Trump’s $1.5 trillion military spending 'gift'!

牛牛課堂

joined discussion · ·

2026 Outlook | When the sky becomes the new gold mine: How AI is reshaping the drone industry chain? These concept stocks are worth watching!

Fellow investors, as we face a brand-new 2026, instead of anxiously chasing trends, it's better to calmly understand the direction. Stay tuned.@Niuniu Classroomto unlock your investment roadmap in real time. In the new year, let’s stay calm and patient, proceed steadily for long-term success, and slowly grow our wealth together.

Former U.S. President Trump announced on Wednesday that he will request Congress to allocate $1.5 trillion for the military budget in the fiscal year 2027 (starting October 2026), which would represent an increase of more than 50% from this year. Trump claimed that this unprecedented increase will be funded by revenue generated from tariffs implemented over the past year.

In fact, with technological advancements and surging demand, drones have become an indispensable technology in military, commercial, and civilian fields. The budget proposal for 2027 indicates a significant push in defense spending, with the drone industry expected to benefit from this.

Morgan Stanley predicts that driven by continuous iterations in AI technology, increased policy support, and expanded application scenarios, the global number of drones will increase from 130 million in 2030 to 2 billion by 2050.

This article will focus on dissecting the investment logic behind the drone industry chain and uncovering relevant targets and opportunities worth paying attention to.

What does the future hold for drones?

First,In terms of policy, last year the Pentagon officially classified drones as 'consumables,'Thus allowing mid-level military officers to directly approve procurement without going through multiple layers of approval. In other words, the demand for drones could suddenly surge at any time.

Secondly,With the deep penetration of AI technology, drones are undergoing a critical turning point, evolving from mere flying tools to intelligent agents.Morgan Stanley stated that AI has lowered the technical threshold from equipment worth $30 million requiring a team of five operators to a $500 product controllable by one person.

Source: Morgan Stanley

Morgan Stanley forecasts that driven by the continuous iteration of AI technology, increased policy support, and the expansion of application scenarios, the global drone market will experience explosive growth. By 2030, the number of drones worldwide will reach 130 million, increasing to 900 million by 2040, and surpassing 2 billion by 2050.

Source: Morgan Stanley

Furthermore, Morgan Stanley states that globally, the low-altitude economy will evolve from 'single-point applications' to 'ecosystem collaboration.'Drones, eVTOLs (electric vertical takeoff and landing aircraft), and ultra-high-speed aircraft will complement each other,forming an aerial transportation network for 'intracity short-distance transport, intercity rapid transport, and international ultra-high-speed transport.'

Morgan Stanley notes that as policies continue to ease, low-altitude resources will be utilized more fully, turning what was nearly idle three-dimensional space into a new economic growth point, reshaping urban planning, logistics networks, and modes of transportation.

Which companies are worth watching?

Fellow investor reviewed Morgan Stanley's research report,summarizing drones and related military systems,for investors' reference:

Specifically, current drone-related stocks can be categorized intomilitary drones, civil/commercial drones, electric vertical takeoff and landing aircraft (eVTOL), and drone software.The business models of these companies will be analyzed one by one.

Military drones include $AIRO Group (AIRO.US)$ 、 $Kratos Defense & Security Solutions (KTOS.US)$ 、 $AeroVironment (AVAV.US)$ 、 $Northrop Grumman (NOC.US)$ 、 $Red Cat Holdings (RCAT.US)$ among others.

$AIRO Group (AIRO.US)$

AIRO Group is a technologically differentiated and diversified company focused on 21st-century aerospace and defense opportunities. Leveraging decades of industry experience and an extensive network in the drone, aviation, and avionics markets, the company delivers leading solutions for global markets. The company went public on June 13 and has risen nearly 120% since its listing.

According to the prospectus, the company operates four divisions:Drones,Avionics、TrainingandElectric Air Mobility. Collectively, these four divisions are targeting a potential market size expected to exceed $315.4 billion by 2030.

AIRO Group's primary revenue stems from drone-related operations,The company has deployed equipment in NATO and EU member states and participated in live combat testing during the Ukraine conflict.Its drones are equipped with AI capabilities, enabling them to perform reconnaissance, target identification, and strike guidance. Due to their artificial intelligence functionality, these drones are extremely difficult to intercept.

