Federal Policy Shift Puts U.S. Drone Stocks on the Flight Path to Growth (ZENA, AVAV, KTOS, ONDS)

The U.S. drone industry may be entering a pivotal phase of growth, driven by new federal policies aimed at accelerating domestic innovation and deployment. On July 11, 2025, the Department of Defense announced a major initiative to rapidly expand the use of small, low-cost drones across military units. This move follows a recent executive order from President Donald Trump directing federal agencies to support and prioritize American-made drone technologies.

Defense Secretary Pete Hegseth has outlined a three-part strategy: bolster the U.S. drone manufacturing base, deliver cutting-edge drone systems to service members, and integrate drone operations into combat training. The Pentagon plans to approve hundreds of domestically produced drones for military use and is committing financial resources freed through internal cost-saving reforms.

This renewed focus on unmanned aerial systems, backed by both executive and departmental support, suggests the sector could see increased demand, capital flow, and long-term investment potential. For investors looking to position themselves in a strategically significant and fast-moving space, now may be the time to pay attention.

Here are four drone stocks to watch as this national initiative unfolds.

ZenaTech (Nasdaq: ZENA) is emerging as one of the most strategically positioned drone and AI companies in the United States. What began as a niche drone business focused on agriculture has rapidly evolved into a multi-vertical defense and enterprise technology firm with a growing presence in national security, logistics, and infrastructure. At the heart of ZenaTech's expansion is its wholly owned subsidiary, ZenaDrone, which develops and manufactures a fleet of AI-enabled drones designed for high-impact roles in inspection, surveillance, inventory management, land surveying, and now battlefield logistics.

ZenaTech recently announced a major expansion of its Arizona facility to support domestic drone production, assembly, and testing. The move will triple the company's footprint and enable start-to-finish manufacturing of its drone lineup on American soil. This is a pivotal step in reducing reliance on foreign suppliers and scaling to meet growing demand from military, government, and commercial users. In addition to its US footprint, ZenaTech maintains international operations in Europe, Taiwan, and the UAE, with its Sharjah facility supporting current manufacturing.

The company's flagship ZenaDrone 1000 is a rugged, medium-sized VTOL drone capable of lifting nearly 90 pounds. It is equipped with AI autonomy, secure communications, and swappable sensors for both commercial and defense applications. It has already completed paid trials with the US Air Force and Navy Reserve, where it demonstrated real-world use in cargo delivery and field logistics. ZenaTech is also developing a gas-powered version of the ZenaDrone 1000 for longer missions, particularly in border patrol and remote operations.

Two other commercial drones round out the portfolio. The IQ Nano is a compact indoor drone built for inventory tracking, security, and facility monitoring. It is designed to operate in GPS-denied environments and features autonomous flight, obstacle avoidance, and AI-driven fleet coordination. ZenaTech has submitted this drone for Green UAS certification, a key requirement for federal procurement. The IQ Square is an outdoor inspection drone tailored for land surveys and infrastructure monitoring. It is already being positioned for use in both public and private projects.

One of ZenaTech's most scalable growth vectors is its Drone as a Service offering. This platform gives customers turnkey access to drone hardware, pilots, data services, and maintenance under a flexible subscription model. ZenaTech has made multiple acquisitions to support this strategy, including land surveying companies across Florida and the Southeast. These rollups create immediate revenue while expanding the addressable market for drone deployment in sectors like transportation, energy, and construction.

ZenaTech is also actively investing in next-generation capabilities, including counter-drone technologies and quantum computing integration. Development has already begun on a threat-detection and mitigation system that will be embedded into its flagship drones for national security applications. These systems are designed to identify and neutralize hostile drones in real time, giving ZenaTech an early lead in the growing market for autonomous defense tools.

With a robust pipeline of new acquisitions, a national DaaS rollout underway, and a drone portfolio already tested by the military, ZenaTech appears well positioned for growth in the years ahead.

AeroVironment (NASDAQ: AVAV) is emerging as one of the clearest winners in the shift toward multi-domain autonomous warfare. The company just posted record fiscal 2025 results, with fourth-quarter revenue rising 40 percent year over year to $275 million and full-year bookings reaching an all-time high of $1.2 billion. Growth was driven by surging demand for its Uncrewed Systems and Loitering Munition Systems, which saw segment-level gains of 9 and 87 percent, respectively. Gross profit rose to $100 million for the quarter, and adjusted EBITDA more than doubled to $61.6 million. Despite a goodwill impairment tied to its legacy ground vehicle unit, AeroVironment ended the year with a $727 million funded backlog and clear momentum heading into fiscal 2026.

