In this article, we will take a look at the 6 Best Small-Cap Drone Stocks to Invest In.
The drone market in the U.S. has seen major developments, including some key legislative measures and executive directives. This is leading to an increase in investment and capital flow in the drone market. The directives include reshaping the procurement and manufacturing environment for drone companies and creating opportunities for local manufacturers.
READ ALSO: Grok Stock Advice: Top 12 Stock Recommendations and 10 Best Affordable AI Stocks to Buy
On June 6, the U.S. government issued an executive order, “Unleashing American Drone Dominance,” which prioritises the use of U.S.-made drones by all federal agencies. By increasing local production, it will arm combat units with a variety of low-cost American-crafted drones, leveraging world-leading engineers and AI experts.
Whereas, the recent DoD Procurement Directive will speed up purchase timelines and expand budgets, allowing military branches to rapidly deploy domestically manufactured drones. On top of that, the FY2025 National Defense Authorization Act (NDAA), tariffs, and grants are creating more opportunities for local manufacturers.
According to memos obtained by Fox News, the U.S. Secretary of Defense ordered fast-track drone production and deployment. The U.S. government is focused on increasing production to outpace Russia and China in unmanned warfare. Defense Secretary Pete Hegseth noted, “The Department’s bureaucratic gloves are coming off. Lethality will not be hindered by self-imposed restrictions… Our major risk is risk-avoidance.”
Hegseth also stated that small UAS are cheap, rapidly replaceable, and categorized as consumables. The government expects small drones to be fully integrated into combat training by 2026 and achieve domain dominance by 2027.
According to Fortune Business Insights, the military drone market size is projected to grow from $16.07 billion in 2024 to $47.16 billion by 2032, growing at a compound annual growth rate (CAGR) of $13.15%. Whereas, the global commercial drone market is expected to grow from $17.34 billion in 2025 to $65.25 billion in 2032, indicating a CAGR of 20.8%.
With these industry shifts in mind, let’s turn to the 6 Best Small-Cap Drone Stocks to Invest In.
A military drone hovering in the sky, demonstrating the AI capabilities of the company.
Our Methodology
To compile the list of 6 small-cap drone stocks to invest in, we shortlisted companies involved in drones with a market capitalization under $2 billion. We then ranked these best small-cap drone stocks in the ascending order of upside potential. We took the data for the upside potential from CNN. We also mentioned the number of hedge funds holding stakes in these stocks, and the data for hedge funds is taken from Insider Monkey’s Hedge Fund database, updated as of Q1 2025.
Note: The data was recorded on August 9.
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).
6 Best Small-Cap Drone Stocks to Invest In
6. Draganfly Inc. (NASDAQ:DPRO)
Market Capitalization: $93.48 Million
Analyst Upside: 30.65%
Number of Hedge Fund Holders: –
Draganfly Inc. (NASDAQ:DPRO) is one of the best small-cap drone stocks to invest in. On July 30, Draganfly Inc. (NASDAQ:DPRO) reported that it has sold its Heavy Lift Drones to a Fortune 50 telecommunications company.
After extensive testing, Draganfly completed the sale of its Heavy-Lift Drones to a Fortune 50 telecom firm for UAV-based emergency response and emergency communication capabilities. The company has sold its drones in partnership with Infinity Communications. The Heavy Lift drones will be deployed in disaster recovery operations to transport essential supplies and provide communications.
“Thanks to our work along with Draganfly, our Fortune 50 Customer will be able to benefit from the vital role UAV technology and automation can play in disaster response. By integrating Draganfly’s Heavy Lift drones into our deployment strategy, we demonstrated rapid, reliable delivery of life-saving equipment and swift restoration of communications in the most challenging conditions,” said Chris Coltrain, National Disaster Recovery Director at Infinity Communications.
Draganfly’s Heavy Lift drones are equipped with different remote sensors along with logistics and communications payloads. These capabilities make Heavy Lift drones an ideal tool for delivering critical supplies and restoring connectivity in areas affected by storms, infrastructure failure, or other emergencies.
Draganfly Inc. (NASDAQ:DPRO) is a leading drone solution and software provider that is transforming industries and serving stakeholders globally.
5. EHang Holdings Limited (NASDAQ:EH)
Market Capitalization: $1.28 Billion
Analyst Upside: 48.33%
Number of Hedge Fund Holders: 16
EHang Holdings Limited (NASDAQ:EH) is one of the best small-cap drone stocks to invest in. On August 1, EHang Holdings Limited (NASDAQ:EH) reported that its VT20 series logistics UAV has completed an intercity round-trip cargo delivery flight between Zhuhai and Guangzhou.
In a notable achievement, EHang’s VT20 series completed the cargo flight route in the Guangdong-Hong Kong-Macao Greater Bay Area. The one-way flight covered 83 km and took over 45 minutes to deliver the cargo. This development significantly improves logistics efficiency, saving up to 40 minutes between Zhuhai and Guangzhou compared to road transport.
“Our vision is to develop the Tangjiagang Port Model, the Wanshan Blueprint, and the Marine Demonstration Zone as benchmarks of China’s low-altitude economy—leveraging aerial innovation to create new productive forces for the blue economy,” Wei Liu, Senior Director at EHang.
Wanyi Tianxia Aviation operates the flight route between Zhuhai and Guangzhou, which is a joint venture by EHang, Zhuhai Wanshan Development Group, and Feixing Tianxia Technology. The strategic collaboration is to support UAV projects across the Wanshan Archipelago to build a ‘Tangjiagang Port Mode’ for the low-altitude economy.
EHang Holdings Limited (NASDAQ:EH) operates as an urban air mobility technology platform company. EHang designs, develops, manufactures, and operates UAVs, along with supporting systems and infrastructure for different industries and applications.
