Drone Stocks Catch A Tailwind As FCC Grounds China

by | Dec 24, 2025 | General

The U.S. drone industry got a major boost this week as the Federal Communications Commission (FCC) officially grounded the competition from China. 

Following a national security determination issued on Monday, the FCC added foreign-made uncrewed aircraft systems (UAS) and their critical components to its “Covered List,” effectively banning foreign-made drones.

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The Regulatory Catalyst

The FCC ban effectively bars Chinese drone makers DJI and Autel, along with other foreign manufacturers, from receiving the FCC authorizations required for sale in the U.S. 

While existing fleets remain operational for now, the inability to import or sell next-generation hardware has created an immediate vacuum in a market where DJI once held a nearly 70-80% market share.

Domestic Drone Stocks Surge

Investors have been quick to identify the domestic winners of the drone dominance initiative. Five key stocks have caught a powerful tailwind:

  • Red Cat Holdings, Inc. (NASDAQ:RCAT): Red Cat shares surged over 25% over the past five days. As a primary provider of the “Black Widow” tactical drone for the U.S. Army, Red Cat is positioned as the most direct secure alternative to DJI’s enterprise models.
  • AeroVironment, Inc. (NASDAQ:AVAV): The defense heavyweight continues to lead the “detect and defeat” lifecycle. With new contracts from the Coast Guard and increased military spending, AVAV remains the blue-chip choice for government-grade autonomous systems.
  • Ondas Holdings, Inc. (NASDAQ:ONDS): Through its American Robotics and Airobotics units, Ondas is the frontrunner for “drone-in-a-box” solutions, essential for industrial infrastructure monitoring that previously relied on foreign tech. Ondas shares gained more than 23% over the past five days. 
  • Unusual Machines, Inc. (AMEX:UMAC): As a specialized manufacturer of drone components, UMAC stands to benefit from the new requirement that even drone parts (motors, flight controllers, and batteries) be sourced from non-adversarial nations.
  • Draganfly, Inc. (NASDAQ:DPRO): Shares of Draganfly surged over 20% recently as it cements its role as a primary “Blue UAS” alternative. Following the FCC ban, Draganfly will likely leverage its NDAA-compliant platforms, such as the Commander 3XL and the Flex FPV, to capture market share. 

The Path Forward

Last week, KeyBanc analyst Michael Leshock said Space & Defense Technology could emerge as one of the strongest growth segments within Aerospace & Defense over the next decade.

He pointed to rising global defense budgets and a rapid evolution in warfare, particularly in drones, and AI-enabled systems.

While supply chain scaling remains a challenge, the “year of the drone” has officially begun, with the transition from foreign-controlled hardware to a secure, American-made ecosystem.

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