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Drone Stocks Have Burned Investors—Are These 4 Different?
Written by Chris Markoch. Originally Published: 10/21/2026.
Key Points
- Drone stocks have broadly declined in 2026 as U.S. government spending lagged expectations and new executive orders reshaped the competitive landscape for manufacturers.
- Despite steep declines in names like Kratos and AeroVironment, analysts maintain Moderate Buy or Buy ratings on several drone-related stocks with significant upside price targets.
- The article highlights four stocks, Axon, AeroVironment, Swarmer, and Unusual Machines, as alternative ways to invest in the drone industry's components, software, or counter-drone technology.
- Special Report: The Untouched Energy Source Behind a New Eight Year Tax Break
Drone stocks have left many investors underwater. The REX Drone ETF (NASDAQ: DRNZ) is down approximately 23% this year. Some individual names, such as Red Cat (NASDAQ: RCAT), are down much more. Investors who haven't already taken a loss are wondering whether they'll ever recoup their investment.
One option is to stay the course, believing that future growth is a matter of when, not if. Another strategy is to look at companies that make the components rather than the finished products. But first, it's important to understand the state of the drone industry.
Drone Dominance Is Complicated
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Watch Chaikin's free presentation and see the ticker nowDrone stocks began to soar in June 2025, when President Donald Trump signed an executive order titled "Unleashing American Drone Dominance." It doesn't get much more bullish than that: The U.S. was going all in on domestic drone manufacturing.
But U.S. government spending hasn't materialized as expected. And now, the government is taking steps to limit foreign competition in the drone space.
That effort stems from a second executive order signed by President Trump, titled "Restoring American Airspace Sovereignty." The U.S. government, the drone industry's largest customer, is now also directly shaping the competitive landscape.
Why Drone Stocks Answer to Their Biggest Customer
What's happening in the drone trade is similar to, but different from, the "regulate AI" debate. In that case, some of the same companies creating and refining the technology are calling for regulation. In the case of drone manufacturers, the calls for regulation are coming from their largest customer: the U.S. government, specifically the Pentagon.
That's terrible news for pure-play drone stocks like Kratos (NASDAQ: KTOS), which is down over 47% in 2026. But there's still hope for the drone trade if you look at where the money is flowing. Here are four stocks to consider.
Axon: A Counter-Drone Stock Hiding in Plain Sight
Axon Enterprise Inc. (NASDAQ: AXON) is best known for products such as TASERS and body cameras in the public safety space.
However, the company also has a significant presence in the drone sector, including the counter-drone space, where demand is expected to grow.
Revenue from the company's Dedrone platform exceeded $100 million in Q2 2026. That was a key contributor to the company's overall quarterly revenue of more than $804 million, a 35% year-over-year (YOY) increase.
AXON shares are down about 30% in 2026, but that decline seems to be more about higher component and memory costs. Demand remains solid.
AXON carries a consensus Moderate Buy rating and a consensus price target of $707.07.
AeroVironment: A Drone Leader Priced for Bad News
AeroVironment Inc. (NASDAQ: AVAV) is the closest thing the drone trade has to a blue chip. Its Switchblade loitering munitions and Puma reconnaissance drones are already in the field. The BlueHalo acquisition added counter-drone, space and electronic warfare capabilities.
None of that has protected the stock. AVAV opened 2026 at $241.89 and now trades near $118, a drop of more than 51%. That's a steeper decline than Kratos.
But this looks more like a perception problem than a fundamentals problem. AeroVironment reported fiscal 2027 first-quarter earnings of 59 cents per share on Sept. 9, far exceeding the consensus estimate of 22 cents per share. Revenue grew 5.7% YOY. That's not explosive growth, but the business isn't broken.
The company is also looking beyond Washington. In mid-October, it signed nonbinding agreements with partners in Spain and Taiwan to support local production and sustainment. That diversifies its customer base just as U.S. spending is in question.
Analysts are cautious, not bearish. AVAV carries a consensus Moderate Buy rating from 26 analysts and a consensus price target of $225.80.
Swarmer: A High-Risk Bet on Drone Swarm Software
If drones are the hardware, autonomy software is the brain. That's where Swarmer Inc. (NASDAQ: SWMR) operates. Its platform lets a single operator coordinate large groups of drones. The company says its software has supported more than 100,000 combat missions in Ukraine since April 2024.
This is the most speculative name on the list. Swarmer went public in March and traded as high as $31 per share on March 17. Since then, the stock has fallen roughly 70%. Q2 revenue was just $216,413, compared with a net loss of $7.3 million. It's also important to note that Swarmer is based in Ukraine and may not benefit from future U.S. defense spending.
So why consider it? First, its software is vendor-agnostic. Swarmer doesn't need to win a hardware contract; it can work with whichever provider does. Its SkyKnight licensing deal recently expanded to $3.9 million. The company has also partnered with Oak Grove Technologies to bring swarming to a platform built for U.S. Special Operations.
Second, Swarmer is buying scale. In September, it agreed to acquire Ukrainian ground robotics maker Ratel Robotics for up to $224 million in cash and stock. Ratel has secured $86 million in contracts this year. The stock plunged on dilution fears after the announcement.
Wall Street isn't buying the story yet. Only one analyst covers SWMR, and that analyst rates it a Sell. Investors buying here are betting on execution, not current numbers.
Unusual Machines: Picks and Shovels for Drone Makers
Unusual Machines Inc. (NYSEAMERICAN: UMAC) is the purest expression of the components strategy. The company makes NDAA-compliant motors, cameras, flight controllers and other parts for drone makers. As Washington squeezes out foreign suppliers, domestic component makers could become harder to replace.
