Key Takeaways
- Defense drone stocks are benefiting from rising military drone budgets, including over $9B in U.S. aerial drone allocations for the latest defense cycle.
- Mobilicom Ltd (MOB), Mobilicom, and MOB stock focus on secure drone communications and cybersecurity software for autonomous systems.
- Red Cat Holdings Inc (RCAT), Red Cat, and RCAT stock focus on U.S.-made tactical drones, with reported revenue growth above 1,800% year over year in its latest preliminary quarter.
- Mobilicom reported ~63% sequential revenue growth in a recent quarter and held roughly $16M+ in cash entering 2026.
- Red Cat entered 2026 with over $200M in cash and a defense production ramp tied to Army reconnaissance programs.
Introduction
The drone industry is no longer centered on consumer gadgets and delivery experiments. The fastest-growing segment is now defense and secure industrial use, where encrypted communications, resilience, and trusted supply chains are essential.
Military strategy has shifted toward smaller, cheaper, and more numerous autonomous systems. Instead of relying only on a few expensive aircraft, defense planners are funding large fleets of drones that can operate in contested electronic environments. That shift is turning defense drone stocks into an identifiable sub-sector within defense tech investing.
Two companies frequently highlighted in this space are Mobilicom (MOB) and Red Cat Holdings (RCAT). They operate in different layers of the defense drone stack — one in secure communications and cybersecurity, the other in tactical drone hardware and manufacturing — but both are seeing measurable growth tied to defense demand.
What Defense Drone Stocks Represent for Investors
Defense drone stocks include companies that build unmanned aerial systems or provide mission-critical subsystems such as encrypted datalinks, flight control software, and secure ground stations.
Unlike commercial drone firms, these businesses sell into government and allied defense channels. That means:
- Longer qualification and testing cycles
- Strict cybersecurity and encryption standards
- Approved vendor frameworks such as Blue UAS
- Multi-year production contracts once selected
Recent U.S. defense planning has allocated billions of dollars annually toward unmanned and autonomous aerial systems. Investors tracking this segment tend to focus on contract wins, approved supplier status, and backlog growth rather than consumer adoption metrics.
Industry Drivers and Risks in Military Drone Markets
The strongest driver for military drone stocks is defense budget prioritization. Recent U.S. defense budgets have included multi-billion-dollar line items for unmanned aerial and combat drone systems, alongside robotics and autonomy funding.
Another tailwind is supply chain policy. Restrictions on foreign-made drones in government operations have reduced competition from overseas suppliers and increased demand for approved domestic and allied vendors.
Technology layering is also expanding. Secure communications, anti-jamming systems, and onboard cybersecurity software are becoming required features, not optional upgrades. That increases the revenue opportunity per drone platform.
Risks remain. Defense procurement timing can be uneven. A delayed program can shift revenue by several quarters. Many companies in this segment are still reporting operating losses as they scale production. Share prices can move sharply around contract news, funding updates, or capital raises.
Mobilicom Ltd (MOB)
Mobilicom Ltd (MOB) develops secure communications and cybersecurity systems for drones, robotics, and autonomous platforms. Rather than manufacturing airframes, Mobilicom supplies the encrypted datalinks, software-defined radios, and cyber protection layers that sit inside them.
Mobilicom’s revenue comes from three main sources: embedded hardware modules, cybersecurity and encryption software licenses, and engineering services tied to defense certification. The company’s strategy is to increase the share of software revenue, where margins are typically higher than hardware components.
In a recent reported quarter, Mobilicom generated about $987,000 in revenue, representing roughly 63% sequential growth. Approximately 84% of that revenue came from U.S. defense-related customers, showing a strong shift toward the American market.
Operationally, Mobilicom reported a monthly cash burn near $300,000 and held roughly $16.4 million in cash entering its latest reporting period. Its market capitalization has been in the $70–75 million range, making it a micro-cap defense tech name.
The company also completed a share structure simplification and reverse split before 2026, aiming to improve institutional accessibility. MOB stock is generally evaluated on design wins, Blue UAS alignment, and expected software scaling rather than current earnings. Analyst coverage has included bullish ratings with published targets in the double-digit dollar range, though estimates vary widely.
Mobilicom may suit investors looking for exposure to the secure communications and cybersecurity layer of autonomous defense systems, with the understanding that revenue is still small and execution risk is high.
Red Cat Holdings Inc (RCAT)
Red Cat Holdings Inc (RCAT) focuses on military drone hardware and has repositioned itself as a U.S.-based tactical drone manufacturer. Through its subsidiaries, the company produces small reconnaissance drones designed for defense users.
Red Cat’s recent momentum has been tied to U.S. Army short-range reconnaissance programs, where its drone platform achieved program-level selection. That status shifts the company from prototype sales toward structured production orders.
Financially, Red Cat reported preliminary quarterly revenue in the $24–$26.5 million range for a recent quarter, marking an increase of roughly 1,800% year over year. Full-year revenue has been reported at around $40+ million, exceeding some analyst expectations.
To support scaling, the company expanded manufacturing capacity, including a large production facility footprint. Red Cat entered 2026 with more than $200 million in cash, giving it a funding runway for expansion without immediate reliance on new equity issuance.
Profitability has not yet been reached. The company reported a net loss exceeding $50 million over the past year, reflecting heavy investment in facilities, staffing, and R&D. Management has indicated that margin improvement depends on higher production volumes and operating leverage.
RCAT stock often trades at a price-to-sales multiple above that of traditional defense contractors, reflecting growth expectations. Analyst price targets have commonly clustered in the high-teens to low-20s dollar range, though valuation remains sensitive to production execution and margin trends.
Red Cat fits investors seeking direct exposure to military drone hardware and manufacturing scale-up, with higher volatility tied to contract flow and delivery performance.
Investment Strategies for Defense Drone Stocks
Defense drone stocks tend to behave more like emerging tech plays than classic defense primes. Revenue growth can be fast, but earnings often lag due to expansion spending.
A long-term thematic approach may work best for investors who view autonomous defense systems as a multi-year buildout story. Instead of focusing only on quarterly earnings, many investors track backlog size, production milestones, and approved vendor status.
Diversifying across the value chain can also help. Combining a communications and cybersecurity supplier with a hardware manufacturer spreads exposure across different revenue drivers.
Position sizing matters. Stocks with market caps under a few hundred million dollars can move sharply on news. Using smaller allocations can help manage downside risk while maintaining thematic exposure.
Watching margin trends is equally important. Revenue growth of 50% to 1,000%+ is attention-grabbing, but sustained improvement in gross margin and operating leverage is what typically supports longer-term re-rating.
Conclusion
Defense drone stocks are increasingly tied to core military infrastructure rather than experimental technology themes. Budget allocations, secure supply chain rules, and autonomous warfare doctrine are pushing drones and robotics to the center of defense planning.
Mobilicom (MOB) and Red Cat Holdings (RCAT) represent two different but connected opportunities within this shift. Mobilicom focuses on encrypted communications and cybersecurity software for autonomous platforms, while Red Cat focuses on tactical drone hardware and scaled production for military customers.
For investors, the key metrics to watch are contract scale, revenue growth rates, cash runway, and margin progression. As autonomous defense systems expand globally, companies operating in secure drone communications and military UAS production are likely to remain a closely followed niche within the broader defense tech sector.