AeroVironment (AVAV 1.66%) stock had a fine start to the 2025 trading year. On Thursday, its stock rose by nearly 2% in value during a session in which the S&P 500 index sagged marginally. The drone maker didn’t have any significant news of its own to deliver; rather, the stock moved because of a new analysis of its business sector.
Innovation will drive sales
That morning, a report predicting notable growth in the military drone market was published by Grand View Research. This bullish view is based on several positive developments, including marked improvements in drone manufacturing, like increased endurance and payload capacity, plus stealth features.
Innovations in areas such as materials science and miniaturization are also contributing, as they allow drones to fly for longer periods of time and carry heavier payloads. Thanks to those advances in stealth capabilities, they are also becoming more effective at evading detection.
Grand View added that the popularity of autonomous and semi-autonomous drone systems is increasing. The appeal of such craft is obvious — as they need little or no human involvement, their operation reduces the risk to personnel.
A member of an illustrious group
In Grand View’s estimation, thanks to these tailwinds, the compound annual growth rate of the military drone market is projected at just under 14% from 2024 to 2030, from a level of slightly over $36.1 billion in 2023. The researcher provided something of a top ten list of military drone manufacturers, and that lineup rightfully included AeroVironment along with such defense incumbents as Northrop Grumman and Lockheed Martin.
Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AeroVironment. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.
