to five pounds) in less than an hour during daylight hours. Meanwhile, public safety and disaster response sectors are using drones for surveillance and search-and-rescue missions. The usage of drone swarms is being extensively explored for tasks like large-area surveillance and search-and-rescue.
The drone technology is scaling new heights, driven by cutting-edge advancements in autonomous technology and AI-powered navigation. The embedding of AI has made modern drones faster and more versatile than ever. AI incorporation is driving the autonomous navigation functionality of drones, enabling them to autonomously plan their flight paths based on real-time data, such as environmental terrain. The integration of 5G and advanced Wi-Fi technology has further improved real-time data transmission, expanding commercial applications.
For investors, this provides an exciting long-term opportunity. With regulatory frameworks evolving and military and commercial adoption gaining pace, the drone sector has a long runway for growth. Drone tech companies with strong R&D pipelines, diversified end-market exposure, and strategic collaborations are well-positioned to flourish in this evolving landscape.
If you're looking to capitalize on this trend, our Drone Technology Screen makes it easy to identify high-potential stocks, such as AeroVironment. ((AVAV - Free Report) ), Draganfly Inc. ((DPRO - Free Report) ) and Kratos Defense & Security Solutions, Inc. ((KTOS - Free Report) ).
Explore 30 cutting-edge investment themes with Zacks Thematic Screens and uncover your next big opportunity.
3 Drone Tech Stocks to Keep an Eye on
AeroVironment is a well-known name in drone technology. The company has been developing uncrewed aircraft and ground robot systems, loitering munitions systems (LMS), and related services for the U.S. Department of Defense (including Army, Marine Corps, Special Operations Command, Air Force and Navy), other federal agencies and international allied governments. AVAV applies advanced technological innovations, seamlessly integrating AI and cutting-edge computer vision into agile, effective next-gen drone solutions for evolving defense needs. AVAV is focused on disciplined investments, production capacity expansion, product innovation and acquisitions to drive market share. The acquisition of BlueHalo (May 2025) has added space technologies, counter-UAS, electronic warfare and cyber solutions to the portfolio.
It is scaling its laser communications manufacturing capacity to gain a larger share of this fast-growing, lucrative market. AVAV recently got a $95 million contract from the U.S. Army for the development and scaling of the manufacturing of the Freedom Eagle 1 missile, which is engineered for extended range, higher altitude and all-weather performance to tackle emerging threats. It is also ramping up its counter-UAS efforts with two deliveries of LOCUST laser weapon systems already made to the U.S. Army under the AMP-HEL (multipurpose high-energy laser) program. These capabilities position AVAV not only as a UAS manufacturer but as a key player in the counter-UAS space, a segment expected to grow to several billion dollars in the coming years.
In the first quarter of fiscal 2026, it reported revenues (inclusive of BlueHalo) of $455 million, up 140% year over year. It has a funded and unfunded backlog of $1.1 billion and $3.1 billion, respectively. AVAV, which carries a Zacks Rank #3 (Hold), has strong visibility into growth as it has over 20 programs of record worth more than $20 billion in potential value over the next five years.
Draganfly is a Canada-based drone solutions and systems developer. The company’s drones include Commander 3XL, Heavy Lift Drone, Commander 2 and Draganfly Medical Response Drone. The company’s Apex drone (launched last September) is aimed at the intelligence, surveillance, and reconnaissance or ISR market for both the military and public safety. Apex drone boasts dual payload capabilities and AI computing powered by NVIDIA’s chips. Further, DPRO’s NDAA-compliant FlexForce FPV (first-person view) drone can be flown individually or autonomously, or swarmed.
By leveraging AI, machine learning and cutting-edge hardware, this Zacks Rank #3 (Hold) stock aims to solidify its position as a key player in the global drone ecosystem, offering both turnkey drone systems and custom solutions tailored to evolving industry needs. On the last earnings call, DPRO highlighted that its Commander 3XL plus DROPS (payload provider) demonstrated 100% success at the U.S. Army’s SMEX25 event. It also delivered its Flex FPV system to a key U.S. prime defense contractor.
DPRO, a Zacks Rank #3 stock, is expanding its footprint in the demining vertical with collaborations with Autonome Labs and SafeLane. With its data, expertise and AI-powered aerial mapping capabilities, DPRO is well-positioned to expand in this niche market. In the last reported quarter, the company achieved 22% year-over-year revenue growth, supported by rising product sales.
