Lockheed Martin: The Top Pick for Military Drones Investing Right Now

We recently released a list of the 10 Top Military Drone Stocks to Invest in Currently In this piece, we will examine how Lockheed Martin Corporation (NYSE:LMT) measures up against some of the top contenders in the drone industry.

Contemporary warfare is swiftly transforming beyond just involving soldiers, tanks, and fighter jets. Drones controlled by artificial intelligence swarm through the airspaces, capable of hitting adversaries' objectives precisely. This shift in combat dynamics has mixed human roles with technological ones, necessitating an overhaul of what constitutes effective military strength.

READ ALSO: 10 Nations Boasting the Highest Number of Military Drones Globally and Goldman Sachs Recommended Defense Stocks: Leading 12 Choices .

In recent years, the demand for drones has skyrocketed as nations increasingly employ Unmanned Aerial Vehicles (UAVs) for gathering intelligence, conducting reconnaissance missions, surveilling areas, and executing targeted operations. These airborne systems provide an unparalleled overhead perspective of combat zones, complicating efforts by adversaries to evade detection within conflict regions.

Unmanned aerial vehicles, or drones, played a significant role in the clash over the Nagorno-Karabakh area involving Azerbaijan and Armenia in 2020. These devices have also loomed overhead above numerous towns and cities throughout the Russia-Ukraine conflict, prompting defense analysts to recognize them as an emerging challenge in air defense strategies.

For nearly a hundred years, the U.S. has utilized unmanned aerial vehicles (UAVs), starting with their deployment during World War II and most recently during conflicts such as those in Afghanistan and Iraq. In 2023, the Department of Defense (DoD) introduced Replicator, a plan aimed at producing large numbers of 'attritable autonomous systems' within the coming 18 to 24 months. Additionally, the Air Force is working on drone escorts designed to accompany its fighter planes and bombers through the Collaborative Combat Aircraft (CCA) project. This past March saw the unveiling of the inaugural pair of these CCA aircraft.

Nevertheless, specialists in military defense see the increasing availability of unmanned aerial vehicles (UAVs) as a significant security risk, particularly since U.S. forces have faced heightened attacks from non-governmental entities in the Middle East. Additionally, officials in Washington are concerned that China might take inspiration from Russia’s tactics during the Ukraine conflict and initiate comparable assaults on American assets across the Pacific region.

A significant amount of effort is being directed towards protecting nations from the dangers presented by unmanned aerial vehicles (UAVs). In October 2024, the Department of Defense (DoD) granted a $250 million contract to Anduril Industries for developing systems to defend against drone assaults targeting U.S. personnel. As part of this agreement, the country will be supplied with 500 restorable Roadrunner interceptor drones. These devices are designed as reusable aircraft capable of either neutralizing approaching drones or safely returning to the ground should they remain unchallenged.

Given that, let's move on to the list of top drone stocks worth investing in.

A flying military aircraft demonstrates the company’s prowess in combat and aerial transportation capabilities.

Methodology

We drew samples from ETFs that have investments linked to military drones, along with data from our earlier pieces on this topic. Our selection encompassed both companies exclusively focused on manufacturing military drones and larger defense firms involved in drone initiatives. After compiling these names, we chose the top 10 stocks among them, identified through Insider Monkey’s extensive record of more than 1,000 major hedge funds at the end of fourth quarter 2024, for their high counts of individual hedge fund backers.

Why do we pay attention to the stocks that hedge funds accumulate? It's straightforward: our analysis indicates that mimicking the leading stock choices from premier hedge funds allows us to surpass the market performance. Each quarter, our bi-monthly bulletin chooses 14 small-cap and large-cap equities, achieving a return of 373.4% since May 2014, which significantly exceeds its benchmark by 218 percentage points. see more details here ).

Lockheed Martin Corporation (NYSE: LMT )

Number of Hedge Fund holders: 65

Lockheed Martin Corporation (NYSE:LMT), which trades under the ticker LMT, focuses on cutting-edge research, design, and development of sophisticated technological systems, goods, and services. Despite being renowned for crafting iconic military planes like the F-35, the corporation extends state-of-the-art unmanned capabilities to the U.S. armed forces to handle their toughest operations requirements.

Several key unmanned aerial vehicles produced by Lockheed Martin Corporation (NYSE:LMT) encompass the RQ-170 Sentinel, Stalker, and Indago 4. This major defense firm consistently commits significant resources to advancing autonomy and artificial intelligence. They have showcased their expertise in manned-unmanned collaboration, AI-powered autonomous platforms, as well as combined technological solutions during multiple recent demonstrations for the U.S. Army.

Over the past six months, the stock has dropped approximately 25%, largely because of significant setbacks in specific confidential projects, delays in updating the F-35 systems, and failing to secure the F-47 contract from Boeing. Nevertheless, the strong financial performance reported for the initial quarter of fiscal year 2025 may entice investors to once again show interest in purchasing shares of Lockheed Martin Corporation (NYSE:LMT).

For the first quarter, the firm announced sales totaling $18 billion, marking a 4% increase over the previous year, primarily because of heightened demand for weaponry amid the continuing hostilities in Ukraine and the Middle East. The net profit came out to be $1.7 billion, corresponding to an earnings per share (EPS) figure of $7.28, which surpassed projections by $0.94 per share. During this period, Lockheed Martin Corporation (NYSE:LMT) produced a free cash flow amounting to $955 million and distributed $1.5 billion back to investors via dividends and stock buybacks.

Based on Insider Monkey’s Q4 2024 database, 65 hedge funds owned shares in Lockheed Martin Corporation (NYSE:LMT), up from 58 during the previous quarter. This makes it one of the top picks among drone-related stocks currently available.

Overall, LMT ranks 4th Among the top 10 military drone stocks to consider right now, we recognize their potential. However, we believe that investing in artificial intelligence stocks offers even better prospects for substantial gains over a shorter period. One particular AI stock has risen since the start of 2025, whereas many well-known AI stocks have dropped roughly 25% during the same timeframe. Should you be seeking an AI stock with stronger growth potential compared to LMT yet trading below five times its earnings, review our detailed analysis on this opportunity. cheapest AI stock .

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Disclosure: None. This piece was initially published at Insider Monkey .