This article looks at the 8 Best Drone Stocks to Buy for the Next 3 Years.
Swarms of AI-powered drones and loitering munitions have filled the skies of the Middle East, as the Iran-US-Israeli war crosses 15 days and spreads to countries in the Gulf Cooperation Council.
Drones proved their mettle in the Russia-Ukraine war and were also a prominent feature in the conflict between Azerbaijan and Armenia previously, and involving India and Pakistan last year.
As a result, the last few years have seen a surge in demand for them, as militaries increasingly adopt this technology, which not only strikes enemy targets with pinpoint accuracy but is also affordable and reduces dependence on ground forces.
According to a report on CNBC late last month, Oppenheimer has forecast that the addressable market for drones will be worth around $400 billion over the next decade. The firm described drones as the fastest-growing investment opportunity in ‘physical’ artificial intelligence.
Moreover, analysts at Oppenheimer noted the growth in global defense markets over the past few years amid an increasing number of geopolitical conflicts. They believe drones are a major driver of this growth, adding that the technology could also impact other commercial technologies.
In a note to investors on Thursday, the analysts further argued that the market will, in the future, revolve around unmanned drones, autonomous systems, and robots, and that these will shape how several institutions function. They were quoted as saying the following by CNBC:
“AI is driving an infrastructure and soon a manufacturing boom as well as dozens of Physical AI use cases (Waymo), with drones the fastest-growing. Whoever wins the drone swarm arms race will win the war. This requires new mobile edge compute/network/blockchain technology, a natural evolution from the internet and cloud which will be commercialized.”
With that said, let’s now head over and see some of the best drone stocks to buy for the next 3 years.
Methodology
We reviewed ETFs with drone-themed exposure and our previous articles on the subject to build a stock universe. The list was narrowed to include only stocks with an expected earnings-per-share growth rate of 10% or more over the next five years, as of the close on March 13. We then shortlisted the top 8 companies that had the highest number of hedge fund investors having a stake in them, based on Insider Monkey’s database of prominent hedge funds as of Q4 2025.
Finally, we ranked them in ascending order based on the number of hedge funds holding positions. When two or more stocks were tied in hedge fund sentiment, we used market cap as a tiebreaker.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
8 Best Drone Stocks to Buy for the Next 3 Years
8. AeroVironment, Inc. (NASDAQ:AVAV)
Number of Hedge Fund Holders: 40
AeroVironment, Inc. (NASDAQ:AVAV) is among the 8 Best Drone Stocks to Buy for the Next 3 Years. On March 12, BTIG analyst Andre Madrid slashed the firm’s price target on the stock to $330 from $415, while maintaining a Buy rating.
The adjustment followed the company’s Q3 2026 financial results earlier in the week, which missed Wall Street’s expectations for both revenue and profit. The drone maker announced diluted earnings per share of $0.64 from a quarterly revenue of $408 million, against forecasts of $0.68 cents over $476 million.
AeroVironment, Inc.’s unfunded backlog at the end of the quarter totalled $3 billion, which included $1.4 billion tied to the U.S. Space Force’s Satellite Communications Augmentation Resource (SCAR) program, which is ‘no longer expected to be awarded,’ said the company.
While the development has left investors concerned, BTIG believes the share price slump following the quarterly results stemmed more from the company’s weak performance in the Cyber & Mission Systems segment than from the SCAR termination. The firm also believes BlueHalo’s assets are taking a toll on AeroVironment, Inc.’s (NASDAQ:AVAV) margins.
In other news, on the same day, Canaccord Genuity also lowered its price target to $300 from $330, citing the Space Force’s SCAR contract termination. The firm kept its Buy rating. As of the close on March 13, the drone maker is a Strong Buy with an average upside of 49%.
AeroVironment, Inc. designs and manufactures unmanned aerial vehicles, ground robot systems, and loitering munition systems.
7. Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS)
Number of Hedge Fund Holders: 41
Kratos Defense & Security Solutions, Inc. is among the 8 Best Drone Stocks to Buy for the Next 3 Years. On March 3, the defense company announced it had secured a $7 million production contract for a counter-unmanned aerial system to identify, track, and classify aerial threats.