Kratos Defense & Security Solutions boasts diverse range of tactical UAVs, including the UTAP-22 Mako, XQ-58A Valkyrie and X-61A Gremlin, along with aerial target drones like the BQM-167A, BQM-177A and MQM-178 Firejet. On its last earnings call, KTOS highlighted that governments are increasing defense budgets amid escalating geopolitical tensions. NATO is expected to spend 5% of GDP instead of 2% historically, while U.S. national security spending is expected to top $1 trillion. KTOS highlighted that it is well-positioned to gain from this increased spending as one of the handful of qualified defense technology companies.
A flagship growth driver is the XQ-58A Valkyrie. In July 2025, Kratos signed a collaboration with Airbus, involving the Kratos XQ-58A Valkyrie, which is a UCCA (uncrewed collaborative combat aircraft). According to the partnership, the XQ-58A Valkyrie UCCA will be armed with an Airbus-made mission system to make it “combat-ready” for the German Air Force by 2029. The company is currently working on programs like Thanatos, Athena, and Air Wolf target drones to boost its market share.
Kratos, which carries a Zacks Rank #3, delivered second-quarter revenues of $351.5 million, up 17.1% year over year, with a record $13 billion backlog, bid and proposal pipeline. The new $750 million Poseidon (military-grade hardware and system) program win is expected to drive “steady-state” revenues and cash flows from 2027.
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Top Drone Tech Stocks Well-Positioned for Long-Term Growth
An updated edition of the July 24, 2025 article.
The drone industry is witnessing rapid growth, with the global drone tech market expected to witness a CAGR of 14.3% from 2025 to 2030, according to a report from Grand View Research, whereas the commercial drone market is expected to witness a CAGR of 20.8% from 2025 to 2032, per the Fortune Business Insights report.
Defense applications are the mainstay for the adoption of unmanned aerial vehicle (UAV) technology. Governments worldwide are now increasingly deploying UAVs for surveillance and reconnaissance missions and combat operations. Drone swarm technology is another eye-catching development. Drone swarms are a synchronized operation of numerous autonomous drones working in tandem and using AI and real-time communication to achieve common objectives. In an asymmetric fight, a well-coordinated swarm attack could subdue enemy air defenses, giving the smaller armies an edge.
In addition to defense and military use, drones are now increasingly deployed across various industries. Drones have become integral to various sectors like mining, infrastructure monitoring, real estate, oil and gas exploration, logistics and even filmmaking. From aerial photography and agricultural mapping, drones are transforming how businesses collect data and operate across sectors
Retail behemoths like Walmart and Amazon (AMZN - Free Report) are increasingly deploying drones in logistics. Amazon uses drone delivery to deliver one package (up to five pounds) in less than an hour during daylight hours. Meanwhile, public safety and disaster response sectors are using drones for surveillance and search-and-rescue missions. The usage of drone swarms is being extensively explored for tasks like large-area surveillance and search-and-rescue.
The drone technology is scaling new heights, driven by cutting-edge advancements in autonomous technology and AI-powered navigation. The embedding of AI has made modern drones faster and more versatile than ever. AI incorporation is driving the autonomous navigation functionality of drones, enabling them to autonomously plan their flight paths based on real-time data, such as environmental terrain. The integration of 5G and advanced Wi-Fi technology has further improved real-time data transmission, expanding commercial applications.
For investors, this provides an exciting long-term opportunity. With regulatory frameworks evolving and military and commercial adoption gaining pace, the drone sector has a long runway for growth. Drone tech companies with strong R&D pipelines, diversified end-market exposure, and strategic collaborations are well-positioned to flourish in this evolving landscape.
If you're looking to capitalize on this trend, our Drone Technology Screen makes it easy to identify high-potential stocks, such as AeroVironment. ((AVAV - Free Report) ), Draganfly Inc. ((DPRO - Free Report) ) and Kratos Defense & Security Solutions, Inc. ((KTOS - Free Report) ).
Explore 30 cutting-edge investment themes with Zacks Thematic Screens and uncover your next big opportunity.
