The idea
I believe defense budgets keep tilting toward drones for years, from cheap ones bought by the thousands to large autonomous jets flying alongside piloted fighters. To express it, I split the basket three ways: small pure-play drone makers that gain most from new orders, the builders of robot wingmen and big autonomous aircraft, and large defense contractors with real drone programs to steady things when the small names swing hard. Spreading across 15 stocks means no single contract decides the outcome, and I keep 12% in cash.
What will be bought
- These companies exist primarily to design, build, and sell small loitering munitions, reconnaissance drones, and swarm software to militaries and allied forces. · AeroVironmentIt makes Switchblade loitering munitions and small recon drones like Puma, and relies on ongoing military reorders and growing order backlogs to sustain its position as the largest drone-focused company in its category., Red Cat HoldingsIt makes the Black Widow small recon drone selected by the US Army for its short-range reconnaissance program, and needs sustained Army orders and reliable manufacturing execution., Ondas HoldingsIt makes autonomous drone systems and counter-drone interceptors and has been acquiring other defense drone businesses, with growth tied to converting acquired products into real military and security orders., AEVEX CorpIt builds loitering munitions and drone systems for US and allied forces, including weapons deployed to Ukraine, and depends on sustained Pentagon and allied purchase orders., AIRO Group HoldingsIt sells drones to military customers including Ukraine alongside smaller aviation businesses, and its position relies on the drone segment driving growth and sustaining defense orders., DraganflyIt is a small Canadian drone maker serving defense and public safety buyers, making it one of the riskier holdings that depends on consistent military orders and adequate cash reserves., Swarmer IncIt develops software enabling coordinated swarm operations across many drones, and the holding depends on militaries increasingly adopting large drone groups and converting that demand into paid defense contracts.35%
- These large defense contractors build or supply the sensors, software, thermal cameras, and autonomy systems that enable drones and counter-drone operations across military branches. · L3Harris TechnologiesIt supplies sensors, radios, and autonomy software that drones and drone swarms require, and competes for drone and counter-drone work as part of a diversified defense portfolio., Elbit SystemsIt builds the Hermes drone family and loitering munitions used by Israel and export customers, with growth dependent on sustained international drone orders and stable export regulations., Teledyne TechnologiesIt owns FLIR, which makes the Black Hornet recon drone and thermal cameras used across many military drone systems, benefiting from growing defense drone and drone-sensor sales., TextronIts defense segment builds Aerosonde drones and other uncrewed systems alongside helicopters and business jets, and depends on winning drone contracts to maintain growth in that division., Lockheed MartinIts Skunk Works unit builds robot wingmen designed to fly with the F-35, and the holding benefits from Lockheed remaining an active player in uncrewed aircraft development alongside its piloted jet business.33%
- These companies are developing larger uncrewed aircraft designed to fly alongside piloted fighters, refuel other jets, or operate as long-range autonomous systems for military operations. · Kratos Defense & Security SolutionsIt builds the XQ-58 Valkyrie cheap jet drone designed to fly with piloted fighters, plus target drones used for military training, and depends on Pentagon and Marine funding for attritable aircraft programs moving toward production., Northrop GrummanIt operates the Global Hawk and Triton long-range reconnaissance drones and competes in the Air Force's robot wingman program, with its position tied to ongoing funding for large uncrewed aircraft., BoeingIt builds the MQ-28 Ghost Bat wingman drone with Australia and the MQ-25 refueling drone for the Navy, with the holding dependent on continued funding for both programs.20%
- Cash12%