The numbers back that up. Q2 revenue came in at $16.72 million, far exceeding analyst estimates of $9.2 million. That was a 687% YOY increase. Enterprise customers accounted for about 95% of sales.
Management is tempering near-term expectations, though. It is targeting $12 million to $14 million in Q3 revenue while it installs a high-speed motor line. The Q4 target jumps to $25 million. Neither figure is formal guidance, so the Nov. 5 earnings report will be a key test.
UMAC is up about 30% in 2026, making it the only stock on this list in positive territory. But it's well off its 50-day high of $34.06. That pullback gives investors a second chance. UMAC carries a consensus Buy rating from six analysts. The consensus price target of $37 implies significant potential upside.
Apple's Foldable iPhone Sold Out in Minutes, But Wall Street Has Questions
Written by Sam Quirke. Originally Published: 10/27/2026.
Key Points
- Apple's first foldable iPhone sold out during preorders, with delivery estimates stretching into January.
- Loop Capital downgraded Apple over concerns about iPhone shipments, rising memory costs, and valuation.
- Apple's Nov. 2 earnings report could provide insight into whether strong demand will support continued growth.
- Special Report: The Untouched Energy Source Behind a New Eight Year Tax Break
Apple Inc. (NASDAQ: AAPL) shares hit an all-time high on Oct. 23 and are currently trading just below it, around $345, up nearly 30% over the past year. Driving the latest phase of the rally is the iPhone Duo, Apple’s first foldable, which sold out within minutes of its recent launch despite its $1,999 price tag. The delivery waitlist now stretches into late January, and Apple has been scrambling to increase production.
For a company long dismissed as overly dependent on incremental upgrades, demand like this marks a real change of pace. Yet not everyone is convinced: Apple has just received a rare downgrade, and mounting concerns suggest its record valuation leaves little room for error.
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The Pentagon is moving to cut US dependence on Chinese rare earth metals, and a Nasdaq-listed company just signed a term sheet for a potential 75-year agreement with the US Army.
The proposed deal would let the company build and operate a rare earth processing facility on an active military base, with the Army getting first right to production. New Pentagon restrictions on Chinese-origin rare earth magnets take effect January 1, 2027.
The company's mine-to-magnet platform covers feedstock agreements, processing, metallization, and downstream manufacturing, with commercial output targeted for 2027.
Read the full breakdown on this rare earth opportunity nowWith earnings due on Nov. 2, the question is whether the foldable frenzy marks the start of something lasting or whether Apple’s shares might have run too far, too fast.
iPhone Duo Demand Is Outpacing Supply
While there were doubts about how eager consumers would be for the Duo, the latest demand signals are hard to dispute. The foldable sold out almost immediately, and Apple’s website now quotes delivery dates in late January, implying waits of around three months for a phone that costs nearly $2,000. Behind the scenes, Apple has reportedly scrambled to boost output, with some reports pointing to an increase of as much as 30% in planned production. The launch hasn't been entirely smooth, however. On Oct. 26, Apple acknowledged that a small number of Duo units had experienced inner-display problems.
It isn’t just the foldable model doing well. Apple’s new iPhone 18 Pro has also been selling well, reportedly capturing about a third of China’s smartphone market in its opening week—a reminder that Apple’s premium appeal remains strong in a market where it has often struggled. Taken together, these results show that this is still a company whose products people will queue around the block for.
For the bulls, that matters well beyond the new hardware. A richer lineup lifts average selling prices, draws more users deeper into Apple’s lucrative services ecosystem, and hints that the foldable could open an entirely new product category. After years of being written off as a slow grower, Apple's iPhone unit sales suddenly look like a growth story again.
Apple's Valuation Gives Wall Street Reason to Pause
Not everyone is buying it, though. On Oct. 20, Loop Capital cut its rating on Apple to Hold, arguing that iPhone shipments cut earlier in the year may not be recovered and flagging the risk that rising memory costs could eat into margins. The firm still likes Apple’s long-term services story, but believes the stock needs a “fundamental catalyst reset” after climbing to five-year valuation highs.
The downgrade also follows reports that Apple reduced iPhone 18 Pro component orders, raising further questions about demand. For now, however, that remains a minority view, with the consensus rating still a Moderate Buy.
That valuation is the crux of the bear case. Apple trades at nearly 40 times earnings, a rich multiple for a business whose growth, while healthy, is hardly explosive. At that price, strong demand alone may not be enough: if memory costs squeeze margins or high prices crimp sales of standard iPhone models, the shares have plenty of room to fall. In other words, the real question isn’t whether the Duo will be a hit. It’s whether it will be a big enough hit to justify what investors are being asked to pay.
Apple's Nov. 2 Earnings Put Guidance in Focus
One wrinkle for anyone hoping the Nov. 2 earnings report will settle the argument: It probably won’t, at least not directly. Apple’s fiscal fourth quarter ended in September, before the Duo went on sale, so the headline numbers will say little about how the foldable is actually selling.
The real tell will be the guidance. Investors will be looking for a December-quarter revenue outlook that comfortably clears Wall Street’s expectations, along with reassurance that rising memory costs aren't eating into margins.
Can Apple's Earnings Justify Its Record Valuation?
Ahead of the Nov. 2 report, investors are right to ask whether red-hot Duo demand can not only justify Apple’s record run but also send the stock to fresh highs. On the product itself, the bulls' argument is convincing: the foldable is a clear hit, the China numbers are encouraging, and Apple finally has a story to tell beyond another round of iPhone refreshes.
The stock, though, is a different question. At near-record levels and nearly 40 times earnings, Apple needs more than sold-out queues; it needs a December outlook strong enough to prove the frenzy will translate into profits. A sold-out foldable might be reason enough to admire Apple again, but it will take a convincing report and outlook to justify paying up for the stock.
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