The Drone Revolution: Investors Focus on Lockheed Martin, Volatus Aerospace, and Northrop Grumman

Asymmetric warfare thanks to drones

First the war in Ukraine, now the one in the Persian Gulf. Asymmetric warfare is the "Holy Grail" of the seemingly outmatched armies of Ukraine and Iran. With smart, low-cost drones, they turn clunky tanks and slow warships into moving targets. And in doing so, they deal a severe financial blow to their opponents. According to media reports, an Iranian Shahed drone costs between USD 20,000 and USD 250,000, depending on the model. In contrast, intercepting such drones with missile defense systems can cost up to 200 times more. A single PAC-3 MSE interceptor used in the MIM‑104 Patriot system costs between USD 3.8 million and USD 5.2 million. For US international partners such as Saudi Arabia or Qatar, the cost can rise to USD 6 million to USD 12 million per missile.

In addition, three to five interceptor missiles often have to be fired to shoot down a Shahed drone. Accordingly, it is not surprising that the US military currently estimates the daily cost of the war at more than USD 1 billion. The enemy's drone technology has turned the attack into a costly endeavor.

Consequently, the US is currently attempting to procure inexpensive defensive drones from Ukraine, estimated to cost just a few thousand dollars. Not least, US media report that they intend to analyze the affordable Iranian models through reverse engineering and build them themselves. The lesson here is that defense contractors must be much more agile and flexible today.

Logistics, Delivery Services, Fire Department: Drones Everywhere

It is already evident that modern drone technology is changing the nature of war. But the revolution goes much further. Development is advancing at a rapid pace, especially in China. There, cleaning drones for skyscrapers, drones for shopping and food deliveries, and drones in the fire department are already in use. International corporations like Ikea are already testing these aircraft in warehouse logistics. This saves time and costs. Accordingly, unmanned aerial vehicles are in demand not only on the battlefield but also in civilian society and are expected to gain importance in the medium to long term. Specialized providers are likely to benefit from these developments.

Investors should keep an eye on Volatus Aerospace stock. But shares of established defense contractors like Lockheed Martin and Northrop Grumman are also on the agenda. Because, despite these changes in modern warfare, the expended material must be replaced after every war.

Northrop Grumman: The Architect of Defense

Northrop Grumman is one of the world's largest defense contractors. Unlike specialized firms, Northrop covers the entire spectrum of modern warfare - from the deep sea to outer space. Its business model rests on four pillars. In the aeronautics division, the company produces stealth bombers, fuselage components for the F-35, and Global Hawk drones.
The Mission Systems segment focuses on radar systems, cybersecurity, sensor technology, and electronic warfare. Additionally, Space Systems covers satellites, launch vehicles, and the modernization of the US nuclear deterrent, known as the Sentinel Program.

Each of these divisions generates approximately USD 11 to USD 12 billion in revenue. Last but not least, the smallest division, Defense Systems, manufactures missile launchers and ammunition, in addition to providing maintenance services and integrated battle management. Last year, the company generated total revenue of USD 42 billion with this structure. Northrop Grumman is benefiting on various levels from the current war in the Persian Gulf. For instance, demand for missile defense has surged dramatically. The Integrated Battle Command System is the centerpiece of modern air defense. As allies such as Saudi Arabia and the UAE are massively upgrading their defenses against Iranian missiles and drones, Northrop acts as an architect of these systems. Added to this is the high demand for ammunition and guided weapons. That is why the Defense Systems segment has been recording record orders for some time now, also because US stockpiles have needed replenishing for quite a while. Northrop's drones, such as the Global Hawk and the newer MQ-4C Triton, are already being deployed extensively in the current war. Without their data, the armed forces cannot operate.

Northrop Grumman recently surpassed the USD 100 billion mark in market capitalization for the first time. The stock had nearly doubled in the wake of the war in Ukraine and broke out to the upside after a long sideways phase at the beginning of the year. This was partly due to Trump's calls for a higher military budget, but since February 28, it has also been linked to the war in the Gulf. Since the start of the year, the stock has already gained more than 50%. At its current price of USD 733, the stock has nearly reached the price targets set in the latest analyst reports. For instance, Bank of America issued a price target of USD 750 at the end of January, before the war began, and confirmed its "Buy" recommendation. Deutsche Bank shares this view and considers USD 765 a possibility. From the perspective of fundamental models such as DCF, the stock is currently "Fairly Valued". However, we expect analysts to revise their reports in the coming weeks and months. In 2025 alone, the company received new orders worth over USD 46 billion.

This figure exceeds the total annual revenue for 2025. Given the sharp rise in the stock price since the start of the year, investors who anticipate only a long war should consider entering the market. Even though the operational outlook is promising, a quick end to the war in the Gulf is likely to trigger massive profit-taking for the time being.

Volatus Aerospace: The Ecosystem for Drone Technology

Unlike Northrop Grumman, Volatus Aerospace covers the entire spectrum of drone applications. Its business model resembles an integrated ecosystem for unmanned aerial systems. Historically, the company has focused heavily on civilian applications such as inspections for the oil and gas industry, utilities, and public safety.

