It’s a long way from Scottsdale to Kiev, but Rick Smith was willing to make the trip.
Smith, chief executive of Arizona-based Axon Enterprise (AXON) , visited Ukraine’s capital in August along with Aaditya Devarakonda, CEO of airspace-security company Dedrone, which Axon acquired last year.
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The two men met with Ukraine Deputy Defense Minister Serhii Boiev to discuss potential collaboration with Ukrainian manufacturers and to share expertise in countering hostile unmanned aerial vehicles.
“Our proposal today is not about business – it is about protecting people,” Smith said in a statement. “We are inspired by Ukrainian service members and the technologies they employ, and it is an honor for us to work together and learn from this experience.”
And the companies that produce drones and related products are also on investors’ radar screens.
Russia and Ukraine trade drone attacks
Drones have become a significant factor in the war: Unmanned aerial vehicles are estimated to account for around 70% of all Russian and Ukrainian battlefield casualties.
On Sept. 9 Ukrainian drones attacked the Russian Black Sea coast just hours after President Vladimir Putin took virtual meetings from his residence there in the coastal resort city of Sochi.
Russia’s Defense Ministry said its forces shot down at least 31 Ukrainian drones overnight, ABC News reported.
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The assault came days after Russia attacked Ukraine’s capital city with drones and missiles in the largest aerial attack on the country since the war began.
At least four people, including an infant, died as Russia struck Kiev with 805 drones and decoys..
“The world is suddenly keenly aware that these small drones are the biggest threat vector at scale because anyone can do it, and none of the traditional defense mechanisms, none of our air defense systems, are designed around that threat,” Smith told analysts during the company’s earnings call in August.
Axon Enterprise, formerly Taser International, develops weapons and technology products for the military, law enforcement and civilians.
“I think we’re in a really strong position,” he added. “We are certainly a market leader. And, you know, we’re seeing just a ton of demand across the spectrum for people realizing that they need solutions here.”
Drone production seen as a growth industry
Chris Versace, lead manager of TheStreet Pro portfolio, noted that the portfolio has positions in Axon and in data-analytics-software provider Palantir (PLTR) , which integrates its data and AI software, primarily its V-NAV (Visual Navigation) and Edge AI platforms with drones.
Versace included a link to a Wall Street Journal story about how Ukraine is using artificial intelligence to enable groups of drones to coordinate with each other to attack Russian positions, a technology that heralds the future of battle.
Military experts say this so-called swarm technology represents the next frontier for drone warfare because of its potential to enable tens or even thousands of drones —or swarms — to be deployed at once to overwhelm the defenses of a target, the Journal reported.
The industry is taking off, according to CB Insights, as equity funding to drone developers has reached a record $5.5 billion already this year.
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“More broadly, the drone market is projected to grow from $73.1 billion in 2024 to $163.6 billion by 2030,” the firm said, “driven by defense spending, more permissive regulations, and AI advances that enable autonomous navigation, real-time object detection, and mission planning without human intervention.”
The drone sector includes such old-school names as Northrop Grumman (NOC) , Boeing (BA) and Lockheed Martin (LMT) , along with companies like Kratos Defense & Security Solutions (KTOS) and AeroVironment (AVAV) .
DJI is the world’s largest drone manufacturer. But the Chinese company is on the verge of being banned in the U.S. by federal lawmakers who accuse the company of a variety of infractions including using forced labor, benefiting from unfair subsidies and being a cybersecurity threat, The New York Times reported.
U.S. Defense Department invests in drone programs
The U.S. Department of Defense is leading the drone surge, CB Insights said.
The Pentagon is redirecting roughly $50 billion from legacy programs to new priorities, including drones and counter-drone systems.
On the industrial front, CB Insights said, adoption is already proving the technology’s value with companies reporting 30% to 50% more efficient inspections.
Both Amazon (AMZN) and Walmart (WMT) are using drones for deliveries and companies are also sending the devices into the air for efforts like seeding crops and surveying.
President Donald Trump showed his support for drones on June 6 when he signed the “Unleashing American Drone Dominance” and “Restoring American Airspace Sovereignty” executive orders.
The Pentagon, the US Department of Defense, is investing big in the drone industry.
Shutterstock-Ivan Cholakov
The orders direct federal agencies to prioritize buying American-made drones to reduce reliance on foreign supply chains. They mandate that the Federal Aviation Administration speed up the integration of drones into national airspace.
The orders also require the attorney general and FAA to increase enforcement of laws against dangerous or illegal drone operation.
And Trump is reportedly preparing to reinterpret a decades-old arms control treaty to expand sales of advanced U.S. drones overseas, according to Reuters.
The change would reclassify drones such as the MQ-9 Reaper, produced by General Atomics Aeronautical Systems, as aircraft rather than missile systems, sidestepping limits imposed by the 35-nation Missile Technology Control Regime, which the US signed in 1987.
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