ONDS, RCAT, AVAV, KTOS, DPRO: US Defense Budget Sparks Drone Stock Rally Overnight

• Over $74 billion is allocated to drones, marking a record investment in unmanned systems. 
• The plan sets aside $18 billion to develop a layered missile defense network called the Golden Dome. 
• In March, Ondas’ Airobotics secured a $20 million order for an autonomous border security program. 

The U.S. defense landscape is undergoing a transformation as autonomous military technologies take center stage, triggering a sharp rally in drone-related stocks and marking a shift in how future conflicts may be fought.

Shares of Ondas Holdings Inc. (ONDS), Red Cat Holdings Inc. (RCAT), AeroVironment Inc. (AVAV), Kratos Defense & Security Solutions Inc. (KTOS), and Draganfly Inc. (DPRO) gained between 2% and 3% overnight, heading into Wednesday following the release of President Donald Trump’s fiscal 2027 military budget proposal.

Trump’s Historic Spending Shift

The U.S. government has unveiled an expansive defense spending proposal, signaling a sweeping overhaul of military priorities with a sharp focus on modernization and next-generation warfare capabilities. The plan calls for $1.5 trillion in funding, representing a 42% increase over current levels. 

"We are delivering on President Trump's commitment to expand American military dominance for decades to come.”

-Pete Hegseth, U.S. Secretary of War

The proposal allocates $18 billion toward a new layered missile defense system known as the Golden Dome. This framework is expected to integrate space-based sensors and intercept technologies to counter emerging threats. 

Unmanned systems stand out as a major priority, with more than $74 billion dedicated to drone and counter-drone programs, marking the largest investment ever in the space.

Defense Market Winners Emerge

AeroVironment, known for its loitering munitions, and Kratos Defense, a leader in jet-powered drones, are positioned as key suppliers. Meanwhile, Red Cat and Ondas are gaining traction for their swarm and counter-drone technologies. Draganfly is also emerging as a niche player in logistics and medical drone support.

In March, Ondas’ subsidiary, Airobotics, received a $20 million purchase order as part of a broader national program to deploy autonomous border protection infrastructure. The agreement is expected to expand over time through additional development checkpoints, wider deployment efforts, and future procurement rounds.

Similarly, Red Cat has won contracts for its Teal Drones and FlightWave units, focusing on short-range reconnaissance and edge surveillance, including a key Army SRR deal and an Edge 130 Blue award. 

In April, Kratos Defense secured another transaction agreement (OTA) worth up to $446.8 million to lead the ground systems work for the U.S. Space Force’s missile-warning satellite program in medium Earth orbit.

So far this year, RCAT and ONDS stocks have surged 58% and 11%, respectively, while KTOS, AVAV, and DPRO have declined between 9% and 12%. 

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