An updated edition of the Nov 5, 2025 article.

The global drone industry is moving rapidly from niche applications to mainstream adoption, reshaping how governments, businesses and consumers approach border defense, surveillance, logistics and infrastructure monitoring.

Within the defense vertical, growing geopolitical strains and defense upgrades are driving increased drone adoption worldwide, with governments allocating an increasing share of their budget to unmanned aerial systems (“UAS”). Globally, drones are now being widely deployed for border security; precision strikes; Intelligence, Surveillance, and Reconnaissance (“ISR”); and other tactical operations, making them indispensable assets in modern warfare.

While defense remains a core market, drones are rapidly gaining traction across a wide range of 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.

The convergence of drones with artificial intelligence (“AI”), cloud computing and edge processing is further driving adoption across verticals. 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 improved real-time data transmission, expanding commercial applications.

With regulatory frameworks evolving and military and commercial adoption gaining pace, the drone sector has a long runway for growth. The global drone tech market is expected to witness a CAGR of 14.3% from 2025 to 2030, according to a report from Grand View Research.

Drone tech companies with strong research and development (R&D) pipelines, diversified end-market exposure and strategic collaborations are well-positioned to flourish in this evolving landscape.

If you are looking to capitalize on this trend, our Drone Technology Screen makes it easy to identify high-potential stocks, such as AeroVironment, Inc. ((AVAV Quick QuoteAVAV - Free Report) ), Kratos Defense & Security Solutions, Inc. ((KTOS Quick QuoteKTOS - Free Report) ) and Draganfly Inc. ((DPRO Quick QuoteDPRO - Free Report) ).

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3 Drone Tech Stocks to Keep an Eye on

AeroVironment is one of the key pure-play beneficiaries of rising global demand for UAS. AVAV develops uncrewed aircraft and ground robot systems, loitering munition systems, counter-UAS technologies and related services for the U.S. Department of Defense, other federal agencies, and international allied governments. AVAV continues to strengthen its competitive position by seamlessly integrating AI and cutting-edge computer vision into agile, effective next-gen drone solutions. 

In the second quarter of fiscal 2026, the total ceiling value of contract awards reached $3.5 billion, driving bookings to $1.4 billion. AVAV’s steady investment in R&D and manufacturing capacity is the key catalyst in driving business momemtum. In the fiscal second quarter, the company unveiled the next generation of Switchblade loading munitions (Switchblade 600 Block 2, Switchblade 400 and Switchblade 300 Block 20), as well as upgraded JUMP 20 and JUMP20-X (its Group 3 uncrewed aircraft system).

AVAV’s expanding software ecosystem, anchored by the AV_Halo open-architecture platform, is emerging as a powerful long-term growth driver. It recently launched two products, namely AV_Halo Cortex (advanced intelligence fusion and analysis environment) and AV_Halo Mentor (a war fighter readiness suite that uses AR/VR weapons training and mission rehearsal).

AVAV is scaling its manufacturing footprint, including a planned high-capacity Switchblade facility, while leveraging synergies from the BlueHalo acquisition to deepen capabilities across counter-UAS, cyber, space, and electronic warfare. For fiscal 2026, it expects revenues between $1.95 billion and $2 billion.

AVAV carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kratos boasts a 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 reported quarter’s earnings call, KTOS highlighted that governments are increasing defense budgets amid escalating geopolitical tensions. NATO and Pacific allies are expected to spend 5% of GDP instead of 2% historically, while U.S. national security spending is expected to top $1 trillion in 2026. KTOS stands to gain from this increased spending as one of the handful of qualified defense technology companies.

KTOS is deploying resources toward facilities, plant and equipment, and more to scale effectively and support program wins. In November 2025, the company announced the acquisition of Israel-based Orbit Technologies Ltd. Orbit Technologies specializes in satellite-based communication systems for mobile and unmanned undersea, aerial, seaborne and land systems, military vehicles and other systems. In October 2025, the company collaborated with Korea Aerospace Industries to advance Manned-Unmanned Teaming (MUM-T) technology using systems such as the XQ-58A Valkyrie, Tactical Firejet and Mako.

Kratos, which currently carries a Zacks Rank #3, delivered third-quarter revenues of $347.6 million, up 26% year over year. KTOS projects revenues of $320-$330 million for fourth-quarter 2025. The company expects 2025 revenues to be $1.32-$1.33 billion, higher than the previously stated $1.29-$1.31 billion.

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 ISR, marketed 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.

Increasing deals with the U.S. military bode well. One of the most significant developments is the company’s first major U.S. Army FPV drone order, which is not only a product sale but also includes providing supply chain and logistical support. It also includes onsite assembly and manufacturing training for the Army to allow them to make “modifications on the fly.”

In October 2025, the company introduced its Outrider Southern Border drone, which is a North American-built, NDAA-compliant multi-mission drone platform. DPRO has 5-plus drone systems that are all NDAA-compliant. As the United States and NATO aggressively eliminate non-compliant Chinese systems from critical infrastructure, this compliance advantage becomes a moat. Last month, the company secured a significant international (Asia-Pacific) military order for Commander 3XL drones, thereby underscoring the company’s expanding footprint globally.

DPRO, a Zacks Rank #3 stock at present, 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 14.4% year-over-year revenue growth, supported by rising product sales.