Drone stocks showed mixed performance in early morning trade on Monday, with AeroVironment (AVAV) surging 13%, Kratos Defense (KTOS) up 10%, Draganfly (DPRO) rising 7.3%, and Red Cat Holdings (RCAT) gaining 6.3%, while Rocket Lab (RKLB) slipped 3.2% and Velo3D (VLDXD) edged down 0.4%.
Drone stocks are rising largely due to geopolitical tensions in the Middle East, which have increased demand for military and surveillance technologies.
Investors are anticipating higher defense spending and military contracts for companies like AeroVironment (AVAV), Kratos Defense (KTOS), and others, driving stock gains. Additionally, the ongoing conflict raises concerns about airspace security and logistics, making unmanned systems more valuable for both military and commercial applications.
The gains in Kratos Defense & Security Solutions also come as it seeks to raise $1 billion in a share sale, as government spending on defense ramps up.
However, shares in Sidus Space (SIDU), which operates a space-as-a-service model focused on low-Earth orbit satellites, fell 4.6% premarket.
Here is a list of top defense names with their performance so far in 2026 and their Seeking Alpha Quant ratings.