An updated edition of the May 27, 2026 article.
The global drone technology market is entering a new phase of accelerated adoption, driven by technology advancements and expanding usage in commercial applications.
The embedding of AI has made modern drones 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 improved real-time data transmission, expanding commercial applications.
Consequently, drones are now becoming indispensable across various industries. Drones have become integral to various sectors like mining, infrastructure monitoring, real estate, oil and gas exploration, and even filmmaking. From aerial photography and agricultural mapping to data collection and operations across sectors, drones are transforming how businesses operate. Drones are gaining momentum in last-mile delivery operations as companies look to cut operational costs and enhance productivity.
Retail behemoths like Walmart and Amazon are increasingly deploying drones in logistics. Amazon uses drone delivery to deliver one package (up to five pounds) in less than an hour during daylight hours. Meanwhile, public safety and disaster response sectors are using drones for surveillance and search-and-rescue missions. The usage of drone swarms is being extensively explored for tasks like large-area surveillance and search-and-rescue.
Still, the defense segment continues to serve as the key growth engine. The growing geopolitical strains and defense upgrades are driving increased drone adoption worldwide. Globally, drones are now being widely deployed for border security, precision strikes, intelligence, surveillance, and reconnaissance (“ISR”) and other tactical operations, making them indispensable assets in modern warfare.
With regulatory frameworks evolving and military and commercial adoption gaining pace, the drone sector has a long runway for growth. The drone market is expected to witness a CAGR of 9.34% from 2026 to 2031, according to a report from Mordor Intelligence.
If you are looking to capitalize on this trend, our Drone Technology Screen makes it easy to identify high-potential stocks, such as Red Cat Holdings RCAT, RTX Corporation RTX and Ondas Inc ONDS.
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Red Cat Holdings specializes in robotic hardware-software integration for applications for military and commercial uses. Teal Drones and FlightWave Aerospace are two of its wholly-owned affiliates. Its portfolio also includes Black Widow (small, unmanned aircraft systems), TRICHON (a hybrid VTOL) and FANG, an NDAA-compliant FPV drone. It recently introduced Hellcat, a dual-use small unmanned aircraft system based on the Black Widow platform.
On the last earnings call, management highlighted that the Defense Autonomous Warfare Group is expected to allocate $54 billion (which could reach as much as $74 billion) toward drones, drone dominance and counter-drone systems starting in 2027, with funding visibility beginning within months. Additionally, a $156 billion defense reconciliation bill for 2025 is now being rapidly deployed in 2026, with only $30 billion obligated as of April, implying a significant ramp in spending over the near term. This creates a powerful demand tailwind for RCAT’s portfolio.
Given these, the company expects $150-$180 million in annual revenues in the near to medium term. The gross margins are expected to approach 30% over time. Red Cat delivered $15.5 million in revenues in the first quarter, marking an 849% year-over-year increase.
Earlier this month, RCAT announced that Teal Drones has moved to Gauntlet II of the Drone Dominance Program.
RCAT’s expansion into USVs via Blue Ops adds a significant new revenue stream with an expected $150 million sales potential in 2026. It recently acquired Quaze Technologies Inc, which specializes in wireless power transfer technology for unmanned and autonomous systems. RCAT carries a Zacks Rank #2 (Buy) at present.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
RTX Corporation is a major aerospace and defense player and represents a more diversified way to enhance exposure to the drone technology space. The company delivers advanced systems and services for commercial, military, and government clients through its Collins Aerospace (Collins), Pratt & Whitney and Raytheon business segments.
Its exposure to the drone market is primarily driven by its strength in counter-drone systems. On the last earnings call, RTX emphasized that the current geopolitical landscape is driving increased demand for munitions, integrated air and missile defense technology, and advanced capabilities to deal with threats. Management highlighted the increasing demand for its Coyote counter-UAS system.
It has demonstrated a non-kinetic version of the Coyote, which reflects the industry’s shift toward more cost-effective and reusable systems. Unlike traditional interceptors, this version can complete a mission, return, be recharged, and redeployed, making it well-suited for sustained operations.
The company noted strong global interest, including a recently approved Coyote system deal with the UAE, underscoring the export potential of its C-UAS portfolio. RTX currently carries a Zacks Rank #2.
Ondas is rapidly scaling its Ondas Autonomous Systems (“OAS”) business, which has quickly become a multi-domain autonomy platform spanning ISR, C-UAS, loitering munitions/strike systems, unmanned ground vehicles and stratospheric sensing via World View acquisition.
The company has accomplished this broad portfolio through focused M&A activity. The company recently announced the acquisition of DZYNE Technologies for $875.8 million. DZYNE will expand ONDS’ reach across c-UAS, multi-domain ISR, precision strike and mission intelligence and autonomous systems. Both World View and DZYNE will operate within the company’s newly launched business division, Ondas Sentinel.
Following this development, Ondas now expects 2026 revenue to be at least $525 million from the previous forecast of $390 million. The increase also reflects contributions from Omnisys. DZYNE is expected to contribute approximately $191 million in revenue in 2026 and more than $300 million in 2027.
In June 2026, ONDS announced the $125 million acquisition of Cyberhawk, a provider of drone-based infrastructure inspection and AI-powered asset intelligence.
Beyond these acquisitions, the company had completed five acquisitions (World View, INDO Earth, Rotron Aerospace, Bird Aero and Mistral Inc) alone in the first quarter of 2026. In the past year, it has acquired Sentrycs, Apeiro Motion and Zickel, among others. Ondas now operates in more than 45 countries with over 1,000 employees globally.
However, extensive M&A amplifies risks, as so many acquisitions in such a short period can create integration overload and execution risks, as achieving targets depends on timely integration and conversion of backlog into revenues. ONDS carries a Zacks Rank #3 (Hold) at present.
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