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By Brandon Hornback

From the war in Ukraine to tension in the Middle East, geopolitical instability has visibly increased. As a result, global defense spending is growing at the fastest clip since 1988, creating opportunity for investors who zero in on a new set of rising stars.

Military budgets reached $2.7 trillion in 2024, rising 9.4%. Additionally, NATO’s plan to lift military spending to 5% of GDP by 2035 is pushing the world into a multi-decade modernization cycle.

One thing is clear: Modern warfare is all about technology, and one industry is standing out. The global drone-warfare market is projected to more than double by 2035, to $75 billion. As nations accelerate adoption of loitering munitions, counter UAS systems, autonomous ISR platforms and swarm intelligence, demand for cutting-edge defense tech is exploding.

However, value is shifting from traditional airframes to autonomy software, AI-driven sensing and edge-based navigation. With that shift comes a new class of winners who are scaling faster than legacy defense firms and capturing rising demand across the United States, NATO and Indo-Pacific allies.

Here are six companies that sit at the center of this transformation:

• AeroVironment (AVAV): Loitering munitions and ISR leader with 143.3% estimated revenue growth.

• Ondas Holdings (ONDS): Autonomy, SDR communication and ISR provider with 219% estimated revenue growth.

• Kratos Defense (KTOS): Tactical jet drone innovator with 19.6% estimated revenue growth and 34.4% estimated EBITDA growth.

• AIRO Group (AIRO): U.S. aligned ISR and interceptor platform with 62.8% estimated revenue growth.

• Shield AI (Private): Hivemind autonomy developer with about $1 billion raised and a $5.3 billion valuation.

• Swarmer (Private): Ukraine tested swarm autonomy platform with over $15 million raised and a $60 to $90 million valuation.

Militaries now favor platforms that think autonomously, coordinate in swarms, and evolve through software updates rather than hardware cycles. This transition is powering a long-term investment cycle that rewards companies with deep autonomy stacks and investors who can identify the winners of tomorrow, today.

Exec Edge Research is pleased to share the full playbook: Our report provides a detailed breakdown of the $75 billion drone market expansion, the rise of software defined warfare, in depth profiles of all six companies and a look at the capital market trends shaping the next decade of defense technology.

Download the report below to access the complete analysis.