Drone stocks rally on report of new manufacturing push

Investing.com -- Shares of drone-related companies climbed in premarket trading Friday following a Fox News report that U.S. Defense Secretary Pete Hegseth has ordered an expansion in drone production and deployment across the military.

The initiative allows commanders to procure and test 3D-printed prototypes and commercially available models without navigating traditional approval bottlenecks.

The move is part of a broader push to accelerate unmanned warfare capabilities and reclassify small drones as consumable assets rather than high-value aircraft.

Red Cat Holdings surged 13%, while AeroVironment (NASDAQ: AVAV) and Kratos Defense Security Solutions (NASDAQ: KTOS) gained 3.4% and 4.3%, respectively.

According to memos obtained by Fox News, Hegseth instructed the Pentagon to treat small unmanned aerial systems (UAS) as “cheap, rapidly replaceable” munitions.

“Lethality will not be hindered by self-imposed restrictions,” Hegseth reportedly wrote, calling on commanders to bypass legacy policies and begin drone combat simulations immediately.

The Pentagon will establish three national test sites within 90 days and build a digital “Blue List” to track approved components and vendors, powered by nightly AI updates.

Direct loans, capital incentives, and advance purchase commitments are also expected to jump-start domestic drone manufacturing, with a preference for U.S. suppliers.

The new orders come amid a global arms race in unmanned warfare, highlighted by the extensive use of drones in Ukraine and the Middle East.

Hegseth reportedly said he expects small drones to be fully integrated into combat training by 2026 and to achieve domain dominance by 2027.

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