In addition,The company plans to manufacture military drones domestically within the United States and aims to secure certification from the Department of Defense within six months to enter the Pentagon procurement system.

Chairman of AIRO Group, Kathuria, stated:

Modern warfare has been fundamentally transformed by drones. While we certainly hope for a peaceful resolution between Iran and Israel, such heightened tensions will likely increase market interest in aerospace and defense sectors.

$Kratos Defense & Security Solutions (KTOS.US)$

Kratos Defense & Security Solutions, founded in 1994, primarily provides critical national security products, services, and solutions to the U.S. government. Its technological strengths include satellite communication systems, electronic warfare, unmanned control systems, and cybersecurity, offering information technology products and wireless communication systems to clients such as the U.S. Department of Defense, Department of Homeland Security, and various industrial customers.

The company operates through six divisions: Unmanned Systems, Microwave Electronics, Space & Training and Cybersecurity, Defense and Rocket Support Services, Turbine Technologies, and C5ISR Systems.

Kratos Defense & Security Solutions has a significant presence in the unmanned systems field,covering Unmanned Aerial Systems (UAS), Unmanned Ground Systems (UGS), and Unmanned Surface Vehicles (USV).These systems have wide applications in military, intelligence, and national security fields.

Unmanned Aerial Systems (UAS): Includes high-performance drones with functions such as reconnaissance, surveillance, strike, and training.

Unmanned Ground Systems (UGS): Unmanned vehicles used for ground combat or support missions. For instance, Ukraine has recently begun to extensively utilize unmanned combat vehicles to support various tasks such as mine clearance, reconnaissance, ammunition delivery, and suppression of enemy infantry.

Unmanned Maritime Systems (USV): Unmanned vessels (commonly referred to as ghost fleets) suitable for maritime reconnaissance and surveillance missions.

$AeroVironment (AVAV.US)$

AeroVironment is a global leader in military and commercial Unmanned Aircraft Systems (UAS), specializing in small drones and tactical missile systems. It is also the primary supplier of small UAS to the U.S. military and its allies.It is well-known for systems such as the 'Switchblade' loitering munition and the 'Puma' reconnaissance UAV. The company typically holds solid government and military contracts.

This company gained significant attention during the Russia-Ukraine conflict in 2022 when its products were rapidly adopted by NATO forces. Its product portfolio includes small drones, ground robots, as well as support services such as training and maintenance.

Notably, starting from May 2025, following AeroVironment’s completion of the major acquisition of BlueHalo, the company restructured its operations into two divisions: Autonomous Systems and Space, Cyber, and Directed Energy.

The Autonomous Systems division includes:Unmanned aerial vehicle systems, defense systems, unmanned ground and maritime systems, loitering munitions systems, and MacCready Works.

Among these, MacCready Works is AeroVironment's innovative R&D division, focusing on the integration of autonomy, AI, and advanced platform technologies to deliver next-generation combat capabilities.

The space, cyber, and directed energy sector includes:space technology, directed energy solutions, cyber solutions, and mission services.

$Northrop Grumman (NOC.US)$

Northrop Grumman is one of the largest producers of weapons and military technology in the United States, focusing on military aircraft, space, and defense technologies. The company manufactures the majority of U.S. bombers and supplies components for fighter jets to other companies. In addition to being a leader in American aviation stealth technology, it also plays a significant role in several space programs.

Northrop Grumman is one of the leaders in drone technology.Its renowned RQ-4 Global Hawk drone is the world's most advanced high-altitude, long-endurance unmanned reconnaissance aircraft, widely used for military reconnaissance and intelligence gathering.The company has also developed the X-47B unmanned combat aircraft, a drone capable of taking off from aircraft carriers, representing a future trend in drone technology.

$Red Cat Holdings (RCAT.US)$

Red Cat Holdings is a company focused on military and commercial drones. Its subsidiaries, Teal Drones and FlightWave Aerospace, provide diversified drone hardware and software solutions. The company previously succeeded in collaborating with Palantir to integrate AI-driven Visual Navigation (VNav) technology into drones.

The company’s standout feature lies in their core product—Black Widow.This small unmanned surveillance and reconnaissance system has won a contract from the U.S. Army's Short-Range Reconnaissance (SRR) program.

