Drone Makers Advance as Pentagon Adopts Ukraine Tactics
Source: Streetwise Reports (8/20/26)
U.S. drone suppliers like Unusual Machines and Red Cat Holdings expand capacity amid Pentagon programs and lessons from Ukraine drone operations that highlight low-cost systems.
A drone that costs only a few hundred dollars can destroy a tank valued in the millions, while swarms of inexpensive drones can threaten strategic aircraft worth far more. According to a May 15 report by David Kirichenko for Forbes, Ukraine has turned that cost imbalance into a core battlefield strategy, and the Pentagon is now sending personnel to Ukraine to study how its forces employ drones in combat.
The global drone market size was valued at US$91.88 billion in 2025 and is projected to grow from US$100.74 billion in 2026 to US$210.26 billion by 2034, exhibiting a CAGR of 9.63% during the forecast period, according to Fortune Business Insights in a July 2026 report. In a separate report on the same day, Fortune Business Insights said the global military drone market size was valued at US$19.83 billion in 2025. North America dominated the military drone market with a market share of 40.49% in 2025.
U.S. Military Drone Opportunity Emerges From Real-World Lessons
Defense Secretary Pete Hegseth told senators that U.S. military personnel were in Ukraine examining the country’s battlefield drone operations. “I’ve personally approved additional personnel there to learn from that drone battlefield, both on offense and defense,” Hegseth said, adding that the Pentagon is working to apply Ukraine’s experience as drone warfare becomes increasingly important to modern military operations.
Ukrainian troops fighting an asymmetric conflict with limited resources have had to adapt quickly and make extensive use of commercially available drones, the report said. Bohdan Garkavyy, a drone pilot with the Unmanned Systems Battalion of Ukraine’s 110th Separate Mechanized Brigade, said Ukrainian drone manufacturing accelerated after the battle for Avdiivka in early 2024 as delays in U.S. assistance contributed to an artillery shortage.
Ukraine plans to manufacture more than seven million drones in 2026, roughly 70 times the United States’ annual combat-drone production, while Ukrainian forces operate about 9,000 drones each day along the front. Manufacturers also modify software and hardware several times annually.
Why These U.S. Suppliers Stand Out in the Drone Shift
The U.S. federal drone-acceleration push has moved from directive (a 2025 executive order) to buildout. Its $1 billion Drone Dominance program is running “gauntlet” competitions to field tens of thousands of ~US$5,000 attack drones. Most recently, in July 2026, the War Department created a Direct Reporting Portfolio Manager for Unmanned Systems as the single integrator for all unmanned programs.
Highlighting the need, The Washington Post reported that the U.S. military has lost 45 MQ-9 Reaper drones during the war with Iran, representing roughly one-quarter of the country’s fleet, noted Kathianne Boniello in a report for Yahoo! Business on August 13. Depending on their configuration, each traditional aircraft can cost between US$30 million and US$50 million, putting the potential value of the losses above US$1.3 billion.
Key Investor Takeaways
- The Pentagon is directly studying Ukraine drone tactics and scaling domestic production programs such as Drone Dominance to close a large output gap.
- Unusual Machines Inc. and Red Cat Holdings Inc. are NDAA-compliant suppliers positioned for military procurement with expanding U.S. manufacturing footprints.
- Revenue at both public companies has grown sharply in recent quarters as demand signals from structured defense programs become clearer.
- Analyst price targets for UMAC range from US$30 to US$42, while RCAT targets sit between US$15 and US$25, reflecting growth expectations.
- Firestorm Labs demonstrates expeditionary 3D-printed drone production that could complement traditional supply chains in forward operations.
- Market forecasts show the military drone segment expanding at an 11.1% CAGR through 2034, supported by AI integration and rising defense budgets.
Unique Business Models and Production Advantages
According to Rachael Hoagland, writing for the Modern War Institute at West Point on July 20, the Ukraine-Russia war is also demonstrating that drone companies must also be able to innovate and manufacture unmanned systems faster than their opponents. During NATO’s 2025 Exercise Hedgehog in Estonia, a Ukrainian-led team reportedly used about 30 drones and an AI-enabled battlefield management system to simulate the destruction of two NATO battalions in one day, highlighting the potential impact of massed, networked drones, she said.
