This article looks at the 11 Best Military Drone Stocks to Buy According to Hedge Funds.
Demand for next-generation, low-cost military technology has surged in recent times as countries modernize their militaries with AI-powered drones and unmanned vehicles that are cheap and cut dependence on ground forces.
Swarms of UAVs, guided by AI, now fill the skies and can strike enemy targets with pinpoint accuracy. These aerial vehicles offer a bird’s eye view of the battlefield, making it difficult for targets to move and hide from the conflict zone.
The NYSE Arca Defense Index has returned 45% YTD, as of the close on October 3, comfortably outpacing the broader market, which has gained 14% during the period. Mid-to-small cap firms have been the major gainers on the index, with drone makers leading the pack.
Much work is also going into guarding against the threats posed by UAVs. Last week, the Defense Innovation Unit (DIU) selected Zone 5 Technologies and Anduril Industries to develop prototype solutions to intercept and neutralize larger, adversarial drones.
With that said, let’s now head over to the list of the best drone stocks to invest in.
Palmer Luckey of Anduril
Methodology
We sampled stocks from ETFs with exposure to military drones and our previous articles on the subject. Both pure-play military drone makers and defense contractors with drone programs were included in our pool. From there, we selected the 11 stocks with the highest number of hedge fund investors, based on Insider Monkey’s database of 983 prominent hedge funds as of Q2 2025. Where stocks were tied on hedge fund sentiment, we used the higher market cap value as a tie-breaker between them.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
11 Best Military Drone Stocks to Buy According to Hedge Funds:
11. Redwire Corporation (NYSE:RDW)
Number of Hedge Fund Holders: 22
Redwire Corporation (NYSE:RDW) is among the 11 Best Military Drone Stocks to Buy According to Hedge Funds. The company was recently awarded a contract by Axiom Space to build and deliver roll-out solar array wings for Axiom Station’s Payload Power Thermal Module (AxPPTM).
Under the assembly sequence, Axiom intends to attach its AxPPTM to the International Space Station (ISS) as the first module, followed by Habitat 1 (AxH1), an airlock, Habitat 2 (AxH2), and the Research and Manufacturing Facility (AxRMF). After the launch and berthing of the AxPPTM to the ISS, the module will separate and rendezvous with AxH1 in orbit, leading to independent operational capability for the Axiom Station.
This approach will allow the two-module station to turn into a free-flyer by 2028 and an independent four-module station by 2030, making sure that American human presence in LEO continues after the ISS retires.
Redwire Corporation (NYSE:RDW)’s roll-out solar array technology has a success rate of 100% when it comes to on-orbit performance. It is being used on several commercial and civil missions, including the ISS, NASA’s DART mission, and Thales Alenia Space’s Space Inspire satellites.
While commenting on the contract, Axiom’s CEO Tejpaul Bhatia said that Redwire Corporation (NYSE:RDW)’s expertise in developing advanced spacecraft technology will aid the station’s global customers in research, innovations, discoveries, and scaling, which would benefit humanity.
10. Textron Inc. (NYSE:TXT)
Number of Hedge Fund Holders: 29
Textron Inc. (NYSE:TXT) is among the 11 Best Military Drone Stocks to Buy According to Hedge Funds. On September 22, the company announced that Textron Systems Corporation had delivered the XM204 Top Attack Munition to the Army in aid of U.S. Army Europe operations.
The anti-vehicle terrain shaping system’s delivery came under the current XM204 LRIP contract, and follows the completion of the U.S. Army-led First Article testing in April this year, certifying the system for delivery to the Army and its allies. The program is being managed by the JPEO A&A, PM CCS, and PdM TSO.
The certification verified XM204’s self-destruct and target engagement technologies and ensured Textron Inc. (NYSE:TXT)’s readiness to fulfill military orders both at home and for American allies looking for counter-mobility capability.
The XM204 offers top attack and standoff capabilities. It is designed to aid in terrain shaping operations by supporting various counter mobility tasks like blocking, disrupting, and turning an enemy force. According to Textron Inc. (NYSE:TXT), the anti-vehicle munition is also highly portable and quickly emplaced. Moreover, it can be employed alone, in tandem, or in multiples with other terrain shaping systems.