Notably, the drone industry in which Red Cat operates is rapidly evolving, particularly within the military and government applications sectors. The industry demonstrates significant market potential driven by technological innovation and growing global demand, especially for drones used in reconnaissance, surveillance, and precision strikes.

The U.S. Army’s recent Short-Range Reconnaissance (SRR) initiative represents a critical opportunity driving demand for drones. Red Cat’s Black Widow drone emerged victorious in this program, generating order demand for the company.

In addition,Red Cat also announced its formal entry into the autonomous maritime systems market, expanding its multi-domain defense systems to the maritime domain.The company integrates aerial drones with autonomous maritime platforms to produce unmanned surface vessels. In the third quarter of this year, it will manufacture a 7-meter-long 'Expeditionary Multi-Purpose Vessel' with 'greater payload capacity, extended endurance, and enhanced firepower.' These will be seamlessly interconnected with the company’s aerial unmanned platforms to collectively build a multi-domain intelligent combat system, strengthening the maritime defense manufacturing base for the U.S. and allied forces.

Civilian/commercial drones include $Ondas (ONDS.US)$ 、 $Draganfly (DPRO.US)$ 、 $ParaZero Technologies (PRZO.US)$ 、 $AgEagle Aerial Systems (UAVS.US)$ among others.

$Ondas (ONDS.US)$

Ondas Holdings specializes in 'industrial-grade wireless communication platforms,'solutions for enterprise and government customers that connect devices, sensors, and networks, covering areas like the Internet of Things (IoT), smart infrastructure, public safety, logistics, and industrial automation.

Ondas Holdings is a leading provider of private wireless data solutions, offering wireless data services through its wholly-owned subsidiary Ondas Networks Inc., and commercial drone solutions through its wholly-owned subsidiaries American Robotics, Inc. and Airobotics LTD. This segment operates as an independent business unit named Ondas Autonomous Systems.

The Ondas Autonomous Systems business unit designs, develops, and markets commercial drone solutions through Optimus System™️, Scout System™️ , and Raider™️ (collectively referred to as the 'autonomous drone platforms').

Optimus System™️ is the world's first small unmanned aircraft system (sUAS) certified by the Federal Aviation Administration (FAA), developed specifically for aerial security and data collection;whereas Iron Drone Raider™️is an anti-drone system,designed to address the growing threat posed by hostile drones.

The Optimus and Iron Drone Raider platforms are highly automated, AI-powered drone systems capable of continuous remote operation and marketed as integrated 'drone-in-a-box' security and data solutions. They are deployed in critical defense, industrial, and government applications that require security, data collection, and information processing.

Additionally, it is worth noting that,Iron Drone Raider is an advanced patented counter-drone solution,designed to protect assets from hostile drone attacks in complex environments while minimizing collateral damage. Iron Drone is a fully automated interception system that reduces human involvement, enabling more efficient, enduring, and cost-effective detection, classification, and neutralization of enemy drones, overcoming the limitations of traditional counter-drone systems.Recently, Ondas successfully completed government-led counter-drone pilot projects in Europe and Asia, paving the way for long-term homeland security deployments.

Overall, Ondas’s drone division focuses on commercial applications, particularly in industrial monitoring and network communications, including logistics distribution, energy pipeline inspections, and agricultural monitoring.As a provider of wireless data solutions, the company has strengths in long-distance communication and large-scale drone operations.

$Draganfly (DPRO.US)$

Draganfly is a pioneer in the drone industry, specializing in the design and development of advanced drone systems. The company was the first to deploy drones in life-saving missions,and developed the first quadcopter drone.

Draganfly offers a variety of drone platforms and technologies,suitable for aerial photography, film production, public safety, industrial inspections, and agricultural mapping.The company excels in engineering and R&D, with its drones equipped with advanced flight control systems, high-resolution cameras, thermal imaging technology, and automated flight modes, enabling users to capture high-quality images and data to meet a variety of professional needs.

However, earlier this year, Christopher C. Miller, the former acting U.S. Secretary of Defense during Trump’s term, joined the company's board of directors. On July 22, 2025,Draganfly also announced a strategic contract with the U.S. Department of Defense,to supply its Commander 3XL multi-rotor drone. This is an extended-endurance multi-rotor UAV specifically designed for ISR, light logistics, and advanced reconnaissance missions.