3 Drone Tech Stocks to Keep an Eye on
AeroVironment is a well-known name in drone technology. The company has been developing uncrewed aircraft and ground robot systems, loitering munitions systems (LMS), and related services for the U.S. Department of Defense (including Army, Marine Corps, Special Operations Command, Air Force and Navy), other federal agencies and international allied governments. AVAV applies advanced technological innovations, seamlessly integrating AI and cutting-edge computer vision into agile, effective next-gen drone solutions for evolving defense needs. AVAV is focused on disciplined investments, production capacity expansion, product innovation and acquisitions to drive market share. The acquisition of BlueHalo (May 2025) has added space technologies, counter-UAS, electronic warfare and cyber solutions to the portfolio.
It is scaling its laser communications manufacturing capacity to gain a larger share of this fast-growing, lucrative market. AVAV recently got a $95 million contract from the U.S. Army for the development and scaling of the manufacturing of the Freedom Eagle 1 missile, which is engineered for extended range, higher altitude and all-weather performance to tackle emerging threats. It is also ramping up its counter-UAS efforts with two deliveries of LOCUST laser weapon systems already made to the U.S. Army under the AMP-HEL (multipurpose high-energy laser) program. These capabilities position AVAV not only as a UAS manufacturer but as a key player in the counter-UAS space, a segment expected to grow to several billion dollars in the coming years.
In the first quarter of fiscal 2026, it reported revenues (inclusive of BlueHalo) of $455 million, up 140% year over year. It has a funded and unfunded backlog of $1.1 billion and $3.1 billion, respectively. AVAV, which carries a Zacks Rank #3 (Hold), has strong visibility into growth as it has over 20 programs of record worth more than $20 billion in potential value over the next five years.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Draganfly is a Canada-based drone solutions and systems developer. The company’s drones include Commander 3XL, Heavy Lift Drone, Commander 2 and Draganfly Medical Response Drone. The company’s Apex drone (launched last September) is aimed at the intelligence, surveillance, and reconnaissance or ISR market for both the military and public safety. Apex drone boasts dual payload capabilities and AI computing powered by NVIDIA’s chips. Further, DPRO’s NDAA-compliant FlexForce FPV (first-person view) drone can be flown individually or autonomously, or swarmed.
By leveraging AI, machine learning and cutting-edge hardware, this Zacks Rank #3 (Hold) stock aims to solidify its position as a key player in the global drone ecosystem, offering both turnkey drone systems and custom solutions tailored to evolving industry needs. On the last earnings call, DPRO highlighted that its Commander 3XL plus DROPS (payload provider) demonstrated 100% success at the U.S. Army’s SMEX25 event. It also delivered its Flex FPV system to a key U.S. prime defense contractor.
DPRO, a Zacks Rank #3 stock, is expanding its footprint in the demining vertical with collaborations with Autonome Labs and SafeLane. With its data, expertise and AI-powered aerial mapping capabilities, DPRO is well-positioned to expand in this niche market. In the last reported quarter, the company achieved 22% year-over-year revenue growth, supported by rising product sales.
Kratos Defense & Security Solutions boasts diverse range of tactical UAVs, including the UTAP-22 Mako, XQ-58A Valkyrie and X-61A Gremlin, along with aerial target drones like the BQM-167A, BQM-177A and MQM-178 Firejet. On its last earnings call, KTOS highlighted that governments are increasing defense budgets amid escalating geopolitical tensions. NATO is expected to spend 5% of GDP instead of 2% historically, while U.S. national security spending is expected to top $1 trillion. KTOS highlighted that it is well-positioned to gain from this increased spending as one of the handful of qualified defense technology companies.
A flagship growth driver is the XQ-58A Valkyrie. In July 2025, Kratos signed a collaboration with Airbus, involving the Kratos XQ-58A Valkyrie, which is a UCCA (uncrewed collaborative combat aircraft). According to the partnership, the XQ-58A Valkyrie UCCA will be armed with an Airbus-made mission system to make it “combat-ready” for the German Air Force by 2029. The company is currently working on programs like Thanatos, Athena, and Air Wolf target drones to boost its market share.
Kratos, which carries a Zacks Rank #3, delivered second-quarter revenues of $351.5 million, up 17.1% year over year, with a record $13 billion backlog, bid and proposal pipeline. The new $750 million Poseidon (military-grade hardware and system) program win is expected to drive “steady-state” revenues and cash flows from 2027.