While no further details were provided in the press release for security considerations, Kratos said this was part of a long-term contract for counter-unmanned aerial system production. Work on the project will be performed in an unnamed secured manufacturing facility of the company.
In other news, Kratos Defense & Security Solutions, Inc. continues to remain on analysts’ radar and sports a Strong Buy rating. As of the close of business on March 13, it has an average upside potential of 34% in its share price.
On Friday, Canaccord Genuity maintained a Buy rating on the stock with a price target of $125, reaffirming its earlier revision on February 24, when it lifted the price target from $120 after the company beat estimates for Q4 and provided upbeat guidance for fiscal 2026.
Kratos Defense & Security Solutions, Inc. develops and fields transformative, affordable products and platforms to meet national security needs.
6. Textron Inc. (NYSE:TXT)
Number of Hedge Fund Holders: 44
Textron Inc. (NYSE:TXT) is among the 8 Best Drone Stocks to Buy for the Next 3 Years. On March 12, the company said that the National Transmission Company South Africa (NTCSA) had signed a purchase agreement for seven Bell 407GXis.
The announcement came during the VAI Verticon 2026. The helicopters are expected to be used for utility operations, especially related to the African country’s national electricity transmission.
The aviation conference also saw California’s Pasadena Police Department issuing a purchase order for two Bell 505 helicopters a day earlier. These will be used for public safety operations.
In other news, Textron Inc. was recently listed among the best aerospace dividend stocks to buy by Insider Monkey.
Late last month, the company declared a quarterly dividend of $0.02 per share on common stock, with the payment scheduled for April 1.
As of the close of business on March 13, Wall Street analysts have a Hold rating for the stock with a one-year average share price target of $99.56, representing an upside of 9.35%.
Textron Inc. manufactures products for consumers across several industries, through its six business segments: Bell, Textron Aviation, Textron eAviation, Textron Systems, Industrial, and Finance.
5. L3Harris Technologies, Inc. (NYSE:LHX)
Number of Hedge Fund Holders: 48
L3Harris Technologies, Inc. (NYSE:LHX) is among the 8 Best Drone Stocks to Buy for the Next 3 Years. The company’s shares have surged over 22% year-to-date and are in focus as the Middle East conflict intensifies.
While talking to Yahoo Finance on March 13, Hennion & Walsh CIO Kevin Mahn mentioned that L3Harris’ missiles and missile protection were widely being used in the Iran war. He noted that the stock had a dividend yield of about 1.3% and was trading at about 30 times the forward earnings, which suggests it was neither cheap nor too expensive.
Last week, Trump met with leaders of several defense contractors, including L3Harris Technologies, Inc., to discuss an increase in production of what the U.S. president described as ‘Exquisite Class’ weaponry.
According to a report on CNBC this Friday, Citigroup analyst John Godyn reiterated the firm’s bullish outlook on companies that deal with mission-critical defense systems. He sees a strong long-term investing case for these stocks, which include L3Harris, Karman Holdings, and RTX Corp, even as the frequency of Iranian attacks slows down.
As of the close on March 13, LHX is a Strong Buy with an average share price upside potential of 10.49%.
L3Harris Technologies, Inc. provides end-to-end technology solutions that connect the air, land, space, sea, and cyber domains for national security.
4. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 59
Lockheed Martin Corporation (NYSE:LMT) is among the 8 Best Drone Stocks to Buy for the Next 3 Years. On March 12, the Department of War (DOW) announced that the company was awarded a contract worth $111.5 million by the Naval Air Systems Command for the procurement of the F-35 Drag Chute System.
This is a fixed price order against an earlier ordering agreement. According to the release, the F-35 Drag Chute System is being procured for the Lot 18-19 aircraft delivery ‘in support of Non-U.S. DOW Participants and Foreign Military Sales customer’s operational aircraft’.
