Defense Stocks Responding to Massive Government Spending

Over the past year defense stocks have been one of the best performing sectors in the market. Recently the Department of Defense, Space Force and the Missile Defensive Agency’s SHIELD “Golden Dome” are currently awarding billions of dollars in contracts to modernizing the defense capabilities in the United States. We follow companies who supply drones, autonomous systems and AI specifically.

Here is a partial list of companies in the space with performance data as of 3/3/2026:

Company	Symbol	YTD % Change	Avg Analyst 12-month Target Return
XTI AEROSPACE INC	XTIA	95.16%	168.60%
RED CAT HOLDINGS INC	RCAT	85.37%	41.16%
PALLADYNE AI CORP	PDYN	69.48%	9.00%
KRATOS DEFENSE & SECURITY	KTOS	17.18%	33.33%
UNUSUAL MACHINES INC /US	UMAC	8.87%	44.20%
DRAGANFLY INC	DPRO	-0.58%	234.12%
AEROVIRONMENT INC	AVAV	-5.62%	57.61%
BIGBEAR.AI HOLDINGS INC	BBAI	-29.63%	40.35%
SIDUS SPACE INC-CL A	SIDU	-35.35%	392.61%

This space is highly volatile currently as the details of who will receive what % of which contract. Some companies such as Sidus Space, Red Cat Holdings, Palladyne and Kratos Defense for example have already been allocated significant contracts by the defense industry.

AeroVironment (AVAV) had a pullback due to potential adjustment to the amount of funding it would receive from the SCAR program while the government is finalizing allocations which were assumed to already be finalized. AeroVironment will still be one of the largest winners in these contracts and the pullback on 3/2/26 was short lived.

BigBear AI has underperformed due to lower realized volumes stemming from U.S. Army programs which similar to AeroVironment the spending allocation from the government has yet to be finalized.