Drone ETF Report | June 2026

Drone ETF – Key Takeaways

Trump Administration US Drone Funding Initiative – The Trump administration is pursuing funding deals with a group of drone companies as part of its effort to increase domestic production and lower the costs of these increasingly vital weapon systems. The aim of the funding deals is to support drone makers’ production build-out to create supply, while also bringing down prices, but not for buying drones. According to an estimate from 2025, the U.S. has the capacity to build up to 100,000 drones a year. In contrast, Ukraine built about four million last year. The drone industry has persistently blamed the Department of Defence for not buying enough drones to fund and scale future production.[1] Companies expected to benefit from the funding initiative include US drone manufacturers Performance Drone Works, Unusual Machines (UMAC) and Neros Technologies. Performance Drone Works previously won an Army contract to supply reconnaissance drones. Neros is a Sequoia Capital-backed startup specialising in first-person-view drones. Components provider Unusual Machines includes Donald Trump Jr. as a board advisor and shareholder. Other US drone companies positively reacting to the announcement were Red Cat (RCAT), AeroVironment (AVAV), Kratos (KTOS), and Ondas (ONDS). The US Department of Defense launched the Drone Dominance Program last year, which is a $1.1 billion initiative to amass about 300,000 low-cost attack drones by the end of next year. In addition, the US DOD requested more than $54 billion for its Defense Autonomous Warfare Group (DAWG), its drone nerve centre, up from $225 million this year.[2]

US Pursues $55 billion Drone Plan under DAWG – The US Pentagon plans to spend nearly $55 billion on its replacement for the Replicator initiative, dubbed the Defense Autonomous Warfare Group (DAWG). The bulk of funding comes in the form of reconciliation, a bet the department also made for a proposed hike to its Office of Strategic Capital loan program. The DAWG essentially absorbed the Biden-era Replicator initiative designed to acquire thousands of low-cost “attritable” drones, particularly for use in the Pacific. In its latest iteration, the department is looking to supercharge development investments across an array of platforms and collaborative autonomy efforts. But this will require a huge investment in the form of a 24,070% increase over the $225.9 million DAWG received in fiscal 2026. Specifically, the Pentagon is seeking a $54.6 billion budget for research and development dollars in the FY27 request — $1 billion in the base budget and the remaining $53.6 billion coming from the more flexible future reconciliation pot. The DAWG dollars are part of the Department of War’s larger goals to spend at least $1.5 trillion on defence next year with $1.15 trillion in the base budget request and an additional $350 billion from a forthcoming reconciliation bill.[3]

Motorola Solutions Spends $1.5 Billion on Drone Acquisition, Validating Technology – Motorola Solutions has announced that it plans to acquire Israeli counter-drone specialist D-Fend Solutions for $1.5 billion. D-Fend develops technology designed to detect, identify, and safely neutralise unauthorised drones. Its systems are already deployed thousands of times across more than 30 countries and are used by government agencies, public safety organisations, and enterprises. The company has also been growing rapidly, reporting annual revenue growth above 50% over the past three years and is projected to generate $185 million in revenue for 2026. The recently enacted Safer Skies Act, included in the FY 2026 National Defence Authorisation Act, expands authority for trained and certified state and local law enforcement agencies to detect, track, and in some cases mitigate drones that pose public safety threats. The law could significantly expand the customer base for counter-drone providers such as D-Fend. Instead of physically destroying drones or using jamming technologies that can disrupt nearby communications, the company specialises in non-kinetic radio-frequency cyber techniques. According to Motorola, D-Fend’s systems can take control of a rogue drone’s communications, redirect it, and safely land it while minimising collateral disruption.[4]

Drone Makers Quantum and Destinus Expected to IPO in 2027 – German company Quantum Systems and Netherlands-headquartered Destinus are in talks for potential IPOs as soon as early 2027 as the drone makers seek to tap surging demand for unmanned defence assets. Quantum is seeking a valuation of at least €10 billion in an IPO, while Destinus is weighing Amsterdam as a possible listing venue. Destinus was founded in 2021 by Russian entrepreneur Mikhail Kokorich, who renounced his Russian citizenship in 2024 in opposition to the war in Ukraine. The company produces a range of weapons, including long-distance strike drones, loitering munitions and interceptors. Destinus and Quantum are among a growing number of European defence groups looking to take advantage of rising military spending by governments and soaring investor demand for companies in the sector. European defence companies including German defence technology firm Vincorion AG, submarine tech provider Gabler Group and Czech ammunition maker CSG NV have all gone public this year to robust demand. Drone maker AEVEX and drone software manufacturer Swarmer also recently IPO’d to great fanfare, with both stocks soaring in their debut — +20.46% and +497.12% since their respective IPOs.[5] [6] [7]

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Company News – Earnings Analysis (DRON)

Dron June

Past performance is not indicative of future performance. When you invest your capital is at risk.

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Macro Outlook – More spending on drones

Oppenheimer has vouched that drones are emerging as one of the fastest-growing investment themes within the expanding field of physical artificial intelligence, with a market potential of $400 billion. Rising global defence spending and rapid advances in autonomous systems are reshaping modern warfare and transforming commercial drone markets. The firm forecasts that the total addressable market for drones, including hardware, services, AI, and related software, could expand from $45 billion today to $400 billion globally.  This view has been validated by global defence budgets which are rapidly increasing their investment in drone and counter drone capabilities. More private drone companies are coming to the public markets, being acquired, or are being supported by government funding initiatives favouring domestic production. The US Pentagon’s $1.1 billion Drone Dominance program aims to rapidly procure and field 300,000 low-cost, disposable attack drones by the end of 2027. In addition, the US DOD requested more than $54 billion for its Defence Autonomous Warfare Group (DAWG), its drone nerve centre, up from $225 million this year. The EU is also pumping over $1 billion into defence R&D, cantered around Ukraine war lessons favouring drones. Cheap, expendable strike drones have reshaped the battlefield and Europe’s defence industry has been slow to catch up.[8] [9]

[1] https://www.wsj.com/politics/national-security/trump-us-drone-company-funding-cadef1f7

[2] https://www.investors.com/news/drone-stocks-funding-trump-administration-equity-stakes-umac-neros-pentagon-dod/

[3] https://breakingdefense.com/2026/04/pentagon-officials-broadly-detail-55-billion-drone-plan-under-dawg/

[4] https://dronedj.com/2026/06/01/motorola-counter-drone-tech-dfend/

[5] https://www.bloomberg.com/news/articles/2026-05-28/drone-makers-quantum-and-destinus-seek-banks-for-2027-ipos?embedded-checkout=true

[6] https://uk.finance.yahoo.com/quote/SWMR/

[7] https://uk.finance.yahoo.com/quote/AVEX/

[8] https://stocktwits.com/news-articles/markets/equity/oppenheimer-sees-400-billion-drone-market-boom-defense-spending-surges/cZTcYt3RITo

[9] Source: VettaFi

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