Among the drone companies stepping up to fill the demand are Orlando, Florida-based Unusual Machines Inc., Utah-based Red Cat Holdings Inc., and a private company, Firestorm Labs.
Unusual Machines Inc. (UMAC:NYSEAMERICAN) is an Orlando, Florida-based manufacturer and retailer of drone components and first-person-view (FPV) systems.
Streetwise Ownership Overview*
Unusual Machines Inc. (UMAC:NYSEAMERICAN)
| Institutions: 66% | |
| Retail: 28% | |
| Insiders and Management: 6% |
The company markets its products through established enthusiast brands such as Fat Shark and Rotor Riot, offering flight controllers, electronic speed controllers, cameras, video transmitters, goggles, and headsets, with drone motors increasingly becoming a central part of its portfolio.
Unusual Machines’ broader strategy is to establish itself as a U.S.-based, NDAA-compliant supplier of the essential components that go into drones, positioning the company to benefit from government policies encouraging defense and commercial customers to reduce their reliance on Chinese-made parts. The company reported that fiscal 2025 revenue more than doubled to approximately US$11.2 million, and has been rapidly increasing production capacity. Its Orlando motor facility is being scaled toward about 1,500 units per day, with additional shifts and automation planned through 2026.
Red Cat Holdings Inc. (RCAT:NASDAQ) fields a “family of systems” of U.S.-manufactured, NDAA-compliant platforms led by the Black Widow small uncrewed aircraft system, which won the U.S. Army’s Short Range Reconnaissance (SRR) Program of Record and is now being fielded, with fresh orders from U.S. Air Force Security Forces, the company said in a release on August 7. A new export-oriented variant, the Hellcat, built on the same architecture, is also available.
Streetwise Ownership Overview*
Red Cat Holdings Inc. (RCAT:NASDAQ)
| Institutions: 51% | |
| Retail: 40% | |
| Management and Insiders: 9% |
| Date | Old Symbol | Old Shares | New Symbol | New Shares |
|---|---|---|---|---|
| 04/30/21 | RCAT:NASDAQ | 1 | RCAT:NASDAQ | 1 |
| 08/29/19 | TFVRD:NASDAQ | 1 | RCAT:NASDAQ | 1 |
The broader lineup spans the Teal 2 blue-UAS (from subsidiary Teal Drones), the Edge 130 VTOL and FANG first-person-view drone from the FlightWave line, and a maritime arm, Blue Ops, whose Variant 7 uncrewed surface vessel has reached full-rate production. On the development track, Teal Drones has advanced to Gauntlet II of the Pentagon’s Drone Dominance Program, one of 19 companies invited to evaluation events at Fort Carson, Colorado, in August 2026, after a Camp Grayling, Michigan, qualifier, according to a July report by Unmanned Systems Technology.
Industry Timing, Catalysts, and Analyst Views
Unusual Machines delivered a strong second quarter of 2026, with revenue more than doubling sequentially and gross margins improving, according to an Aug. 10 research report from Roth Capital Partners analyst Craig Irwin. Counter-drone systems are emerging as another potential growth avenue, while military demand is beginning to strengthen. Roth maintained its Buy rating and US$40 price target.
According to Litchfield Hills analyst Barry Sine on August 6, UMAC produced a “blowout quarter” that substantially surpassed expectations, with second-quarter revenue climbing roughly 700% to US$16.7 million as the company works to satisfy military demand, particularly through the Drone Dominance program. Sine reiterated his Buy rating and US$42 price target.
According to TipRanks, on August 12 Piper Sandler’s Clarke Jeffries initiated coverage at Buy with a US$38 target (about 46.32% upside); H.C. Wainwright’s Amit Dayal reiterated a Buy at US$42 on August 7 (about 61.73% upside); Maxim Group’s Matthew Galinko reiterated a Buy and raised his target to US$30 from US$25 (about 15.52% upside) on August 7; and on August 6, Needham’s Austin Bohlig reiterated a Buy while lifting his target to US$40 from US$30 (about 54.02% upside).