The Pentagon's selection of the Commander 3XL primarily aims to acquire autonomous tactical ISR capabilities, addressing the urgent need for frontline, real-time intelligence under the emerging "multi-domain operations" concept.

This acquisition reflects the growing importance of lightweight drones in contemporary military systems.It also highlights a deeper trend: the emergence of tactical drones as critical tools for gaining information and logistical advantages on modern battlefields.

$ParaZero Technologies (PRZO.US)$

ParaZero Technologies is an Israeli aerospace company specializing in safety systems for defense and commercial drones as well as urban air mobility aircraft.

The company primarily engages in the design, development, manufacturing, distribution, and sales of autonomous parachute safety systems for commercial drones. Additionally, it offers the SafeAir system, an intelligent parachute system that monitors unmanned aerial systems in real time during flight, identifying critical malfunctions and automatically triggering the parachute in emergency situations.

Moreover, with the proliferation and misuse of drone technology, anti-drone systems have become an urgent necessity for protecting critical assets and personnel. ParaZero's DefendAir system, featuring its unique net projectile interception technology and modular design, provides an efficient, safe, and highly adaptable solution.

Notably, the company announced on Tuesday that it had received marketing approval from Israel's Defense Export Control Agency (DECA).This will allow the integration and sale of its DropAir precision airdrop system with Steadicopter's UAV platforms.

The authorization permits both companies to promote their joint solution to customers across global commercial, defense, and humanitarian sectors.The system is designed to deliver medical supplies, tactical equipment, and humanitarian aid in complex terrains.

$AgEagle Aerial Systems (UAVS.US)$

AgEagle Aerial Systems is a globally recognized pioneer in the drone industry, offering integrated solutions for high-performance flight hardware, sensors, and software.

The company’s eBee TAC tactical mapping drone, equipped with an advanced imaging system, ensures high-precision data acquisition while supporting real-time data processing. It is widely used in precision agriculture and crop management.

AgEagle’s drone solutions span multiple industries, including agriculture, environmental protection, and sustainable development. Additionally, AgEagle has further solidified its position in the drone industry through significant partnerships. For instance, its collaboration with Agribotix leverages advanced drone technology to enhance precision agriculture, providing high-quality aerial imagery and data analysis for crop management.

The company has also partnered with the Kansas Department of Transportation to apply drone technology to infrastructure inspections and other transportation-related fields.

Another key point for investors to focus on is that, although the company primarily serves the agricultural sector,this year, its eBee TAC model obtained Blue UAS certification.This certification qualifies the company for procurement by the U.S. Department of Defense and other federal agencies, indicating that its drones meet the DoD's security and performance standards. The company's CEO believes thatthis is a transformative moment, enabling the company to provide equipment and technology required to address modern battlefield threats.

Electric Vertical Takeoff and Landing (eVTOL) aircraft include $Joby Aviation (JOBY.US)$ 、 $Archer Aviation (ACHR.US)$ 、 $Eve Holding (EVEX.US)$ 、 $EHang (EH.US)$ 、 $Vertical Aerospace (EVTL.US)$ 。

Electric Vertical Takeoff and Landing (eVTOL) aircraft combine the convenience of helicopters with the efficiency of electric propulsion, offering a convenient, fast, and environmentally friendly mode of air travel.

According to a MarketsandMarkets report, the eVTOL market size was $760 million in 2024 and is expected to reach $4.67 billion by 2030, with an annual growth rate of 35.3%. Ken Griffin, founder of Citadel Securities, holds shares in JOBY and ACHR, betting on the vast commercialization potential of the drone market.

$Joby Aviation (JOBY.US)$

Joby Aviation is a leader in the eVTOL sector,Its innovative technology and market layout have attracted a large number of investors, including Toyota.

Joby’s strategic positioning is robust. First, leveraging Toyota’s strengths in hydrogen energy, Joby brought in the manufacturing giant early on. Additionally, Uber and Delta Air Lines have also invested; Uber’s experience in on-demand dispatch management and information systems from its ground taxi operations provides crucial insights for Joby Aviation’s air taxi business. Meanwhile, Delta Air Lines’ partnership enables Joby to pioneer “home-to-airport” shuttle routes.

In other news, on August 5, it was reported that Joby Aviation will acquire Blade Air Mobility’s (Blade) passenger air transport business for up to $125 million.To accelerate the deployment of electric air taxis for commercial services.

