Investors have bought up drone makers' shares: White House discusses support for the industry

Shares of drone component maker Unusual Machines rose 57% in trading on May 28, reaching an all-time high. Quotes of drone developer Red Cat Holdings soared by 32.6%, AeroVironment - by 18%, and Kratos Defense & Security Solutions - by 13.7%. Shares of Texas-based Swarmer, which is developing an AI platform to control drone swarms, added nearly 17% in value. The capitalization of military drone manufacturer Aevex, which went public in April, jumped 31%.

The rally was sparked by The Wall Street Journal's report that the White House is discussing with a number of industry players possible financing schemes to boost domestic production. According to the publication's sources, the Pentagon is considering Unusual Machines, whose adviser is Donald Trump Jr., as well as non-public companies Performance Drone Works and Neros Technologies for potential support.

"While there is no official confirmation yet, [the White House's financial backing] is justified for Unusual Machines given the strategic importance of drone components and limited internal manufacturing capacity," Bloomberg quoted Needham & Co. analyst Austin Bolig as saying. Austin Bolig. Similar talks could be underway with other defense technology companies, he said. Official announcements of financing would be a confirmation for the market of the stable demand for such products, the analyst pointed out.

The wars in Iran and Ukraine have accelerated the shift to cheaper autonomous and unmanned weapons systems that rely heavily on software, Bloomberg notes. Against that backdrop, the Pentagon requested $75 billion in April for drones and counter-drone systems - which could be the largest funding increase of any program in the Trump administration's proposed $1.5 trillion defense budget.

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