That trajectory is expected to accelerate following the company's acquisition of BlueHalo, a privately held defense contractor with complementary capabilities in directed energy, counter-UAS, and electronic warfare. AeroVironment expects the combined entity to deliver between $1.9 and $2.0 billion in revenue this year and up to $320 million in adjusted EBITDA. Management has made it clear that the deal enhances both domestic manufacturing scale and long-term relevance across next-generation mission sets.

Meanwhile, development on the Wildcat VTOL drone continues to advance rapidly under DARPA's ANCILLARY initiative. Built by AeroVironment's MacCready Works division, Wildcat has now achieved full forward-flight transitions and validated its propulsion and control systems. Designed for autonomous deployment in contested maritime environments, Wildcat is built to operate from ship decks without launch infrastructure. Its core technologies-including modular AI compute, AVACORE-based integration, and a new precision landing system-are now feeding back into AeroVironment's broader product ecosystem.

To support future growth, the company is raising $1.35 billion in equity and convertible notes, with proceeds earmarked for debt reduction and expanded production capacity. AeroVironment remains tightly aligned with long-cycle defense priorities and well-positioned to scale.

Kratos Defense (NASDAQ: KTOS) is carving out a unique space in the national security ecosystem by combining high-performance technology with a cost-first mindset. From jet drones to satellite software, Kratos is not chasing science experiments. It is building real-world systems that can be deployed quickly and scaled efficiently-and the strategy is working. In the first quarter of 2025, Kratos reported revenue of $302.6 million, up more than 9 percent from the year before. It also booked $365.6 million in new contracts and ended the quarter with a total backlog of over $1.5 billion. That includes strong order flow in its core Government Solutions segment, which continues to benefit from steady demand for air defense, microwave systems, and missile-related hardware.

But Kratos is doing more than just winning contracts. The company is pushing its proprietary propulsion platforms forward in partnership with GE Aerospace. Their new joint venture targets the next wave of engine development for unmanned systems and collaborative combat aircraft. Engines like the GEK800 and GEK1500 are being designed with affordability in mind, using Kratos' small engine heritage and GE's production muscle. This partnership could help Kratos scale faster and lock in a vital role in the Air Force's transition toward lower-cost, distributed fleets.

At the same time, Kratos continues to turn heads with its dual-use ground vehicle work. The company's automated truck platooning systems, originally developed for the military, are now running across highways in Ohio and Indiana through a partnership with DriveOhio and INDOT. These systems pair a human-driven lead truck with an autonomous follower and have been tested across more than ten U.S. states. For logistics firms struggling with labor shortages and rising costs, this solution is not just futuristic, it is operational now.

With more than $12 billion in bids outstanding, Kratos is positioned to grow across nearly every dimension of defense and autonomous technology.

As the Department of Defense moves to fast-track autonomous drone integration across combat units and border security, Ondas Holdings (NASDAQ: ONDS) stands out as a direct beneficiary. Through its Ondas Autonomous Systems (OAS) unit, the company is becoming a go-to provider for cutting-edge drone platforms tailored to high-stakes military and homeland security missions.

June marked a breakthrough when Airobotics, Ondas' Israeli-based subsidiary, secured a $14.3 million order from a leading defense customer for its flagship Optimus System-an FAA-certified autonomous drone platform capable of 24/7 aerial surveillance without a human operator. CEO Eric Brock emphasized its strategic impact: "Our Optimus platform is proving to be a critical enabler for modern security operations, particularly in military applications requiring autonomous, round-the-clock coverage."

That order, the largest in company history, helped expand Ondas' total drone backlog to $28.7 million, more than doubling from the start of the year. And it's not just Optimus gaining traction-OAS is also rolling out its Iron Drone Raider counter-UAS platform and the Kestrel system, which was recently adopted by a major U.S. public safety agency to manage airspace threats during high-visibility events.

The company reported Q1 2025 revenue of $4.2 million, a 7x increase year-over-year, driven almost entirely by OAS. Ondas is targeting $25 million in revenue for the full year, with $20 million expected to come from autonomous drone systems. Its strategic partnerships with Palantir and Volatus Aerospace, combined with new orders from the U.S., Europe, and the Middle East, support that forecast.

As the Pentagon unlocks fresh procurement pathways and pushes for AI-driven drone operations, ONDS could be a stealth winner in America's next defense-tech surge.

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