According to Moeller's forecast,Electric aircraft from Archer and Joby are expected to receive certification from the U.S. Federal Aviation Administration (FAA) by 2026.

$Archer Aviation (ACHR.US)$

Archer Aviation was founded in 2018 and is headquartered in San Jose, California.The company aims to transform urban mobility by developing fully electric eVTOL aircraft, providing sustainable solutions for Urban Air Mobility (UAM).

Specifically, the company operates across the following three business areas:

Urban Air Mobility Solutions: Archer’s eVTOL aircraft are designed for urban air mobility, aiming to transport passengers quickly and safely across cities. The company seeks to alleviate traffic congestion and improve travel efficiency through electric air taxi services. For instance, its Midnight aircraft can complete a single flight within 10-20 minutes, replacing a car commute that would typically take 60-90 minutes.

Defense Applications Collaboration: In February 2024,Archer announced the establishment of a defense division and a collaboration with Anduril Industries to develop a hybrid-electric propulsion model based on the Midnight platform, in response to a directed solicitation from the U.S. Department of Defense.This move not only highlights the potential of its technology in civilian applications but also expands its prospects in military applications, thereby enhancing the company’s technological value and market competitiveness.

Customization services: Archer also offers customization services, allowing eVTOL aircraft to be designed and manufactured according to specific customer needs in urban air mobility, tourism, logistics, and other fields. This flexibility effectively meets diverse requirements and broadens its market coverage.

Archer Aviation announced a partnership with $Palantir (PLTR.US)$ to establish an AI foundation for the future of next-generation aviation technology.

Furthermore, Archer announced a comprehensive 'Launch Edition' commercialization plan for its Midnight aircraft. The goal of this initiative is to create a pragmatic and repeatable framework to commercially deploy the Midnight across dozens of early adopter markets before FAA type certification of the aircraft. This approach aims to allow Archer to accumulate operational expertise, generate revenue, and continue strengthening long-term demand.

$Eve Holding (EVEX.US)$

Eve Holding is a leader in the development of next-generation Urban Air Mobility (UAM) solutions and a spin-off subsidiary of Embraer.

Specifically, they design and manufacture electric vertical takeoff and landing (eVTOL) aircraft. Additionally, they provide related maintenance, support services, and Urban Air Traffic Management (UATM) systems.

In summary, Eve Holding is committed to building a comprehensive urban air mobility ecosystem, offering end-to-end solutions from aircraft development to operations and maintenance.

$EHang (EH.US)$

EHang is a global leader in urban air mobility technology and the world's first manned eVTOL company to obtain the three core 'certificates' issued by the Civil Aviation Administration of China: Type Certificate (TC), Production Certificate (PC), and Standard Airworthiness Certificate (AC). Its flagship product, the EH216-S unmanned passenger aircraft, has already begun commercial deliveries and operations. As the absolute leader in the low-altitude economy, EHang is actively expanding into aerial sightseeing, urban transportation, logistics, and emergency rescue scenarios, making it one of the very few hard-tech companies globally capable of achieving a full 'air taxi' commercial loop.

$Vertical Aerospace (EVTL.US)$

Vertical Aerospace, a UK-based eVTOL developer, recently announced the successful completion of the world's first inter-airport manned flight conducted by a full-scale, winged tilt-rotor electric vertical takeoff and landing (eVTOL) aircraft.This milestone marks a critical advancement in the practical application of the company's electric aviation technology.

Following the recent launch of its hybrid-electric model, Vertical Aerospace stated that its technology platform is ready to deliver cleaner, quieter, and more adaptable aviation solutions for various government and military use cases. This highlights the broad application prospects of eVTOLs in specialized transportation and logistics support.

However, investors should be cautious as the company’s cash burn rate is staggering, with net cash consumption reaching $100 million in 2024 and projected to increase to $110-$125 million in 2025. The $60 million financing completed in July this year is expected to cover only about six months of expenses, meaning a new round of financing must be initiated by mid-2026.

Drone software and core technologies include $Palladyne AI (PDYN.US)$ 、 $SES AI Corp (SES.US)$ 、 $Unusual Machines (UMAC.US)$ among others.

