Even in times of peace, these defense stocks have a future: NEO Battery Materials, Hensoldt, DroneShield

Drone market to grow rapidly through 2030

The US, Ukraine, and Russia are talking about peace, which is fundamentally excellent news. However, the parties disagree on the details. Russia wants to gain ground at the negotiating table, and Ukraine has a legitimate interest in not ending up as a defenseless agricultural state. And the US? It wants a deal and does not care about the current security architecture in Europe. Conversely, this means that the EU states themselves must massively build up their own capabilities. This applies above all to the areas of reconnaissance and drones. According to a forecast by Global Markets Insights, the global defense drone market could grow to over USD 21 billion by 2034 – small interceptor and reconnaissance drones in particular are among the fastest-growing segments. In Germany, for example, the commercial drone market is expected to almost double by 2030, growing at around 7.5% annually, according to a statement made by the Association for Unmanned Aviation in 2023. It is entirely conceivable that growth has accelerated even further since then. Demand for high-performance battery components for longer flight times, as well as for drone detection and defense against unmanned aerial systems, is therefore increasing dramatically.

NEO Battery Materials: Innovative technology makes drones better

This is where companies such as NEO Battery Materials come into play with their specialized technology. The patented NBMSiDE® silicon anode platform is designed to significantly increase the energy density and fast-charging capability of batteries. In addition to drones, NEO's key target markets include applications related to robotics, electronics, and stationary energy storage. NEO's strategy is to provide end-to-end battery solutions, from materials and cell manufacturing to full system integration, in order to establish a robust, ideally domestic supply chain spanning North America and its allied countries. This strategy is also in line with European and US plans to become less dependent on Chinese supply chains, particularly in defense applications.

In recent months, NEO has announced several important partnerships and contracts. In November 2025, for example, NEO entered into a development partnership with US LFP anode specialist Nascent Materials to jointly develop cost-effective high-performance batteries for defense drones and AI servers. Together, the companies aim to integrate high energy density with ultra-fast charging to enable a new class of batteries for next-generation drone and high-tech systems.

High-performance batteries for the drones of tomorrow

In early November, NEO announced an order from a South Korean manufacturer of unmanned combat aerial vehicles. Under "Project David", NEO will supply silicon anode battery systems for swarm drones, medium vertical take-off drones, and balloon-based platforms. The prototypes are designed to deliver 25-50% longer flight times and around 50% higher energy density than today's LiPo batteries. That means more power, longer missions, and potentially life-saving advantages in the field. NEO's goal is clear: to make electric drones so capable that they can compete directly with fossil-fuel-powered systems. Given that drones are crucial in modern warfare and the fact that many Western countries remain behind the curve, NEO Battery Materials have become particularly interesting in building out a secure Western supply chain. The recent drop in the Company's market capitalization makes the stock even more attractively priced.

DroneShield faces competition

While the focus in recent months has been primarily on counter-drone systems such as DroneShield, small defense drones are now increasingly coming into focus. These intercept incoming aerial threats directly and neutralize them mid-air. After DroneShield's stock came under pressure in recent weeks due to misreported orders and other inconsistencies, it is worth focusing on alternatives such as NEO Battery Materials – after all, battery technology is a key requirement across numerous defense applications. In the field of drone defense, defense giant Hensoldt appears particularly compelling.

Hensoldt strongly positioned with unique reconnaissance electronics

Hensoldt is a leading German supplier of defense electronics with a focus on radar, optronics, and electromagnetic combat systems. The Munich-based company offers manufacturer-neutral multi-domain systems for air, land, and sea forces and is increasingly active in the cyber and space sectors. Its core target groups are NATO and EU defense ministries, in particular the German, French, and Polish armed forces and other international partners. Last year, Hensoldt generated revenue of around EUR 2.2 billion and, following the acquisition of IT service provider ESG, employs around 9,000 people. Hensoldt's advanced systems are particularly important for reconnaissance and could make a significant contribution to the coordination of drone swarms. Similar to NEO Battery Materials, Hensoldt occupies a crucial area and benefits largely regardless of which drones will actually be needed in the future.

False peace could necessitate investment

Even if a ceasefire is reached in Ukraine, the demand for drone and reconnaissance technology will remain high. Should Ukraine be forced to cede territory in Donbass, some military analysts even warn that Europe's security situation could deteriorate further. The market for defense stocks, therefore, remains structurally intact. Companies that supply flexible components have an advantage. Given its market capitalization of around CAD 70 million, NEO Battery Materials stands out as particularly interesting within the high-performance battery sector.