AeroVironment, Kratos soar as Hegseth reportedly ordered drone production surge

Drone-related stocks soar on Fri after U.S. Defense Secretary Pete Hegseth reportedly ordered sweeping new orders to fast-track drone production and deployment

Among stocks rising are AeroVironment AVAV.O jumping ~10% to $261.69, Kratos Defense & Security Solutions KTOS.O leaping ~12% to $51.83, and Red Cat RCAT.O rallying ~22% to $8.27

Unusual Machines UMAC.A, which sells ultra-low latency video goggles for drone pilots, surging ~37% to $11.88

Shares of Canada's ZenaTech ZENA.O, a tech co specializing in AI drone solutions in various sectors, including agriculture, defense, and logistics, up 14% to $4.84

As part of an aggressive push to outpace Russia and China in unmanned warfare, "the Department’s bureaucratic gloves are coming off," Hegseth wrote in a memo, according to report by Fox News

For the first time, commanders with the rank of colonel or captain can independently procure and test drones, including 3D-printed prototypes and commercial-off-the-shelf systems, as long as they meet national security criteria, per the report

The Pentagon's FY26 budget ramped up investment in unmanned aerial systems (UAS) and counter-drone technology — a 78% increase that's reshaping the entire military landscape

With moves on Fri, AVAV up 70% YTD, while KTOS has nearly doubled. Even with today's rally, RCAT down ~35% in 2025

This year, UMAC and ZENA have shed about 30% and 40%, respectively, including moves on Fri

Broader NYSE Arca Defense Index .DFII up 1% on Fri, extending YTD gain to ~24%