Once considered science fiction, Drone technology has fast transformed from a niche military application to a disruptive force across various industries. Drones, also known as unmanned aerial vehicles (UAVs), are now used widely in sectors like agriculture and logistics, transforming how businesses operate, offering real-time data collection, aerial surveillance and even autonomous delivery.
With the embedding of cutting-edge tech like AI, modern drones are 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 further improved real-time data transmission, expanding commercial applications.
Drones are increasingly being used in farming to detect and monitor crops and improve irrigation, whereas in the construction/ infrastructure vertical, it is deployed for checking bridges, pipelines and energy grids, in site surveys and 3D-mapping of terrain. Within logistics, drones are being tested and used for last-mile deliveries to enhance operational efficiency, especially in remote/ congested urban areas.
The growing demand for drone-enabled solutions in these industries has benefited companies like Draganfly, Inc DPRO and Ondas Holdings Inc. ONDS. DPRO’s commercial drones are used widely across agriculture, energy, logistics, and infrastructure and public safety. On the other hand, Ondas Holdings designs, develops, and markets commercial drone solutions for critical industrial and government applications through its Ondas Autonomous Systems business division.
The drone technology industry is a fast-growing industry, but it remains highly fragmented. Overall, 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, whereas the commercial drone market is expected to witness a CAGR of 20.8% from 2025 to 2032, as per the Fortune Business Insights report. Higher adoption of small UAVs for a variety of commercial applications is expected to drive growth for the commercial drone market, according to the Fortune Business Insights report.
If you're looking to capitalize on this trend, our Drone Technology Screen makes it easy to identify high-potential stocks such as Red Cat Holdings, Inc. RCAT, Kratos Defense & Security Solutions, Inc. KTOS and Draganfly.
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Red Cat Holdings specializes in robotic hardware-software integration for applications for both military and commercial uses. Teal Drones and FlightWave Aerospace are two of its wholly-owned affiliates. The FlightWave Aerospace acquisition (concluded in September 2024) augmented RCAT’s portfolio by adding Edge 130 drones. Edge 130 is FlightWave’s Blue UAS-approved military-grade tri-copter.
The collaboration with Palantir also bodes well for RCAT. It is working with Palantir to integrate PLTR’s Visual Navigation software (VNav) into its Black Widow drones. Black Widow is a portable sUAS designed for electronic Warfare environments and belongs to RCAT’s Arachnid unmanned intelligence, surveillance, and reconnaissance and precision lethal strike systems. Leveraging Palantir’s Visual Navigation will improve autonomous sUAS operations for modern warfare in GPS-contested environments. Red Cat also boasts a ground control station - WEB (Warfighter Electronic Bridge), to operate the ARACHNID family of systems for military operations.
This Zacks Rank #2 (Buy) company’s focus on international expansion is another tailwind. It is marketing its Black Widow and Edge 130 drones to various new international markets, such as the Asia Pacific, Middle East, and Latin America. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Kratos Defense & Security Solutions offers high-performance, jet-powered, unmanned aerial target drone systems, which are designed to replicate state-of-the-art adversarial fighter aircraft, missiles and other threats. Kratos Defense boasts 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.
The XQ-58A Valkyrie, a stealthy unmanned combat aerial vehicle, is one of KTOS’ significant drone innovations. It is a high-performance, low- cost tactical UAV designed for the U.S. Air Force and its allies. Valkyrie is capable of long-range flights at high-subsonic speeds. Owing to its maneuverability and capacity to carry flexible mission kit configurations and lethal weapons from its internal bomb bay and wing stations, it can serve as a loyal wingman.
Kratos is the primary provider of jet-target drone systems to the U.S. Navy with BQM-177 systems. It provides the U.S. Air Force with the BQM-167 and the U.S. Army with the MQM-178 systems. In March 2025, KTOS secured a $59.3 million contract for the production of an additional 70 BQM-177A Subsonic Aerial Target (SSAT) aircraft. The award has been provided by the Naval Air Systems Command, Patuxent River, MD. This contract is part of a bigger contract valued at $227.6 million. The BQM-177A is the U.S. Navy’s next-generation SSAT, designed to simulate advanced missile threats. With the company being the sole source provider of the BQM-177A to the U.S. Navy, such contract wins reflect the solid demand that Kratos enjoys in the unmanned aerial market. This Zacks Rank #3 (Hold) company currently has a contract with a U.S. government agency for a next-generation target drone or 5GAT.
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. Last September, it launched its APEX Drone. The cutting-edge drone designed for portability, dual payload capabilities and edge computing powered by NVIDIA’s chips positions Draganfly for significant growth across commercial and military markets.
DPRO also launched its NDAA-compliant FlexForce FPV first-person viewer drone in the fourth quarter of 2024. Strategic partnerships and government contracts have played a crucial role in Draganfly's growth. The integrations like the HellHive swarming technology and Commander 3XL along with drone-in-a-box solutions for logistics and continuous missions, underscores its improving market position.
By leveraging AI, machine learning, and cutting-edge hardware, this Zacks Rank #3 stock aims to solidify its position as a key player in the global drone ecosystem, offering both turnkey drone systems and custom solutions tailored to evolving industry needs.
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