Red Cat posted record Q2 2026 revenue of US$20.2 million, up 527% year over year, the August 7 release said. The company recently entered a multiyear partnership with the NFL’s Washington Commanders aimed at supporting U.S. service members, veterans, and military families.
Analyst sentiment on Red Cat is broadly bullish. Ladenburg Thalmann’s Glenn Mattson reaffirmed his Buy rating on March 3 and raised his price target to US$20 (about CA$27.80). Needham & Company’s Austin Bohlig maintained a Buy rating in May. ThinkEquity’s Ashok Kumar set a US$25 target after first-quarter results. H.C. Wainwright initiated coverage with a Buy and a US$20 target. Roth Capital launched coverage with a Buy and a US$25 target.
Share Structure, Events, and Valuation Context1
As for ownership and share structure, eight insiders and management own about 6% of Unusual Machines. About 219 institutions hold 66%. Unusual Machines has 49.96 million shares outstanding. Its market cap is US$1.35 billion. Its 52-week range is between US$7.25 and US$34.36 per share.
As for ownership, about 9% of Red Cat is held by insiders and management, about 51% by institutions, and the remainder by retail investors. The company has 152.71 million shares outstanding, a market cap of US$1.58 billion, and a 52-week range of US$5.77 to US$18.78.
On the private side, Firestorm Labs is approaching the supply issue from a different angle, working to bring drone production directly to the front. The defense technology company has demonstrated the ability to manufacture 3D-printed drones aboard a U.S. Navy ship at sea, using a containerized microfactory to support the Navy’s effort to produce autonomous systems quickly and expand a warship’s weapons capacity, according to a report by Riley Ceder for the Navy Times on August 5. Earlier this year, Firestorm announced it had secured US$82 million in Series B funding, led by Washington Harbour Partners and supported by NEA, Ondas Holdings Inc. (ONDS:NASDAQ), In-Q-Tel, the venture arms of Lockheed Martin Corp. (LMT:NYSE) and Booz Allen Hamilton Holding Corp. (BAH:NYSE), among others, elevating its total funding to US$153 million.
Frequently Asked Questions
Why is the U.S. racing to build more drones? Ukraine’s war with Russia has shown that cheap drones can destroy multimillion-dollar equipment, making mass, low-cost drone production a strategic priority. The Pentagon is studying Ukraine’s tactics firsthand.
How big is the production gap? Ukraine plans to build more than 7 million drones in 2026, roughly 70 times U.S. annual combat-drone output, and operates about 9,000 drones a day at the front.
What is the Drone Dominance program? A US$1 billion Pentagon initiative running gauntlet competitions to field tens of thousands of approximately US$5,000 attack drones while creating a new portfolio manager for unmanned systems.
What happened with the Reaper drones? The U.S. lost about 45 MQ-9 Reapers during the war with Iran, with each aircraft costing roughly US$30 million to US$50 million depending on configuration.
How large is the drone market? Fortune Business Insights values the global drone market at US$91.88 billion in 2025, growing to US$210.26 billion by 2034 at a 9.63% CAGR, with the military segment reaching US$52.31 billion by 2034.
The incorporation of artificial intelligence (AI) and machine learning into military drones is enhancing autonomous flight, target identification, and mission planning, making operations more capable and efficient, the report said. AI is also advancing military drone technology by enabling systems to identify and select targets with greater precision and autonomy. Rising investment in AI and autonomous technologies is further supporting market growth.
Important Disclosures:
- Unusual Machines Inc. is a billboard sponsor of Streetwise Reports. The company pays a monthly sponsorship fee of US$3,000–US$6,000 for banner advertising and an enhanced company profile page. Streetwise Reports’ editorial content is fully independent and is not influenced by sponsorship.
- As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Red Cat Holdings Inc., Firestorm, Lockheed Martin Corp., and Unusual Machines Inc.
- Jordan Nova wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
- This article does not constitute investment advice and is not a solicitation for any investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.
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1. Ownership and Share Structure Information
The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.