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Drone technology has advanced almost exponentially since their introduction roughly 50 years ago, to the point where drones are now one of the most important and cutting-edge tools used by modern militaries. This demand for military drones has boosted competition in the market and defense budgets alike.
The global military drone market size, valued at $11.73 billion in 2022, is projected to grow to $30.86 billion by 2029, with a CAGR of 14.82% in the run-up to 2029. With increased government funding as one of the key drivers, the demand for drones is rising fast. Branches of the US Military, including the Navy and the Army, as well as the Department of Defense, all see their budgets for unmanned vehicles expand. The ongoing war in Ukraine has also shown the critical role of drones in surveillance, reconnaissance, and combat operations.
Epazz, Inc. (OTC: EPAZ) is a mission-critical provider of drone technology, blockchain mobile apps, and cloud-based business software solutions. Its spinoff, ZenaDrone, is an autonomous drone monitoring, inspection, and surveillance solution provider.
ZenaDrone first launched drones to predict animal health and crop diseases. Recently, it made a foray into defense with the launch of ZenaDrone 1000, an unmanned vehicle with capabilities that include fully autonomous flights, highly detailed 3D mapping, geotagging, and thermal detection. It combines the best of both software and hardware to provide solutions for aerial monitoring and data gathering in defense.
On March 1, Epazz announced that the US Air Force had invited the company to conduct a demonstration of the ZenaDrone 1000 at an air base in California on March 16 and 17. It has been focusing on getting U.S. government contracts for the product, as it submitted Phase 1 SBIR contracts and is working on securing partnerships for Phase 2.
With additional phases, SBIR would enable the company to win major government contracts worth up to $15 million over the next three years. With the significant revenue opportunity coming from the SBIR contracts in the next few years, the company’s prospects also get a boost from the ban on Chinese drones by the US government. Additionally, if ZenaDrone becomes a part of the program, it will have to be able to sell its drones to US allies. Trading at $0.0067 per share, this company deserves investor attention.
Additional stocks in the military drone space to pay attention to include:
NVIDIA Corporation (NASDAQ:NVDA) is a graphics chipmaker that also provides autonomous drones with AI-enabled flight control with object recognition capabilities.
Nvidia is one of the first companies to bring AI capabilities to commercial drones with its credit card-sized platform NVIDIA Jetson TX2
On January 19, the company released Nvidia Jetson Orin NX 16Gb module, the most advanced AI computer with the ability to boost performance and efficiency of drones
BAE Systems (OTC: BAESY) specializes in aerospace, security, and armaments. It develops security, defense, and aerospace technology systems for use in the air, on land, and at sea, including unmanned systems and drones.
On Feb. 15 its Autonomous Pacific 24 rigid inflatable boat was the first ever unmanned military vessel to be awarded Lloyd’s Register Unmanned Marine Systems Certification.
On Feb. 28 BAE Systems unveiled a new uncrewed military aircraft that will be designed, manufactured and armed in Australia. The STRIX uncrewed air system will be capable of air to ground strikes, surveillance and reconnaissance in "high-risk environments."
Elbit Systems Ltd. (NASDAQ:ESLT) is an Israel-based technology company involved in numerous defense, homeland security, and commercial programs. Its products include unmanned aircraft systems; command, control, computing, and communications (C4ISR); and aerospace, land, and naval systems.
Its robotic and autonomous combat solution, the THOR VTOL, vertical takeoff and landing, is a mini unmanned aircraft system uniquely positioned to operate both in urban areas and marine zones. The platform is foldable, stored in a backpack and can be deployed in less than two minutes.
Its fully autonomous operation micro-unmanned aircraft system MAGNI is a foldable device designed for delivering day/night, 3D real-time intelligence.
Kratos Defense & Security Solutions, Inc. (NASDAQ:KTOS) is a government contractor for the US Department of Defense, making drones, defense electronics, and other products for the Pentagon and other government buyers. The company recently developed loyal wingman drones that can fly alongside manned aircraft to conduct reconnaissance, test enemy air defenses, and launch attacks with precision weapons.
On Feb. 23 Naval Air Systems Command awarded Kratos a sole source $49.6 million initial contract for production of the BQM-177A drones, its Subsonic Aerial Target System. Kratos has delivered 65 products previously, under a $14.7-million contract. Under this new agreement, it will deliver another 55 BQM-177A drones, mission kits, and technical data to the navy.
On March 1 the company said it can double or even triple its annually built 150 drones, including its Valkyrie XQ-58A, to meet possible surge in demand that could come from the Pentagon’s aid to Ukraine and stocks depletion.
Conclusion
The market for military drones has strong drivers, with growing government spending being the most important one. The use cases of drones are expanding as well, to include military cargo delivery.
Investors hoping to get in and benefit should pay close attention to the news and advances that these drone manufacturers make as they continue to innovate and bring new products to market.
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