Drone Stocks Soar As Trump Clips The Wings of Defense Majors

President Donald Trump sent defense stocks on a rollercoaster on Wednesday after threatening a total ban on stock buybacks and dividends until supply issues are resolved and following up with a proposed 50% increase in the military budget in 2027. 

Shares of drone manufacturers and autonomous systems providers benefited from both Trump's attack on the defense majors and the proposed expansion of military spending. 

• RCAT stock is soaring. See the chart and price action here.

The Crackdown On Defense Majors

In a series of social media posts on Wednesday, Trump condemned the current pace of military manufacturing, specifically targeting the billions of dollars allocated to shareholder returns while key programs face years of backlogs.

• The Ultimatum: Any defense contractor that fails to meet strict production and maintenance benchmarks will be prohibited from issuing dividends or repurchasing shares.
• Executive Caps: Trump also proposed a $5 million cap on executive compensation for underperforming firms, demanding that capital be redirected into “NEW and MODERN Production Plants.”
• Market Impact: Following the posts on Wednesday, shares of Lockheed Martin Corp. (NYSE:LMT), Northrop Grumman Corp. (NYSE:NOC), RTX Corp. (NYSE:RTX) and General Dynamics Corp. (NYSE:GD) dropped between 4% and 6% and later recovered after Trump proposed expanded military spending in the near future. More on that below. 

$1.5 Trillion Military Budget? 

Trump concluded a series of social media posts on defense contractors and spending with a proposal to expand the military budget to $1.5 trillion in 2027. 

"I have determined that, for the Good of our Country, especially in these very troubled and dangerous times, our Military Budget for the year 2027 should not be $1 Trillion Dollars, but rather $1.5 Trillion Dollars,” Trump said.

The Drone Stock Surge

Stocks of high-growth drone and autonomous systems providers soared as investors viewed both the admonition from the big defense primes and the expanded military spending as positive catalysts for the sector.

The following pure play drone stocks have soared by double-digits in the 24 hours following Trump's posts: 

COMPANY	FOCUS
AeroVironment, Inc. (NASDAQ:AVAV)	Loitering munitions (Switchblade)
Kratos Defense & Security Systems Inc. (NASDAQ:KTOS)	Low-cost tactical jet drones (Valkyrie)
Red Cat Holdings, Inc. (NASDAQ:RCAT)	Small reconnaissance drones (Black Widow)
Ondas Holdings, Inc. (NASDAQ:ONDS)	Autonomous infrastructure & C-UAS
Draganfly, Inc. (NASDAQ:DPRO)	Multi-mission tactical UAVs
AgEagle Aerial Systems, Inc. (AMEX:UAVS)	Drones, sensors and software

The sentiment is clear: the Trump administration wants a decentralized, domestic military manufacturing base capable of mass-producing weapons quickly. 

For companies like Red Cat, Kratos and AeroVironment—which operate without the bureaucracy and heavy dividend baggage of the majors—the path to massive Pentagon contracts has never been clearer.

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