Drone stocks soar as Pentagon fast-tracks unmanned aircraft production

Published 10/07/2025, 21:30
© Reuters.

Investing.com -- Drone-related stocks rallied sharply Thursday evening after reports that Defense Secretary Pete Hegseth has ordered a significant acceleration in drone production and deployment across the U.S. military.

Red Cat Holdings Inc. (NASDAQ:RCAT) and Unusual Machines, Inc. (UMAC) both climbed 7%. Defense giant AeroVironment (NASDAQ:AVAV), a major military drone supplier, rose 2%, and AgEagle Aerial Systems gained 10%.

According to Fox News, which first obtained the Pentagon memos, Hegseth has implemented sweeping changes to fast-track drone acquisition, stating that "the Department’s bureaucratic gloves are coming off" in an effort to outpace Russia and China in unmanned warfare capabilities.

The new directives allow military commanders at the colonel or captain level to independently procure and test drones, including 3D-printed prototypes and commercial off-the-shelf systems, without going through traditional acquisition channels.

In a significant policy shift, the Pentagon has reclassified small drones (Group 1 and 2) as "consumables" rather than durable military assets. This change removes them from legacy tracking systems and simplifies the acquisition process, treating them more like munitions than "high-end airplanes."

Hegseth acknowledged in the memos that the Department of Defense has previously "failed to field UAS [unmanned aircraft system] at scale and speed" and declared that small unmanned aircraft systems "must be prioritized at the same level as major weapons systems."

The policy changes appear aimed at addressing what Hegseth described as the military’s biggest risk: "risk-avoidance" in drone development and deployment.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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