This article looks at the 10 best military drone stocks to buy now. We also discuss recent trends in the unmanned aerial vehicle (UAV) industry.
Modern warfare is rapidly evolving from being the sole domain of soldiers, tanks, and fighters. Swarms of UAVs, guided by artificial intelligence, now fill the skies and can strike enemy targets with pinpoint accuracy. This revolution in warfare has blurred the lines between man and machine, resulting in a need for reassessment of military capabilities.
READ ALSO: 10 Countries with the Most Military Drones in the World and Goldman Sachs Defense Stocks: Top 12 Stock Picks.
The demand for drones has surged over the last few years, with countries actively using UAVs for intelligence, reconnaissance, surveillance, and target operations. These aerial vehicles offer a bird’s eye view of the battlefield, making it difficult for targets to move and hide from the conflict zone.
Drones were a prominent feature of the conflict in the Nagorno-Karabakh region between Azerbaijan and Armenia in 2020. They have been clouding the skies across several towns and cities during the Russia-Ukraine war, which defense experts see as the arrival of a new threat in the aerial defense space.
The US has been operating drones for about a century, having first deployed them during World War II and more recently during the wars in Afghanistan and Iraq. In 2023, the Department of Defense (DoD) announced Replicator, an initiative to build ‘attritable autonomous systems’ in mass over the next 18-24 months. Moreover, the Air Force is developing drone wingmen to fly alongside its fighter and bomber jets under the Collaborative Combat Aircraft (CCA) program. The first two CCA fighters were unveiled in March this year.
However, defense experts view the proliferation of UAVs as a security threat, with American troops increasingly coming under attack from non-state actors in the Middle East. Policymakers in Washington also worry about China getting a leaf out of the Kremlin’s book (Ukraine war) and launching similar strikes against US interests in the Pacific.
Much work is going into guarding countries against the threats posed by UAVs. In October 2024, the DoD awarded a $250 million contract to Anduril Industries to counter drone attacks against American forces. Under the contract, the US will receive 500 recoverable Roadrunner interceptors, which are reusable drones that can intercept incoming drones or land back on the ground if they are not engaged.
With that said, let’s head over to the list of the best drone stocks to buy.
Palmer Luckey of Anduril
Methodology
We sampled stocks from ETFs with exposure to military drones and our previous articles on the subject. Both pure-play military drone makers and defense contractors with drone programs were included in our pool. From there, we selected the 10 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of over 1,000 prominent hedge funds as of Q4 2024.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Best Military Drone Stocks to Buy Now:
10. Elbit Systems Ltd. (NASDAQ:ESLT)
Number of Hedge Fund Holders: 15
Elbit Systems Ltd. (NASDAQ:ESLT) is an Israel-based defense technology company that develops a portfolio of airborne, land, and naval systems and products, primarily for defense and homeland security. The company offers a comprehensive range of military drones, from the man-portable Skylark LEX to the multi-mission Hermes-900.
In November last year, Elbit Systems Ltd. (NASDAQ:ESLT) received contracts worth $335 million to supply defense systems to a European country. The contract, which is to be performed over three years and six months, will include PULS rocket launchers and rockets, and Hermes 900 unmanned aircraft systems that are equipped with advanced payloads.
The Hermes 900 is Elbit Systems Ltd. (NASDAQ:ESLT)’s largest UAV. It is designed to perform various security missions like area dominance, persistent surveillance, intelligence, reconnaissance, and target acquisition operations across land and maritime domains. It is operated by over 20 customers worldwide.
Elbit Systems Ltd. (NASDAQ:ESLT) also boasts expertise in counter-UAS solutions. In January this year, the company clinched a $60 million award from a NATO European country for its multi-layered Counter Unmanned Aerial Systems (C-UAS). It is one of the best drone stocks to buy, with 15 hedge funds holding a stake in the company, as of Q4 2024, according to Insider Monkey.
On March 18, Elbit Systems Ltd. (NASDAQ:ESLT) declared consolidated financial results for the fourth quarter of FY24. Revenue was reported at $1.93 billion, improving from $1.63 billion during the prior year’s period. Non-GAAP diluted EPS was logged at $2.66, beating estimates of $1.95 per share and up 71% year-over-year.
9. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
Number of Hedge Fund Holders: 21
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) develops and fields products and platforms for national security needs. It is involved in various technological areas, such as unmanned systems, C5ISR, satellite communications, warfighter training, and combat systems.
In March this year, the Naval Air Systems Command awarded Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) an additional $59.3 million for 70 BQM-177A Subsonic Aerial Target (SSAT) by exercising the contract option for FRP Lot 6. Combined with the base award and exercise of FRP Lot 5, the total value of the contract has exceeded $175 million.
