Conservative estimates put military UAV markets at about $17 billion by 2030. That’s a compounded annual growth rate of 26% since 2020. Some estimates put that 2030 figure at more than $30 billion, which would certainly accelerate the sector’s CAGR significantly.
Nearly 100 countries already use drones in their defense forces, whether they’re built by big defense contractors like Boeing (NYSE: BA), Northrop Grumman (NYSE: NOC), Thales (OTC: THLLY), BAE Systems (OTC: BAESY), or smaller national firms.
Today, UAVs serve a variety of purposes. Some are strictly for reconnaissance, some for tactical awareness, and some are kinetic.
In Ukraine, for example, AeroVironment (NASDAQ: AVAV) has been busy sending its kamikaze Switchblade drones as anti-tank weapons. AVAV has a big reputation with soldiers since the first Gulf War when its handheld drones were helpful in sniffing out IEDs and hostile troops in small villages before US forces entered.
Now, as more UAVs fill the battlespace in a variety of applications, other new technologies are being married to these platforms to create new systems entirely.
AI is helping build autonomous drone swarms. Hypersonics are marrying with AI and drone technology to improve kinetic warfare, but the fact is, the more powerful and time tested these platforms become, their use in the civilian environment will become even more valuable.
For example, as you can see in the graphic below, swarms can not only be used for military targets, but can also provide fast, reliable information in a city, or during wildfires or flooding.
The one thing to bear in mind when we talk about MegaTrends is the ability for these technologies to evolve and transform into new markets and enhance productivity on a variety of levels.
Once these MegaTrend sectors are identified, it takes a deep dive into the companies that are developing the technologies, but also whether those companies can take that skill set and deploy it into a variety of markets and not just end up as highly specialized one-trick ponies.
Like any strong team, we have our starters, but also have a deep, strong bench in case those starters lose their edge. Our goal is to always have more great stocks than we can put in our small, curated portfolios and then pick only the best of the best.
So far, it’s working very, very well.
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