A new defense budget proposal from the White House means the drone industry could soon see a spike in cash flow. President Donald Trump last week requested $1.5 trillion for defense in fiscal 2027 starting in October, 44% higher than the fiscal 2026 military budget. If Congress were to pass the bill, U.S. military spending would be at its highest level as a proportion of GDP in decades. Though the proposal doesn't specify how funds will be allocated, an analysis from Needham estimates $63 billion of the budget will go to unmanned or drone technology. That's more than six times the enacted level of drone spending 2026. "We view this unprecedented funding as a positive catalyst for the entire unmanned ecosystem, as expanding federal investment meaningfully increases the U.S. market opportunity not only for platform providers, but also across the broader value chain of critical subsystems and key components," Needham analyst Austin Bohlig wrote. The analyst estimates that $55 billion of the $63 billion in projected drone spending will go to the Defense Autonomous Weapons Group, a program meant to rapidly produce low-cost drones. Bohlig named four defense stocks as potential beneficiaries. AeroVironment Drone company AeroVironment is one of Needham's expected beneficiaries. The defense company specializes in drone and counter-drone technology and has already reached several major deals with the U.S. government. In February, AeroVironment won a $186-million contract from the Pentagon to deploy its Switchblade drones. The army spent another $17.6 million in March for a fleet of AeroVironment's Red Dragon drones. Bohlig believes the military budget proposal would benefit AeroVironment through both those franchises, and gave a $400 price target on the stock, suggesting upside of 114% from Tuesday's close. Ondas Needham also expects AI-powered drone maker Ondas to win additional government funding. The West Palm Beach, Florida-based company said in March that it would merge with Mistral, a defense contractor with more than $1 billion in procurement contracts with the Department of Defense. The new military budget will likely benefit Ondas through the Mistral acquisition, Bohlig said, setting a price target of $23 on Ondas, implying the stock will gain 141% from Tuesday's close. Karman Holdings and Amprius Technologies Karman and Amprius are defense companies that make drone parts. Karman makes launchers for autonomous systems including drones, and Amprius manufactures batteries used in long-range drone strikes. Bohlig set a price target of $125 on Karman, 50% higher than the stock's Tuesday close, and a $20 target on Amprius, implying 20% appreciation from where it closed Tuesday.