Earlier in the year, in January, Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) announced a $34 million contract modification to a previously awarded contract from the Marine Corps. Under the agreement, the company will support the XQ-58A Unmanned Aerial Systems mission systems for the Marine Air-Ground Task Force Unmanned Aerial System Expeditionary (MUX) Tactical Aircraft (TACAIR).
On February 26, Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) reported impressive results for the fiscal year 2024, with a 9.1% organic growth in revenue. GAAP net income for the full year was reported at $16.3 million, compared to a net loss of $8.9 million in 2023. Adjusted EPS was logged at $0.49, growing 17% year-over-year.
Full-year revenue for the Unmanned Systems business totalled $270.5 million, reflecting a 25.1% organic increase from fiscal 2023. The company anticipates continued growth for the segment, with the potential to even exceed forecasts if tactical drone opportunities are realized. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is one of the best drone stocks to buy now.
8. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 24
AeroVironment, Inc. (NASDAQ:AVAV) designs and manufactures unmanned aerial vehicles, ground robot systems, and loitering munition systems. It is one of the best drone stocks to buy right now, with the stock having returns of over 15% in the past month on the back of several positive recent developments.
On April 21, AeroVironment, Inc. (NASDAQ:AVAV) announced securing a $47 million contract from the Italian Ministry of Defence for its JUMP 20 VTOL medium uncrewed aircraft system (MUAS). The contract will run for five years and will include the procurement of these drones, engineering services, initial sustainment, and onsite support. JUMP 20 is a fixed-wing UAS, designed for advanced ISR missions. It boasts 30 pounds of payload capacity, an operational range of 185 km, and flight endurance of over 13 hours.
Earlier in the month, AeroVironment, Inc. (NASDAQ:AVAV)’s stockholders approved the acquisition of BlueHalo LLC, a leading space and defense engineering company. The transaction is expected to help AVAV further expand its portfolio amid ongoing geopolitical tensions in different parts of the world.
Wall Street analysts are bullish on AeroVironment, Inc. (NASDAQ:AVAV) with a consensus Buy rating and an average share price upside potential of 36%. Their optimism around the stock stems from the company’s recent strategic initiatives like the BlueHalo acquisition and its current position in the sector, with America’s defense spending expected to increase ahead.
According to Insider Monkey’s database for Q4 2024, 24 hedge funds held a stake in the company, improving from 22 at the end of the third quarter. Heard Capital was the largest investor in AeroVironment, Inc. (NASDAQ:AVAV), with holdings of over $115 million as of December 31, 2024.
7. Textron Inc. (NYSE:TXT)
Number of Hedge Fund Holders: 29
Textron Inc. (NYSE:TXT) manufactures products for consumers across several industries, through its six business segments: Bell, Textron Aviation, Textron eAviation, Textron Systems, Industrial, and Finance.
The company is a recognized industry leader in uncrewed air, land, and surface products. It is working on the FTUAS Option 3 and Option 4 award for the US Army. Under the contract, Textron Inc. (NYSE:TXT) will complete flight and MOSA demonstrations and deliver an Aerosonde Mk. 4.8 Hybrid Quad uncrewed aircraft system to the Army for test and evaluation.
On April 24, Textron Inc. (NYSE:TXT) declared financial results for the first quarter of fiscal 2025. It reported revenues of $3.3 billion, topping estimates and growing $171 million from the prior year. The company’s adjusted EPS of $1.28 also surpassed analysts’ estimates of $1.16 per share and was up from $1.20 in Q1 FY24. The strong results were driven by robust demand for military helicopters and aftermarket parts and services in the Aviation segment.
Textron Inc. (NYSE:TXT) also enjoys unmanned surface vehicle (USV) expertise. It recently announced that the Naval Sea Systems Command had awarded Textron Systems a three-year, $100 million contract to perform payload integration and software support activities for the Mine Countermeasures (MCM) Unmanned Surface Vehicle (USV). The company will also be responsible for testing and demonstration work on potential future mission systems.
According to Insider Monkey’s database for Q4 2024, 29 hedge funds held a stake in Textron Inc. (NYSE:TXT), making it one of the best drone stocks to buy now. While Street analysts have a consensus Hold rating for TXT, they anticipate a 31% uptick, on average, in its share price.
6. L3Harris Technologies, Inc. (NYSE:LHX)
Number of Hedge Fund Holders: 48
L3Harris Technologies, Inc. (NYSE:LHX) is known for its wireless and night vision equipment, command and control systems, avionics, and terrestrial and spaceborne antennas. It is also considered a leader in unmanned and autonomous systems.
