Drone technology is rapidly expanding across multiple industries, including surveillance, logistics, agriculture, emergency response, environmental monitoring, construction and filmmaking. These unmanned aerial vehicles (UAVs), once primarily used for military reconnaissance, are now transforming businesses by enhancing cost efficiency, improving safety and enabling real-time data collection.

Technological advancements are driving increased adoption. These include augmented battery life, enhanced image sensors and embedding of AI (artificial intelligence) and machine learning technologies. AI incorporation is driving the autonomous navigation functionality of drones, enabling them to autonomously plan their flight paths based on real-time data, such as environmental terrain. The integration of 5G and advanced Wi-Fi technology has further improved real-time data transmission, expanding commercial applications.

Companies like Amazon AMZN and Walmart WMT are testing drone deliveries to cut logistics costs and optimize last-mile delivery. Amazon uses drone delivery to deliver one package (up to five pounds) in less than an hour during daylight hours. Amazon has also highlighted that its drone fleet is totally electric and does not produce exhaust emissions during flight. Utility companies leverage drones for power line inspections, while farmers utilize them to monitor crop health and enhance yields.

The long-term outlook for drones remains strong, fueled by rising investments, evolving regulations, and continuous technological innovations. According to a report from Grand View Research, the global drone market size is projected to witness a CAGR of 14.3% from 2025 to 2030. The report adds that the pivot toward fully autonomous drones and the addition of hybrid product systems (which integrates the strengths of fixed-wing and multi-rotor designs) is expected to further boost adoption of drones. 

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AeroVironment is a well-known name in the drone technology space. The company has been developing uncrewed aircraft and ground robot systems and loitering munitions systems (LMS) and related services for the U.S. Department of Defense (includes Special Operations Command, Army, Marine Corps, Air Force and Navy), other federal agencies and international allied governments. AVAV’s uncrewed systems (“UxS”) business segment comprises Small Uncrewed Aircraft Systems (“SUAS”), Medium Uncrewed Aircraft Systems (“MUAS”), and Uncrewed ground vehicles (“UGV”). 

SUAS includes products like Raven, Wasp AE, Puma AE, Puma LE, and VAPOR MX, while MUAS includes products like T-20 and JUMP 20. SUAS is designed to operate at low altitudes in various environmental conditions and also boasts cutting-edge technology that ensures mission continuation even during loss of GPS or RF contested environments. T-20 and JUMP 20 offer relatively higher endurance and payload capacity than SUAS. These MUAS have bigger airframes designed to accommodate wide-ranging payloads, including small cargo. 

SUAS and MUAS are capable of real-time observation and communication with their commanders, who operate and control them. The use of open standard communications and common control technologies enables these functionalities in these systems. UGVs come in handy in extreme situations like the handling of caustic chemicals, improvised explosive devices, and nuclear/radiological or biological hazards.  LMS consists of tube-launched aircraft that can be deployed with the push of a button. LMS can fly at higher speeds than SUAS and can execute delivery or reconnaissance missions. 

This Zacks Rank #1 (Strong Buy) company recently unveiled P550, its latest UxS solution designed to fill the gap between Puma and JUMP 20 ISR platforms. AVAV highlighted that it was getting responses from both domestic and international customers for its P550 offering. The pending acquisition of BlueHalo will boost its position in Unmanned Aerial Systems (“UAS”), Counter-UAS, Loitering Munitions, Electronic Warfare and Cybersecurity industries. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVIDIA, a tech behemoth best known for its groundbreaking graphics processing units (GPUs), is emerging as a key player in the development of drone technology. At the core of NVIDIA’s contributions to drone technology is its Jetson platform—a powerful AI computing platform that offers tools to build and deploy drones, AI-powered robots and autonomous machines.

Jetson Platform is powered by generative AI at the edge, along with NVIDIA Metropolis and Isaac platforms. The platform offers users with scalable software along with a modern AI stack, and flexible microservices and APIs. It also has production-ready ROS packages and application-specific AI workflows. The Jetson Orin Nano platform is augmented for lightweight drones and UAVs. It offers solid AI performance and energy efficiency while minimizing weight and size.

NVDA highlighted that its new Jetson Orin platform can deliver up to 275 trillion operations per second and an eight-fold improvement in performance compared with the previous generation. It also provides advanced obstacle detection, real-time data processing and precise terrain mapping in complex environments. Recently, Foresight Autonomous Holdings Ltd leveraged this Zacks Rank #2 (Buy) company’s Jetson Orin Nano and Jetson AGX Orin platforms to boost its 3D perception systems, with special focus on autonomous drone and UAVs.

Kratos Defense & Security Solutions offers high-performance, jet-powered, unmanned aerial target drone systems which are designed to replicate state-of-the-art adversarial fighter aircraft, missiles and other threats.  Apart from unmanned aerial drones, it also focuses on development of unmanned ground and unmanned seaborne systems and related autonomy and artificial intelligence. It also manufactures propulsion systems for drones and loitering munitions.

Kratos is the primary provider of jet-target drone systems to the US Navy with BQM-177 systems. It provides the US Air Force with the BQM-167 and the U.S. Army with the MQM-178 systems. To enhance its footprint in this space, the company has been making significant efforts. In July 2024, it partnered with GE Aerospace for the development and production of small, affordable engines for powering UAS, collaborative combat aircraft and similar applications. Last year, KTOS won a $58 million contract to manufacture and deliver 70 BQM-177A Surface Launched Aerial Targets to the U.S. Navy. With the company being the sole source provider of the BQM-177A to the U.S. Navy, such contract wins reflect the solid demand that Kratos enjoys in the unmanned aerial market. This Zacks Rank #3 (Hold) company currently has a contract with a U.S. government agency for a next-generation target drone or 5GAT.

The XQ-58A Valkyrie, stealthy unmanned combat aerial vehicle, is one of KTOS’ significant drone innovations. It is a high-performance, low- cost tactical UAV designed for the U.S. Air Force and its allies. Valkyrie is capable of long-range flights at high-subsonic speeds and. Owing to its maneuverability and capacity to carry flexible mission kit configurations and lethal weapons from its internal bomb bay and wing stations, it can serve as a loyal wingman. Loyal Wingman is a concept whereby expendable UAVs work alongside manned aircraft to augment mission capabilities and even deliver offensive capabilities. Such order growth and other collaborative initiatives undertaken by Kratos make us optimistic about the organic growth prospects of its unmanned aerial business.

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