by Fred Fuld III
You may have recently read about the defense-technology company specializing in drones called AIRO Group, which completed its IPO on June 13, 2025. Its shares soared on the first day of trading, more than doubling in price. So are drone stocks worth investing in?
Here is an in-depth look at the six largest drone-related companies by market capitalization as of mid-2025. Each of these firms operates in different niches within the drone and advanced air mobility (AAM) sector, from military-grade unmanned systems to futuristic electric vertical takeoff and landing (eVTOL) aircraft. This article explores the business focus, strengths, and drawbacks of each company.
AeroVironment (AVAV)
AeroVironment Inc., based in Virginia, is the largest pure-play drone company by market cap, valued at approximately $8.6 billion. The firm specializes in unmanned aircraft systems (UAS) primarily for defense and government agencies. Its flagship products include the Puma, Raven, and Switchblade drones, which are used extensively by the U.S. military and its allies. AeroVironment also provides sensor payloads, software analytics, and tactical missile systems.
The company’s key strength lies in its established position within the defense ecosystem and its long-term government contracts, which provide predictable revenue streams. Its reputation for reliability and battlefield-proven technology gives it a competitive edge. However, its reliance on government contracts makes it susceptible to budgetary shifts and political uncertainty. Additionally, its commercial drone ambitions have lagged behind competitors, limiting its diversification.
The stock trades at 161 times trailing earnings and 48 times forward earnings. Earnings per share growth next year is expected to increase by over 28%.
Joby Aviation (JOBY)
Joby Aviation, headquartered in Santa Cruz, California, is an eVTOL aircraft company developing electric air taxis aimed at transforming urban mobility. With a market cap around $7.1 billion, Joby is backed by major investors such as Toyota, Delta Air Lines, and Uber. The company is targeting FAA certification for its five-seat aircraft and hopes to launch commercial operations in the coming years.
Joby’s primary advantage is its first-mover position in the U.S. eVTOL space, supported by strong financial backing and a clear regulatory roadmap. Its vertical integration—building aircraft and planning to operate its own air taxi service—gives it control over the customer experience. The major challenge for Joby is execution: mass-producing aircraft, achieving certification, and scaling a profitable transport service remain unproven. As with many pre-revenue firms, it also faces pressure to justify its high valuation in a capital-intensive field.
The company has been generating negative earnings on a year-over-year drop in sales.
Kratos Defense & Security Solutions (KTOS)
Kratos, valued at approximately $6.4 billion, is a national security technology company with a significant footprint in the unmanned systems space. It manufactures high-performance tactical drones such as the XQ-58A Valkyrie, used for military training and as loyal wingman systems to supplement piloted fighter aircraft. Kratos operates in various segments, including satellite communications, microwave electronics, and missile defense.
Kratos benefits from its diverse product lines and integration with U.S. defense priorities, particularly unmanned combat systems. Its experimental drones align with the Department of Defense’s interest in cost-effective autonomous aircraft. However, unlike AeroVironment, Kratos is more diversified and less focused solely on drones, which may dilute investor exposure to the UAV sector. Moreover, delays in Pentagon procurement and the high R&D costs of next-gen aircraft can pose financial headwinds.
The stock has a nosebleed high trailing price to earnings ratio of 330 and a forward P/E of 60. Earnings per share growth next year is expected to increase by over 37%.
Archer Aviation (ACHR)
Archer Aviation, another eVTOL company, has a market cap of approximately $5.6 billion. Based in San Jose, California, Archer is building an electric air taxi called “Midnight” with a projected range of 100 miles and a capacity for four passengers and a pilot. United Airlines is among its major backers, and the company is aggressively targeting FAA certification in the next 1–2 years.
Archer stands out for its partnerships and high-profile collaborations, including a manufacturing deal with Stellantis and commercial support from United. Its aircraft design emphasizes redundancy and safety, appealing to regulators. However, like Joby, it remains a pre-revenue company facing intense capital demands and long development timelines. It also competes head-to-head with Joby, which has more flight hours logged and appears ahead in the certification process.
The company has been generating negative earnings.
EHang Holdings (EH)
EHang, based in Guangzhou, China, is a publicly traded autonomous aerial vehicle company with a market cap of roughly $1.2 billion. Its flagship product, the EH216, is a fully autonomous two-seater eVTOL aircraft targeting air taxi, cargo delivery, and emergency services applications. EHang has achieved conditional certification in China and is making inroads in several international markets.
The company’s strength lies in its aggressive rollout in Asian markets and its autonomous technology, which removes the need for onboard pilots. This could be a game-changer in urban air mobility if adopted at scale. However, regulatory approval outside of China remains a challenge, and investor confidence has occasionally wavered due to concerns over governance, financial transparency, and geopolitical tensions. Its technology, while advanced, remains relatively unproven in real-world conditions compared to Western peers.
The stock trades at 68.5 forward earnings, with a loss generated this year and a profit expected next year. Sales jumped 168% year over year.
Red Cat Holdings (RCAT)
Red Cat Holdings is a small but rapidly growing player, with a market cap estimated between $750 and $800 million. The Puerto Rico-based company focuses on drone hardware and software for military and industrial uses. Through its subsidiary Teal Drones, it produces the Golden Eagle drone, a U.S.-approved alternative to Chinese UAVs for national security use. It also provides AI-driven command-and-control software and secure data streaming tools.
Red Cat’s appeal lies in its focus on domestic, NDAA-compliant drones at a time when the U.S. is actively reducing reliance on Chinese UAVs. Its software-driven platform approach also positions it well in the growing battlefield intelligence space. However, it remains a micro-cap stock with limited revenue and unproven scalability. The company needs to expand its client base and execute on defense contracts to achieve sustainable growth.
The stock trades at 95.5 forward earnings, with a loss generated this year and a profit expected next year. Sales went up by 49.8% year over year.
Conclusion
From defense stalwarts to futuristic air taxis, these six drone-related companies represent a spectrum of business models and stages of maturity. AeroVironment and Kratos provide stable exposure to military UAV systems, while Joby and Archer are high-risk, high-reward bets on the future of urban air mobility. EHang offers a global angle with a fully autonomous platform, and Red Cat delivers a niche opportunity in U.S.-centric, secure drone technology. As the drone ecosystem continues to evolve, each of these companies offers a unique lens on the industry’s future.
Disclosure: Author didn’t own any of the above at the time the article was written.