In November last year, the Defense Innovation Unit (DIU) selected L3Harris Technologies, Inc. (NYSE:LHX) to develop a command and control system prototype that can simultaneously operate thousands of autonomous assets. The project is in line with the DoD’s Replicator initiative to enhance America’s military posture through swarms of uncrewed aircraft, seacraft, and ground vehicles.
On February 10, L3Harris Technologies, Inc. (NYSE:LHX) announced the launch of its new software, AMORPHOUS, featuring a single user interface to operate thousands of autonomous assets at the same time. It is designed with an open architecture and will allow the US military to control a mix of platforms, payloads, and systems simultaneously, even if they are manufactured by another producer.
L3Harris Technologies, Inc. (NYSE:LHX) is an important player in America’s defense sector, and the stock’s appeal among investors has further enhanced through recent strategic contract awards. This year, it clinched a $263 million deal from the US Army in January for additional Enhanced Night Vision Goggle–Binocular (ENVG-B) systems. In March, the company signed a long-term agreement, valued at up to 1 billion euros, with the Netherlands for Falcon IV radios for the FOXTROT program.
On April 24, L3Harris Technologies, Inc. (NYSE:LHX) announced financial results for the first quarter of fiscal 2025. It reported a revenue of $5.13 billion, down 1.5% from last year and lower than analysts’ estimates of $5.22 billion. The company’s non-GAAP diluted EPS was logged at $2.41, improving 7% year-over-year and beating expectations by 9 cents. It is one of the best drone stocks to buy.
5. Northrop Grumman Corporation (NYSE:NOC)
Number of Hedge Fund Holders: 54
Northrop Grumman Corporation (NYSE:NOC) is one of the largest defense contractors in the world. The company is the manufacturer of the long-range, stealth strategic bomber, the B-21 Raider. It is also a leader in autonomous aerial systems and has developed notable military drones like the RQ-4 Global Hawk and MQ-4C Triton.
In March this year, Northrop Grumman Corporation (NYSE:NOC) was awarded a $267 million contract from the US Navy to produce two additional MQ-4C Triton drones, as part of the service’s plans to have a fleet of 27 of these UAVs to bolster ISR capabilities. Under the agreement, the company will also provide the Navy with a main operating base and support services.
Northrop Grumman Corporation (NYSE:NOC) is also working on a $387 million foreign military sales contract awarded by the DoD in April 2024 to sustain Italy, Japan, and South Korea’s RQ-4 Global Hawk drones. Moreover, the first of the four Tritons was delivered to Australia in June last year, with the second and third set for delivery later this year.
On April 22, Northrop Grumman Corporation (NYSE:NOC) reported results for the first quarter of fiscal 2025. It posted a revenue of $9.5 billion, down 7% year-over-year, due to several contracting delays and the timing of material receipts. Net earnings for the quarter totaled $481 million, or $3.32 per diluted share, falling sharply from $944 million, or $6.32 per diluted share, in Q1 2024.
The company’s shares have slumped following these results. Despite the setback, analysts have a consensus Buy rating for Northrop Grumman Corporation (NYSE:NOC) with a share price upside potential of 18%. Investor sentiment also remains strong. According to Insider Monkey’s database for Q4 2024, 54 hedge funds held a stake in the company. It is one of the best drone stocks to buy now.
4. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 65
Lockheed Martin Corporation (NYSE:LMT) specializes in the research, design, and development of advanced technology systems, products, and services. While the company is famed for producing some of the most notable military aircraft in history, including the F-35, it also delivers advanced autonomous solutions to the US military to meet the needs of its most demanding missions.
Some of the most prominent UAVs manufactured by Lockheed Martin Corporation (NYSE:LMT) include the RQ-170 Sentinel, Stalker, and Indago 4. The defense contractor continues to invest heavily in autonomy and AI. It has demonstrated its capabilities in crewed-uncrewed teaming, AI-driven autonomous systems, and integrated technologies at numerous recent US Army events.
The stock plunged nearly 25% over the last six months due to heavy losses in certain classified programs, a delay in the rollout of upgrades for the F-35, and losing out to Boeing on the F-47 program. However, the recent announcement of robust financial results for the first quarter of fiscal 2025 is likely to woo investors back into buying Lockheed Martin Corporation (NYSE:LMT).
The company reported sales of $18 billion for Q1, up 4% from last year, due to a surge in demand for weapons from ongoing conflicts in Ukraine and the Middle East. Net earnings were posted at $1.7 billion, with EPS of $7.28, beating estimates of $6.34 per share. Lockheed Martin Corporation (NYSE:LMT) generated a free cash flow of $955 million during the quarter and returned $1.5 billion to shareholders through dividends and share repurchases.
