Hegseth’s Vow to Unleash American Dominance Lifts Drone Stocks

An unmanned aerial vehicle at the Special Operations Forces Industry Conference in Tampa, Fla., in 2022. (Luke Sharrett/Bloomberg)

Drones stocks soared Friday, after Defense Secretary Pete Hegseth announced in a video filmed at the Pentagon with Metallica playing in the background that his department was “unleashing American drone dominance.”

Shares of AeroVironment and Kratos Defense & Security Solutions finished 11% and 11.8% higher, respectively. Meanwhile, shares of smaller Red Cat and Unusual Machines made respective gains of 26.4% and 39.5%. The S&P 500 dropped 0.3% and the Dow Jones Industrial Average fell 0.6%.

AeroVironment makes guidable, loitering munitions, among other things. Kratos makes tactical unmanned vehicles. Red Cat makes the Black Widow reconnaissance drone, among other things. Unusual Machines makes drone components.

Shares of the largest defense contractors weren’t getting a big boost. Lockheed Martin and Northrop Grumman stocks each gained less than 1%. Both of those companies work on unmanned systems, but are large, diversified defense players.

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“Today, I’m rescinding restrictive policies that stifle production, and this will unleash American manufacturing and ingenuity,” added Hegseth. He plans to boost manufacturing, supply combat units with more drones, and train senior officers in their use.

The U.S. military, of course, employs dozens of unmanned systems. Some, like Northrop’s Global Hawk, have a wingspan that rivals a commercial jet. Boeing’s Orca is an autonomous submarine. “There are scores of drone companies, and this was evident to anyone who has attended a major defense trade show in recent years,” wrote Capital Alpha Partners analyst Byron Callon on Friday.

Friday’s announcement represents an acceleration of the trend.

“There is funding in the fiscal year 2026 DoD budget to scale drone production,” added Callan. “This ranges from first-person view [drones] to unmanned aircraft systems. The Jul. 10 memo didn’t call out any additional funding.”

Write to Al Root at allen.root@dowjones.com