“Investors looking for the next big wave in the defense and tech markets are finding that timing is of the essence,” it added. “To miss out on the early action of a breakout sector can mean missing out on triple-digit profits. Now, the drone market finds itself at such an inflection point, and it appears to be rewarding those who are positioning early,” it said.
“You can’t go anywhere near drones that say what area is going to be the winner in terms of growth rates” in anything from analyzing the Ukraine battlefield to delivering Amazon orders, Greg King, the CEO of the Rex Drone ETF, told the Fox Business Network. “But it should be an 8- to 10% growth rate, and it needs to get to $60 billion in sales by the year 2030.” Hedge funds are lining up to invest, and the 35% year-to-date performance of the NYSE Arca Defense Index makes it clear that this industry is on fire. Here are the top drone stocks that are backed by hedge funds and have huge upside potential.
1. RTX Corporation – Extending Missile and UAV Capabilities
RTXCorp (NYSE:RTX) capitalizes on diversity in the aerospace industry and concentrates on drone-related products in the defense segment. In drone-related news, “Raytheon Rafael Protection Systems,” its joint venture, began on January 21st and received an order of $1.25 billion for additional “Tamir” missiles for Iron Dome. There is also increased capacity within this latest factory for Iron Dome and SkyHunter for the US Marine Corps in East Camden, Arkansas.
Positive earnings surprises in Q3 2025 push analysts’ target prices higher to $193.79, indicating an upside potential of 11.89%. It is adequately prepared for the development of unmanned aerial systems and integration within the broader frameworks of each segment of the wider sectors of the industry for aircraft and missile systems due to business diversity within its segments of Collins Aerospace and Pratt & Whitney, and within the segment of Raytheon. Over 60% of analysts recommend it as those to Buy or better.
2. Lockheed Martin – Global Air Defense and Drone Technology Integration
Lockheed Martin Corp. (NYSE: LMT) is still at the forefront of the integration of “heritage and emerging” unmanned systems. In November 2025, it partnered with another company in Germany, Diehl Defence, to integrate IRIS-T missiles within the Aegis Weapon System, the first missile of any kind from Europe integrated into such a weapon system. It comes after another supply chain expansion in October for Patriot PAC-3 missiles.
Lockheed gathered 8.8% of its earnings in the period of Q3 2025, and its net earnings also increased an additional 2.2%. Lockheed has some orders in relation to its Sikorsky FIREHAWK Helicopters and its ventures in quantum computing and artificial intelligence that are pulling it towards the development of defenses for drones within the network in the future. Lockheed also holds an upside of 16.30% of its positions in 68 hedge funds.
3. AeroVironment – Tactical Drone Specialist
AeroVironment (NASDAQ:AVAV) is an integral part of the battlefield and has small tactical UAVs operating in Ukraine. AeroVironment products are well capable of offering reconnaissance, targeting, and precision strike at very affordable costs.
The company is reaping the benefits of the double-digit CAGR of the military drones market, which is expected to be 29.8 billion in 2030. AeroVironment is making use of artificial intelligence and autonomy in ISR, and their stock has increased fourfold since February of 2022.
4. Northrop Grumman: High-End UAV Platforms
Northrop Grumman (NYSE: NOC), known for its large drones like its high-altitude and endurance ISR drones, is operating in sync with the rising need for multi-domain and artificial intelligence-based surveillance systems.
“With the level of international tension playing such an important role in spending on procurement, Northrop is in an optimal position in their drone-related programs in terms of contract length and export potential.” Specific business diversity and balance sheets for Northrop put Northrop in an optimal investment position for those looking for a stable and fast-growing investment in drone-related markets.
5. General Atomics: Pioneers in the MALE Drone Segment
Even to this present day, in the minds of many people around the world, the brand General Atomics is synonymous in the first place with medium-altitude, long-endurance unmanned aerial vehicles such as the MQ-9 Reaper series.
Being privately-owned and having considerable business coming in through the form of contracts for the pubic suppliers and partners, the dominance in the marketplace that General Atomics poses has implications for the ecosystem and benefits suppliers of the components and systems that are part of their supply chains.
6. Kratos Defense & Security: Tactical UAVs at an Affordable Price
Kratos (KTOS) deals in Pgms-cost-effective tactical drones such as target drones and unmanned combat aerial vehicles. Kratos’ products are of interest to the military in terms of scalability.
Kratos invests in drone swarming technologies, which constitutes another area of functionality that is of the highest significance in the future. Being involved in hedge funds and developmental programs makes it poised for upside due to budget preferences for unmanned systems.
7. Elbit Systems – International Drone Expansion
Elbit Systems (ESLT), an Israel-based company that specializes in the production of aerial drones, develops several types of drones for use in the areas of ISR, target designation, and logistics. International demand for their drones has led to increased international sales of their drones.
“Elbit Systems’ combination of secure communications and autonomy, based on artificial intelligence, increases the level of competitiveness and preparedness for possible operating scenarios.” “With ever more countries seeking independence from hostile supply chains, the diversity of markets that Elbit”
8. BAE Systems
Connecting Defense Platforms and UAVs BAE Systems (OTC:BAESY), on the other hand, uses the knowledge of its platform in the defense industry for the integration of UAVs in its systems. BAE Systems’ rotary and fixed-wing drones are meant for homeland and defense security. International networking and collaboration of BAE Systems, like in the case of counter-drone systems, give it the potential to leverage the investments made in multi-layer air defenses in different nations.
9. Anduril Industries AI-Driven autonomy
Anduril is privately funded and is also redesigning the use of drones in the aspect of autonomy and sensor fusion derived from artificial intelligence. Wholesale investors can invest in Anduril through suppliers and partners contracted in line with Anduril’s business. Fast growth reveals that the use of network drones that are independent is on the rise.
10. Tekever – The Leading Commercial and Defense
UAV in Europe Tekever, operating in Portugal, became a unicorn in 2025 because of the rising requirement for maritime surveillance and ISR drones. Expansion of facilities includes additional operating sites in the UK, in answer to the requirement of both NATO and the EU. That Tekever functions in the sectors of both defense and business, such as environmental surveillance, reveals that it has several sources of income. In addition, the evaluation of values reveals that drone businesses, which are scalable, are of infinite interest. “The convergence of Defense urgency, Commercial viability, and AI integration is propelling the development of drones at an ever-accelerating pace.
Hedge funds are taking massive positions in drones, and analysts are calling for double-digit returns in many of them. Here are ten stocks that illustrate the diversity of appealing investment opportunities: “For individual investors and semi-investors, the investment opportunity is in finding the optimal balance between playing the established leaders in defense stocks and nimble leaders in drones before the markets can take wings.”
