Drone ETF Report | September 2026

Drone ETF – Key Takeaways

US Drone Stocks Rally on Tariffs – US drone stocks rallied after the US announced import tariffs on August 14th in an effort to boost US manufacturing and protect national security. The directive subjects large drones with “sensitive” military capabilities like thermal imaging to a 100% tariff and smaller drones lacking capabilities to a 25% levy. Trump imposed a 15% tariff on drones and parts from the European Union, Japan, Liechtenstein, the Republic of Korea, Switzerland, and Taiwan, and 10% on those from the UK. The US is seeking to scale drone production on US soil and reduce its reliance on outsourcing parts, especially from China, which has long dominated the drone market. Earlier this year, the Trump administration launched the $1 billion drone dominance program aimed at scaling US manufacturing of small, low-cost drones, with the second stage of that project slated to begin soon. Geopolitical risks abroad and the war in Iran have highlighted the need for lower-cost, disposable weapons solutions. The Trump administration is asking for a record $1.5 trillion defence budget. As part of that budget, the Department of War has earmarked an historic $75 billion for drones. Domestic beneficiaries – were the funding to be approved – potentially include Unusual Machines (Donald Trump Jr. on Board), Red Cat Holdings, AeroVironment, Kratos, and Ondas.[1] [2]

Israeli Drone Makes Debuts on NYSE – Israeli drone company XTEND started trading on the New York Stock Exchange with a burst of investor enthusiasm, with shares surging +25% on their first day of trading. XTEND began trading on the NYSE following its merger with publicly traded real estate company JFB Construction. The combined company has been renamed XTEND AI Robotics. The company has investment ties to Donald Trump Jr’s companies Unusual Machines and American Ventures.[3]

Germany Plans Anti-Drone Shield – Germany is planning a comprehensive protective shield to prevent attacks like the failed assault on Leipzig-Halle airport. Assuming the proposal precedes, several German cities will receive rapidly deployable units capable of defending against drone strikes on critical infrastructure. The measures include vehicles and helicopters that can be quickly deployed to protect airspace over key cities like Frankfurt, Munich and Berlin to counter drone attacks. On August 4, several small drones targeted Leipzig-Halle Airport in eastern Germany, with one hitting a parked plane, while another is thought to have struck an inbound cargo jet. German intelligence agencies have blamed Russia for the incident, which Russia has denied. Germany insisted it was “not at war” but had become a “daily target” of the Kremlin’s hybrid campaign. Putin dismissed the allegations, saying Berlin wants to distract from its own failings and dissatisfaction among voters. Meanwhile, the EU is considering new sanctions against Russia in response to the attack.[4] [5]

Major Drone and Counter-UAS Contracts in August 2026

U.S. Army (Griffon Aerospace): Awarded a contract worth up to $133 million to Griffon Aerospace for Outlaw target drone systems on August 10.[6]

U.S. Department of Homeland Security (DHS): Awarded a $1.5 billion counter-UAS contract spanning 12 companies. The contract splits work between two tracks. Track 1 covers hardware, software and ancillary services, with an estimated ceiling just over $1 billion, and went to seven companies: Dedrone Defense, D-Fend Solutions AD, Leidos, Fortem Technologies, CACI Inc., BAE Systems, and EMS Defense Technologies. Track 2 covers comprehensive services — counter-drone capability delivered as a fully managed service, system integration and support for research, development, testing and evaluation — with a ceiling of roughly $489 million. Contracts went to Booz Allen Hamilton, General Dynamics, Parsons Government Services, BAE Systems, Leidos, Anduril Industries and Astrion Group. Only Leidos and BAE Systems appear on both award lists; the remaining 10 companies hold a single position apiece.[7]

U.S. Air Force (Red Cat / Teal Drones): Issued a $2.49 million order for Black Widow short-range reconnaissance systems, slated for delivery by August 24.[8]

Indian Ministry of Defence: Signed a $205 million (approx. Rs 1,943 crore) 30-month lease agreement with General Atomics on August 17 for two additional MQ-9B Sea Guardian surveillance drones. [9]

Monthly Stock Highlights

TerraDrone: Shares were up +68% in August, after the Japanese firm passed a demonstration test for Japan’s Acquisition, Technology & Logistics Agency’s interceptor drone program. The company also announced a 2-1 stock split, making shares more attainable by retail investors.[10] [11]

ZenaTech: stock rose +37% in August.  The company completed its acquisition of ESM Software and its ZenaDrone precision agriculture solution received an award.  Market discussion also highlighted the firm’s Drone as a Service (DaaS) strategy.