To this end, it has developed its own software and technology and, in addition to drones, offers services such as logistics. In 2024, Volatus merged with Drone Delivery Canada and has since been working intensively on scaling autonomous drone deliveries, known as "middle-mile logistics."

However, the Canadians are now operating as a dual-use company. The greatest market growth in the coming years is expected in the field of military and security technology. Global Market Insights estimates the global drone market could exceed USD 66 billion by 2035, compared with roughly USD 18–20 billion today.

This sector is also driving Volatus's revenue. In the third quarter of 2025, hardware sales, specifically drones, already accounted for 53% of revenue. To capitalize on opportunities in this sector, the company has built an "Innovation Centre" in Mirabel, Québec, to manufacture proprietary drone-based ISR (Intelligence, Surveillance, Reconnaissance) solutions and logistics drones for NATO partners and the Canadian Armed Forces. This strategic positioning is rounded out with corresponding services (training, etc.) and data-driven software to provide customers with a one-stop solution. With this integrated approach, Volatus sets itself apart from many competitors who focus primarily on hardware. Volatus aims to combine the development and production of unmanned aerial systems with operational services, software solutions, and AI-powered data analysis.

With a market capitalization of approximately CAD 540 million, Volatus Aerospace remains one of the smaller but rapidly growing providers in this market. The stock has roughly tripled since the beginning of 2025, but is trading at only half the level it was at five years ago. In recent months, it has also traded quite volatilely between CAD 0.50 and CAD 0.75.

With the outbreak of war, the stock has successfully broken out of this range. Analysts at Ventum Capital Markets had just published an update on the stock on February 26, raising the price target from CAD 0.80 to CAD 0.95. Chief Analyst Rob Goff believes the company is at a strategic inflection point. The growth seen so far could accelerate massively due to large orders in the defense sector. Ventum emphasizes that the potential of the new manufacturing center in Québec is massively underestimated. Additionally, Volatus can benefit from its status as a national supplier. The new Canadian defense strategy, with a budget of CAD 82 billion, stipulates that 70% of defense goods should be procured domestically. Analysts expect EBITDA to grow by 77% to CAD 19.3 million by 2026. Long-term investors can bet on the expected growth in both civilian and military drones with Volatus Aerospace. If the stock's breakout is confirmed, now would be a good time to buy.

CEO Glen Lynch outlined Volatus Aerospace's strategy at the 18th International Investment Forum. Click here for the presentation.

Lockheed Martin: The Defense Giant

Lockheed Martin is one of the world's largest defense contractors and the preferred partner of the US government and allied nations. It is likely the only company worldwide to cover the entire spectrum of defense systems: from research and development through production to decades of maintenance. In 2025, the group generated revenue of approximately USD 75 billion (+6%) with this portfolio. Net income stood at USD 5 billion, down 27% from the previous year. The decline was primarily due to delays and cost increases in two major projects in Q2 (approximately USD 1.6 billion). Analysts view these as one-time effects. In terms of free cash flow, Lockheed Martin exceeded market expectations with approximately USD 6.9 billion. The order backlog reached a new record high of approximately USD 194 billion at the end of 2025.

Lockheed Martin is generally divided into four specialized segments: aerospace is the largest segment, accounting for approximately 40% of revenue. The primary focus here is on the F-35 Lightning II program, arguably the world's largest fighter jet project. This is complemented by the production of the F-16 and C-130 Hercules. The MFC segment focuses on missile defense systems (PAC-3 MSE), tactical missiles (HIMARS, Javelin), and fire control systems. In addition, the RMS and Space divisions focus on military helicopters, integrated air and missile defense, radar systems, and satellite systems.

Lockheed Martin's stock has risen steadily in recent years, but really took off starting in late 2025, gaining around 50% within three months. The company is a reliable dividend payer. In 2025, the company paid a dividend of USD 13.35 per share. In Q4 2025, the quarterly dividend was increased for the 23rd consecutive time and now stands at USD 3.45 per share. Additionally, Lockheed repurchased 6.6 million of its own shares last year, worth approximately USD 3 billion. At the end of 2025, management expanded the program by an additional USD 2 billion. The company is considered crisis-proof, especially in today's climate. The record order backlog secures revenue for the coming years. The war in the Persian Gulf is also likely to lead to a massive demand for restocking military depots. Here, too, a short-term end to the war could lead to profit-taking.

With Lockheed Martin, investors can rely on a dependable dividend payer with a record order backlog. The war in the Gulf is likely to drive further revenue and profit growth. Dividend growth and the share buyback program provide additional support for the stock. The same applies to Northrop Grumman, which is likely to be flooded with new orders during and after the war in the Gulf and should benefit in particular from rising demand for interceptor missiles. In addition, a series of analyst updates could provide further momentum for the stock. Volatus Aerospace is the smallest but also the most integrated provider of drones and unmanned aerial vehicles. Here, investors are betting on a comparatively small but fast-growing company that operates in both the civilian and military sectors. From a technical perspective, the stock’s breakout from a long sideways trading range currently also represents a buy signal.