$Palladyne AI (PDYN.US)$

Palladyne AI is an artificial intelligence software developer focused on orbital space, industrial unmanned platforms, and defense applications. Last year, this robotics autonomy-focused software company announced,The Palladyne Pilot AI software platform supports third-party drone identification, prioritization, and automatic tracking of Earth-based targets.

In 2024, Palladyne AI announced the successful maiden flight of a third-party small drone capable of identifying and prioritizing ground targets of interest, then interfacing with the drone’s autopilot software to autonomously track priority targets.

Denis Garagic, Chief Technology Officer of Palladyne AI, emphasized that the company’s first automated flight using Palladyne Pilot successfully demonstrated target tracking capabilities, proving the effectiveness of its AI platform.

$SES AI Corp (SES.US)$

SES AI is a pre-commercialization company specializing in the development and production of high-performance rechargeable lithium metal battery technology for applications such as electric vehicles and urban air mobility.

In mid-September last year, SES AI announced a groundbreaking initiative on its official website aimed at accelerating material discovery in the electric mobility sector. SES AI stated, 'By leveraging cutting-edge supercomputers optimized for artificial intelligence to map the small molecule universe, this pioneering project aims to revolutionize the understanding of battery chemistry, enhance energy storage solutions, and advance energy-efficient technologies. The program will utilize Crusoe’s innovative and purpose-built AI cloud platform, powered by NVIDIA and Supermicro, showcasing a unique collaboration at the intersection of science, computing, and sustainable technology.'

In June this year, SES AI indicated that it would no longer produce batteries for electric vehicles but instead focus on lithium metal batteries for aerial applications such as drones and urban air mobility (UAM). The company has already secured drone customers.

$Unusual Machines (UMAC.US)$

Unusual Machines primarily provides Drone-to-Cloud rendering data center solutions for drones — integrating GPU cloud rendering with real-time drone filming for applications in film production, real-time simulation, and gaming development. It is a provider of unmanned aerial vehicle data center (UDC) solutions tailored for cloud rendering.

The business model combines hardware with cloud service subscription, targeting creative industries and military training simulation users. Previously, Donald John Trump Jr., son of former President Donald Trump, became an advisor to Unusual Machines.

Summary

In fact, from a broader perspective, the rise of drones and aerial mobility represents a revolution in humanity's use of spatial dimensions, driven by AI technology. Just as cars reshaped the value of land space, drones and the low-altitude economy will unlock the potential of the skies, creating a dual spatial utilization pattern of 'ground + air' and injecting new momentum into global economic growth.

Fellow investors may also refer to previous articles in the 2026 outlook series.

2026 Outlook | Where Will the US Stock Market Go Next Year? A New Script Has Emerged: Major Rotation Among Fed Voters, Midterm Elections... These Major Events Will Impact Your Wallet.

2026 Outlook | Is a "selective" bull market on the horizon? JPMorgan provides a 2026 US stock "game plan," highlighting 55 companies to watch!

2026 Outlook | Wedbush's Top Ten Tech Predictions Revealed! Tesla Targeting $800, NEBIUS Potentially Acquired, Oracle Set for a Comeback...

2026 Outlook | Wall Street's "Treasure Map" of chip stocks revealed! NVIDIA, Broadcom top the charts—what are the potential dark horses?

2026 Outlook | Don't Just Focus on NVIDIA! The Optical Communications Industry Could Become the Strongest Growth Sector by 2026—What Opportunities Should Investors Watch?

2026 Outlook | Nomura, JPMorgan, and other investment banks unanimously predict: The storage industry is expected to enter a supercycle by 2026! Which investment opportunities should be closely watched?

2026 Outlook | The New Battleground for US-China Rivalry! The Robotics Industry May Face a "Commercialization Test," Which Core Companies Has Morgan Stanley Highlighted?

2026 Outlook | Musk, Huang Renxun Issue Collective Warning! Power Shortages Spark New Investment Opportunities; Here's a List of Power 'Goldmines' to Watch

2026 Outlook | Space industry poised for a breakout year! Beyond SpaceX, this "list of key players" is worth bookmarking early.

2026 Outlook | Has autonomous driving reached the eve of an explosion? NVIDIA's model ignites market enthusiasm, five core opportunities worth watching!

2026 Outlook | Minerals in Focus During Trump 2.0 Era! CRML, a rare earth concept stock, has doubled in price this year—what opportunities in Hong Kong and US stock markets should investors keep an eye on?