It has been almost one month since Russia invaded Ukraine. With diplomatic talks failing to yield any positive results so far, geopolitical tensions continue to rise. What’s more, although the U.S. doesn’t seem compelled to grant Ukraine’s no-fly zone request, it is providing plenty of aid. Most recently, this has meant sending advanced technology, including Switchblade drones. Drones have already been vital to Ukraine’s resistance efforts. Now, as the U.S. doubles down on sending aid, drone stocks are shooting up.
Specifically, yesterday brought an announcement that the U.S. is sending $800 million worth of security aid to Ukraine. This package includes 100 Switchblade drones — also known as “kamikaze drones” — designed to attack enemy targets on “one-way missions.”
This recent focus on uncrewed aerial technology has created new momentum for drone stocks, some of which are spiking today. For example, Canadian drone producer Draganfly (NASDAQ:DPRO) is surging by more than 80% this morning, partly on big order news of its own. Fellow penny stock AgEagle Aerial Systems (NYSEAMERICAN:UAVS) is up more than 2% for the day as well. Finally, AeroVironment (NASDAQ:AVAV) has seen a turbulent morning but is in the green so far.
What’s Happening with Drone Stocks?
It’s not hard to see why this type of news cycle would drive market momentum for drone stocks. As reports of the conflict have escalated, Ukraine has used drones strategically to combat Russian forces. Now, the U.S. is providing a fleet of highly advanced drone models with more enhanced targeting capabilities.
AeroVironment has manufactured two variants of the drone, both of which have been sold to U.S. Special Forces. The company’s gains have been small today, but shares will likely continue rising if the need for more drones increases. Plus, AeroVironment is not just a drone innovator; the company has also been noted for its advancements in space tech. That gives investors even more reason to watch AVAV stock closely.
The recent success of Draganfly — which just received an order from Coldchain Delivery Systems for medical-response and search-and-rescue drones — also highlights the wide capabilities of drone tech. Drones are most known for aerial attacks, but they can also be life-saving equipment. As the Russia-Ukraine conflict worsens, the need for the latter will only increase. MarketWatch reports that the Draganfly order was for up to 200 units. Further, as InvestorPlace contributor William White notes, Draganfly has a history of supporting humanitarian efforts across the globe.
What It Means
Looking forward, the recent focus on sending drones to Ukraine may mean world leaders don’t see the conflict being resolved anytime soon. What’s more, search-and-rescue tech will likely still be needed even after the Russia-Ukraine conflict ends.
As such, investors should keep an eye on these names as well as other drone stocks moving forward.
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On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.