Drones Show Promise Despite Recent Declines, Congress Boosts Funding
The REX Drone Economy ETF (DRNZ) experienced a significant surge of 57% from November 2022 to January 2023 but has since dropped 22%. Currently, it remains about 15% below its January peak. Veteran trader Jonathan Rose maintains that the underlying fundamentals supporting drone technology remain unchanged, with military applications accelerating; a report indicates drones are responsible for 80% of battlefield casualties in Ukraine.
In early October 2023, Congress passed an $839 billion defense spending bill for fiscal 2026, including $9.8 billion specifically for autonomous and unmanned systems. This funding signals a commitment to integrating drones and other autonomous technologies into military operations, likely to drive sustained demand. According to a 2024 Citi report, the market for AI robots could reach 1.3 billion by 2035, emphasizing the economic shift toward automation.
Investors looking for drone exposure can explore a tiered approach recommended by Jonathan Rose. This includes core manufacturers like Kratos (KTOS) and AeroVironment (AVAV), UAV subsystems from companies like Velo3D (VELO), and more speculative names such as Draganfly (DPRO). With an anticipated enduring trend in drone technology, cautious investment strategies are advised as market conditions may fluctuate.