According to Insider Monkey’s database for Q4 2024, 65 hedge funds held a stake in Lockheed Martin Corporation (NYSE:LMT), improving from 58 at the end of the third quarter. It is one of the best drone stocks to buy now.
3. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 67
Honeywell International Inc. (NASDAQ:HON) is an integrated operating company that helps organizations address their most complex challenges in aviation, automation, and energy transition. The company is an important player in the military drone market.
In October 2024, Honeywell International Inc. (NASDAQ:HON) partnered with Merlin Labs to bring autonomy to a wide range of aircraft, including military fleets. Under the agreement, Honeywell Anthem’s advanced avionics suite will be integrated with Merlin’s non-human pilot system to reduce pilot workloads during special missions.
Late last year, Honeywell International Inc. (NASDAQ:HON) also announced a strategic collaboration with Near Earth Autonomy to support autonomous rotorcraft program pursuits. The two companies will initially team up with Leonardo as a competitor in the United States Marine Corps (USMC) Aerial Logistics Connector (ALC) prototype program.
On February 26, Honeywell International Inc. (NASDAQ:HON) announced its intention to separate Automation and Aerospace Technologies, in addition to the previously announced plan to spin Advanced Materials. The change is expected to be completed during the second half of 2026 and will result in three publicly listed companies, with distinct growth drivers and strategies.
According to Insider Monkey’s database for Q4 2024, 67 hedge funds held a stake in Honeywell International Inc. (NASDAQ:HON), making it one of the best drone stocks to buy.
2. RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 80
RTX Corporation (NYSE:RTX) is a giant in the global aerospace and defense industry, providing systems and services to commercial, military, and government clients. It operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.
The company holds immense relevance in the UAV segment due to its focus on drone-based missile systems and counter-drone technologies. RTX Corporation (NYSE:RTX)’s expertise in radars, sensors, and electronic warfare offerings also makes it an important player in the global drone market.
According to media reports this week, RTX Corporation (NYSE:RTX)’s Raytheon business has signed a strategic agreement with the United Arab Emirates’ defense and security acquisitions authority, Tawazun Council, to locally produce the Coyote counter-drone system in the Middle Eastern country.
The Coyote effector is a low-cost, rail-launched missile variant, featuring a boost rocket motor and a high-speed turbine engine that enable it to defeat both small to large unmanned aerial systems, as well as swarms of drones of varying sizes. The Coyotes are paired with Raytheon’s Ku-band Radio Frequency Sensor, which provides them with detection and defeat capabilities.
RTX Corporation (NYSE:RTX) recently declared strong financial results for the first quarter of fiscal 2025. It reported sales of $20.3 billion, up 5% year-over-year. Adjusted EPS was logged at $1.47, beating estimates by 12 cents and 10% higher than the prior year.
Following the announcement, UBS raised its price target for the stock to $138 from $133. Wall Street analysts have a consensus Buy rating for RTX Corporation (NYSE:RTX), with an average share price upside potential of 12.50%, making it one of the best drone stocks to buy.
1. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 103
The Boeing Company (NYSE:BA) is a leading aerospace company that manufactures commercial airplanes, space systems, and defense equipment for customers in over 150 countries. It also boasts an impressive lineup of uncrewed vehicles that operate in the air, across the sea, on the ground, and beyond the Earth’s atmosphere.
Last year, The Boeing Company (NYSE:BA) delivered the first MQ-25 Stingray to the U.S. Navy for testing. This will be the service’s first carrier-based UAV. The drone will provide aerial refueling capabilities to extend the combat range of deployed fighter jets. Other prominent UAVs built by the company include the ScanEagle and MQ-28 Ghost Bat.
On April 23, The Boeing Company (NYSE:BA) declared financial results for the first quarter of fiscal 2025. It reported a net loss of $31 million, significantly lowering the losses from $355 million a year earlier. The company’s revenue rose 18% year-over-year to $19.5 billion. It also improved its cash burn to about $2.3 billion from the nearly $4 billion in the first quarter of 2024.
Following the earnings call, several analysts raised their price targets for the stock. Investor sentiment in The Boeing Company (NYSE:BA) has also improved over the past month, after its selection by the US Air Force to design and build next-generation fighter aircraft, the F-47, to replace the F-22 Raptor.
Overall, BA ranks first among the 10 Best Military Drone Stocks to Buy Now. While we acknowledge the potential of drone companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BA but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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