Combat drones have been utilized by the world's leading militaries for several decades. France first deployed them during Operation Barkhane in the Sahel, while the United States was already using them in Afghanistan. However, the true evolution lies in the increased use of these machines by military forces that are under-equipped relative to their adversaries. This logic was notably developed by the Islamic State about ten years ago. Today, the use of micro-drones—often originally designed for leisure and subsequently repurposed by armed organizations to conduct low-cost strikes—has become widespread.
The war in Ukraine has fundamentally altered the conduct of warfare. In the aftermath of the Russian invasion, the vast majority of experts and observers held little hope for Ukrainian sovereignty. While Ukraine suffered heavily at the start of the conflict, particularly against Shahed drones—still used by Iran in current conflicts—the Ukrainians adapted rapidly. Whether through maritime drones or remote-controlled kamikaze drones, the country has pivoted toward a war economy with companies that have learned to do much with very little. By January 2026, the Ukrainian army used 1,500 anti-Shahed interceptor drones per day according to Arte, at a cost significantly lower than that of Russian drones. Ukraine reportedly produced 4.5 million drones on its territory in 2025, a colossal number. This is part of the formula that has made this war, initially perceived as asymmetric, far more balanced than originally expected.
Capable of conducting reconnaissance, attack, and defense missions at extremely low costs, these new tools make the military more agile and offer unparalleled responsiveness.
Drones have thus become a genuine means of restoring a form of equity on the battlefield. This is also how Iran caused significant disruption to its neighbors in March. To such an extent that Volodymyr Zelensky undertook a diplomatic tour of the Emirates in late March. The objective was to monetize Ukrainian expertise through cooperation agreements and co-production discussions. Even these petro-monarchies, despite their ability to spend without limit on defense, are adapting their choices to structural changes. Ukrainian interceptor drones can be sold for a few thousand euros, whereas the famous American Patriot interceptors reportedly cost approximately 4 million dollars per unit, according to Reuters.
It remains, of course, important today to possess a massive and technologically impressive military. Between major powers, deterrence remains a cornerstone of warfare, as it has been since well before the Cold War. However, 21st-century warfare is not truly waged with aircraft carriers. Military giants are beginning to address these new challenges, modernizing both their forces and their strategies.
In the technological era we are just entering, armament strategies will focus less on the size of naval and air fleets and more on the importance of information and the capacity to react to the enemy. It is no coincidence that the project for the European fighter jet of the future—though it remains uncertain if it will ever leave the factory—is designed to be accompanied by connected support drones.
Market Outlook
As observed in recent years, the entire sector is benefiting from the increase in military spending, whether by NATO giants or middle powers. However, models with low capital intensity and decisive technological expertise are particularly well-positioned to outperform.
In France, Thales naturally comes to mind. Broker AlphaValue published a note on this subject this week. The group is expected to benefit from this momentum, as it has significant exposure to radar and anti-drone systems. Also in France, Exail Technologies is worth noting. With the transformation of maritime conflicts, the French defense group's underwater anti-mine drones have been in particularly high demand in recent weeks. Exail explained that it benefited from the conflict involving Iran, both due to the risk of mines in the Strait of Hormuz and because competition there is virtually non-existent. This explains why the group has benefited the most from the sector's rally since the tensions in Iran.
On a European scale, the dynamic is similar. The Swedish army has just placed an order of approximately 900 million euros for anti-drone defense systems, with SAAB and BAE Systems among the suppliers. The Minister of Defense indicated that these solutions had been tested against Iranian Shaheds and that the results proved positive. The objective is defensive against the Russian threat, as these systems would serve to thwart low-altitude drone offensives.
Among technological players with particularly interesting positioning, groups specialized in artificial intelligence, such as Palantir or Anduril, must also be mentioned. They focus on analysis and targeting, and their solutions are expected to quickly become indispensable to the world's major militaries. This is already the case in the United States, as the Pentagon recently announced that Palantir will be at the heart of the "Maven" project—an artificial intelligence system capable of processing immense volumes of data from satellites, radars, drones, and reports to identify threats and targets.
In this same vein, the collaboration between Rheinmetall and Anduril is noteworthy. Rheinmetall has diversified significantly into these solutions and announced a partnership aimed at integrating Anduril's software into the manufacturing of drones destined for European markets. A few weeks ago, Europe's five largest military powers also announced a production program for Low-cost European Air Defense Platforms (LEAP). The fact that the General Directorate for Armaments approached Renault to participate in developing a French drone industry is also quite telling.
Aerovironment, one of the groups most focused on drone production, has acquired BlueHalo for 4.1 billion dollars, a company active in the cyber and space domains. The goal is no longer just to be a producer of drones and loitering munitions, but also to integrate detection and coordination services to enhance its attractiveness to military forces.
Overall, major players in the sector have demonstrated significant responsiveness in recent months by multiplying plans, partnerships, and new solutions to adapt to the changing needs of the military.
