Oppenheimer Sees $400 Billion Drone Market Boom As Defense Spending Surges: Report

According to a CNBC report, Oppenheimer said rising global defense spending and rapid advances in autonomous systems are reshaping modern warfare.

• Oppenheimer estimates worldwide defense expenditures now total roughly $3 trillion, up about 50% over five years.
• The firm forecasts that the total addressable market for drones could expand from $45 billion today to $400 billion globally. 
• Analyst Timothy Horan said within the lower-skies segment, Ondas stands out as a preferred pick.

Oppenheimer has reportedly vouched that drones are emerging as one of the fastest-growing investment themes within the expanding field of physical artificial intelligence, with a market potential of $400 billion.

According to a CNBC report, Oppenheimer said rising global defense spending and rapid advances in autonomous systems are reshaping modern warfare and potentially stepping over into commercial markets.

From Battlefield To Broad Adoption

The firm highlighted that global military budgets have climbed sharply amid rising geopolitical tensions, with the U.S. House authorizing $900.6 billion in Defense Department funding for fiscal 2026. Oppenheimer estimates that worldwide defense expenditures now total roughly $3 trillion, up about 50% over five years, and projects that figure could double within the next decade, the report cited. 

The firm forecast that the total addressable market for drones, including hardware, services, AI, and related software, could expand from $45 billion today to $400 billion globally. 

“AI is driving an infrastructure and soon a manufacturing boom as well as dozens of Physical AI use cases (Waymo), with drones the fastest-growing.”

-Oppenheimer

Investment Opportunities

According to the report, analyst Timothy Horan said that within the rapidly expanding lower-skies segment, Ondas Holdings Inc. (ONDS) stands out as a preferred pick. The company focuses on AI-enabled aerial security and infrastructure monitoring.

In December, the company disclosed that its Ondas Autonomous Systems (OAS) unit was selected for a large-scale development of a border protection platform and a commercialization effort focused on deploying advanced unmanned technologies.

ONDS stock has gained over 925% in the last 12 months. 

Horan also pointed to satellite operators BlackSky Technology Inc. (BKSY) and Iridium Communications Inc. (IRDM) as complementary plays, citing their roles in real-time imagery and secure connectivity for unmanned systems.

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