In other news, Lockheed Martin Corporation further expanded its ties with Japan during the week by providing the Japanese Ministry of Defense with a second Aegis System-Equipped Vessel (ASEV) shipset, including AN/SPY-7(V)1 radar equipment.
Earlier in the month, the defense contractor announced that it will supply an anti-jamming payload for Japan’s Next-Generation Defense Satellite Communication System, which will offer enhanced interoperability and interference resistance.
The stock remains on analysts’ radar and currently carries a Hold rating as of the close on March 13. It has a one-year average share price target of $659.31, representing an upside of 2%.
Lockheed Martin Corporation is one of the world’s largest defense contractors. It specializes in the research, design, and development of advanced technology systems, products, and services.
3. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 79
Honeywell International Inc. (NASDAQ:HON) is among the 8 Best Drone Stocks to Buy for the Next 3 Years. On March 12, Morgan Stanley analyst Christopher Snyder lifted the price target on the stock to $245 from $235 and reiterated an Equal Weight rating. The firm said it was revising earnings estimates and rolling forecasts for the company.
This follows Deutsche Bank’s price target adjustment on March 4, lifting it to $292 from $273 while maintaining a Buy rating. The move came as part of the bank’s update of the stock’s sum-of-the-parts valuation.
As of the close of business on March 13, Honeywell International Inc. is a Strong Buy, with a one-year average share price target of $252.94, which reflects an upside potential of 8%.
In other news, on March 3, the company said it had filed with the Securities and Exchange Commission the Form 10 registration statement for the spin-off of Honeywell Aerospace, which will create one of the largest aerospace and defense stocks to trade on the market by the third quarter of 2026. The new company will trade under the ticker ‘HONA’.
Honeywell International Inc. helps organizations address their most complex challenges in aviation, automation, and energy transition.
2. RTX Corporation (NYSE:RTX)
Number of Hedge Fund Holders: 79
RTX Corporation (NYSE:RTX) is among the 8 Best Drone Stocks to Buy for the Next 3 Years. According to a report on TipRanks, Morgan Stanley analyst Kristine Liwag reiterated the firm’s Overweight rating on the stock on March 7, with a price target of $235.
This is a reaffirmation of the investment banking company’s earlier update in late January when it lifted the price target from $215 following the defense contractor’s strong fourth-quarter results.
As of the close of business on March 13, RTX Corporation is a Strong Buy with an average share price upside potential of 11%.
In other news, on Friday the company announced that its Raytheon business had completed a $115 million expansion of its missile integration facility in Alabama, which is now expected to increase the facility’s delivery and integration capacity by more than 50%.
The development follows last month’s agreement with the Department of War to expand the production and delivery of Tomahawks, AMRAAM missiles, and other missiles and interceptors.
RTX Corporation is a giant in the global aerospace and defense industry, providing systems and services to commercial, military, and government clients. It operates through three main businesses: Collins Aerospace, Pratt & Whitney, and Raytheon.
1. The Boeing Company (NYSE:BA)
Number of Hedge Fund Holders: 114
The Boeing Company (NYSE:BA) is among the 8 Best Drone Stocks to Buy for the Next 3 Years. According to a March 12 press release from the Department of War, the company has been awarded a $2.34 billion option exercise modification to an earlier Air Force contract for the E-7A Rapid Prototype Airborne Mission Segment.
Work on the project will be performed at Washington, Oklahoma City, Huntsville, and Heath, with completion planned for the third quarter of 2032.
The Boeing Company remains on analysts’ radar and currently sports a Strong Buy rating based on 14 analyst recommendations. As of the close of business on March 13, the stock has an average share price upside potential of 32%.
Recent updates include a March 6 update from Jefferies analyst Sheila Kahyaoglu reiterating the firm’s Buy rating on the stock with a price target of $295, amid reports that the company is nearing a 500-jet order from China ahead of President Trump’s upcoming official visit to Beijing.
The Boeing Company is a leading aerospace company that manufactures commercial airplanes, space systems, and defense equipment for customers in more than 150 countries.
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