Draganfly: Posted record Q2 2026 revenue of CAD 2.7 million (up +26% YoY). The stock’s low float and elevated short interest amplified shares gains on institutional accumulation. The stock gained +31% in August.[12]

MS International: Shares saw a boost, up over +20% in August, following a €19.4 million NATO naval gun systems contract announced on August 24, 2026. The three naval gun systems will incorporate radar and optical detection technologies alongside the proprietary MSI-DS Fire Control System.[13]

Past performance is not indicative of future performance and when you invest in ETFs your capital is at risk

Company News – Earnings Analysis (DRON)

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

Latest Rebalance – 30.06.2026

DRON September 2

Macro Outlook – More spending on drones

Increasingly, the use of drones and counter-drone technology is becoming a global military priority.  The US is using tariffs to encourage domestic drone use.  Europe’s drone investment case is also surging as the continent faces hybrid security threats and the race to rearm, backed by multi-billion-euro EM initiatives and massive venture capital. Lessons learned from Ukraine show that scalable, low-cost battlefield technology and rapid manufacturing capacity are vital for national security. Similarly, the Asia-Pacific drone market is expanding at a CAGR of 18% amid surging defence budgets and rapid commercial adoption. Nations like Taiwan, China, India, and Australia are prioritising autonomous systems and counter-drone technologies. Artificial intelligence integration for intelligent surveillance and autonomous delivery is expanding rapidly in China, Japan, and South Korea. Cheap drones are upending the big business of defence, but government scale remains capital intensive and a competitive challenge for smaller drone companies regardless of their location.[14]

It should be noted that while the proliferation of drone technology has increased rapidly in the last several years, its continued expansion is contingent on a number of factors, including but not limited to: sustained government funding and regulatory support, which cannot be guaranteed.

Key risks

  • Thematic ETFs are exposed to a limited number of sectors and thus the investment will be concentrated and may experience high volatility.
  • When you invest in ETFs, your capital is fully at risk and may not get back the amount originally invested.
  • Exchange rates can have a positive or negative effect on returns.
  • Drone and UAV companies are closely tied to the economic fortunes of such companies’ research, design, manufacture, operation, or enabling technologies of drones and other unmanned aerial systems.
  • The market for drone and UAV-related products and services is nascent, highly competitive, and characterised by rapid technological change, evolving regulatory frameworks, and heightened geopolitical sensitivities.
  • Drone and UAV companies may derive a significant portion of their revenue from supplying drones, sub-assemblies, sensors, or software to military or intelligence customers. As a result, their financial performance is heavily dependent on national defence budgets, foreign-military-sales approvals, and shifting geopolitical priorities, any of which can be affected by changes in administrations, governmental funding allocations, multilateral treaty obligations, or fiscal austerity measures.
  • Military-focused drone and UAV companies are also exposed to strict export-control regimes, heightened sanctions risks, and enhanced compliance obligations under anticorruption, anti-boycott, and anti-money laundering laws; violations or compliance failures can result in substantial fines, loss of export privileges, or debarment from future government contracts.

[1] https://www.cnbc.com/2026/08/14/drone-stocks-trump-tariffs.html

[2] https://www.wsj.com/livecoverage/stock-market-today-dow-sp-500-nasdaq-08-14-2026/card/drone-stocks-jump-after-trump-targets-imports-with-tariffs-kHhD4jMUxSunYKjiJW73

[3] https://www.calcalistech.com/ctechnews/article/38443knhl

[4] https://www.dw.com/en/germany-plans-anti-drone-shield-over-leipzig-attack-report/a-79052604

[5] https://apnews.com/article/germany-russia-explosive-drone-leipzig-attack-8a0054face48cc56f6cb6bcf9a8f4b51

[6] https://defence-blog.com/u-s-army-awards-133-million-contract-for-outlaw-drone-systems/

[7] https://insideunmannedsystems.com/dhs-awards-1-5-billion-counter-uas-contract-to-12-companies/

[8] https://ir.redcatholdings.com/news-events/press-releases/detail/235/red-cat-receives-2-49-million-u-s-air-force-order-for-black-widow-systems

[9] https://www.tribuneindia.com/news/defence/india-leases-two-more-mq-9b-sea-guardian-drones-from-us-firm-for-navy-at-rs-1943-crore/

[10] https://finance.biggo.com/news/d159dff2-9d26-4464-a4f9-cce934feb91f

[11] https://tokyobrief.com/articles/terra-drone-stock-split-warrant-adjustment

[12] https://www.marketbeat.com/articles/radar-anomaly-draganflys-options-surge-signals-strategy-shift/

[13] https://uk.finance.yahoo.com/news/ms-international-secures-19-4-071124966.html

[14] Source: VettaFi

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