Key points
- Kratos (KTOS) gained 28.3%, AeroVironment (AVAV) 24.9% and Ondas (ONDS) 16.8% in the two weeks to August 7. All three are still down for 2026.
- Lockheed Martin (LMT), Palantir (PLTR) and Kratos each beat estimates and raised full-year guidance between July 23 and August 4.
- The iShares US Aerospace and Defense ETF (ITA) is up 16.8% in 2026 against 13.4% for the S&P 500 and 30.6% for the technology sector.
Three defense companies beat Wall Street estimates and raised guidance inside twelve days. Lockheed Martin (LMT) went first, before the open on Thursday, July 23. Palantir (PLTR) followed after the close on Monday, August 3, and Kratos Defense (KTOS) the next evening.
| Company | Q2 result vs estimate | Stock reaction |
|---|---|---|
| Lockheed Martin (LMT) | EPS $7.94 vs $7.23 | +10.5% on Jul 23 |
| Palantir (PLTR) | EPS $0.41 vs $0.35 | +29.5% on Aug 4 |
| Kratos Defense (KTOS) | Revenue $458.8M vs $411M | +6.7% on Aug 5 |
Lockheed booked $65 billion of orders in the quarter and its backlog reached a record $230.4 billion, about $64 billion higher than a year earlier. Sales rose 11% to $20.1 billion.
Palantir's revenue grew 93% from a year earlier to $1.935 billion. The company raised its full-year revenue guidance to about $8.15 billion.
Kratos increased its full-year 2026 organic revenue growth forecast to approximately 18% to 23%. "Kratos' second quarter year over year organic growth rate was 19.1 percent," chief executive Eric DeMarco said in the release, "we are now forecasting third quarter organic growth of approximately 19 percent to 25 percent, and for fourth quarter organic growth of approximately 19 percent to 31 percent."
Over the two weeks that held all three reports, every drone maker we track gained at least 16%. Most of them are still down for the year.
Which defense and drone stocks gained most, and where do they stand for 2026?
The five drone makers at the top each gained at least 16% between the July 24 and August 7 closes. The bottom four rows are comparisons.
| Stock | Jul 24 to Aug 7 | 2026 to date |
|---|---|---|
| Unusual Machines (UMAC) | +34.9% | +104.9% |
| Kratos Defense (KTOS) | +28.3% | -19.9% |
| AeroVironment (AVAV) | +24.9% | -22.8% |
| Red Cat Holdings (RCAT) | +20.5% | +16.1% |
| Ondas Holdings (ONDS) | +16.8% | -6.7% |
| Palantir (PLTR) | +39.9% | -3.2% |
| SPDR S&P 500 ETF (SPY) | +4.6% | +13.4% |
| iShares Aerospace & Defense (ITA) | +4.4% | +16.8% |
| Lockheed Martin (LMT) | +0.9% | +21.6% |
Palantir doesn't build drones. It sells data and analytics software to defense and intelligence agencies through its Gotham platform, and to companies through Foundry. The commercial side is the faster-growing one now, with US commercial revenue up 149% last quarter. It's in the table because its earnings report drew attention to the group, not because it belongs to the group. Palantir gained 39.9% over the two weeks and is down 3.2% for the year.
Kratos and AeroVironment each gained more than 24% over the two weeks and remain the two worst performers on the list for the year, down 19.9% and 22.8%. AeroVironment trails the S&P 500 by 36 percentage points in 2026.
Unusual Machines is the exception, and a large one. It is up 104.9% this year and it still gained 34.9% over the two weeks, so its move isn't a recovery of ground it had lost. The company said in April that its Orlando factory was producing about 15,000 drone motors a month.
Lockheed Martin gained 0.9% over the same two weeks while the S&P 500 gained 4.6%. Its move came earlier, on the July 23 earnings report. Northrop Grumman (NOC) is up 0.2% for 2026.
Did money rotate into defense stocks in 2026?
Defense is ahead of the S&P 500 this year. The SPDR S&P Aerospace and Defense ETF (XAR) is up 18.9% for 2026 and ITA is up 16.8%, against 13.4% for the index.
| Sector or index | 2026 to date | vs S&P 500 |
|---|---|---|
| Technology (XLK) | +30.6% | +17.2 |
| Energy (XLE) | +28.6% | +15.2 |
| Aerospace & defense (XAR) | +18.9% | +5.5 |
| Aerospace & defense (ITA) | +16.8% | +3.4 |
| S&P 500 (SPY) | +13.4% | 0.0 |
| Health care (XLV) | +7.0% | -6.4 |
| Utilities (XLU) | +2.2% | -11.2 |
Technology is 17 points ahead of the index for the year and energy is 15 points ahead. Both defense ETFs sit between the S&P 500 and those two. The results inside the group are split. Lockheed and RTX are each up 21.6% for 2026 while Northrop is up 0.2%, and Kratos and AeroVironment are down 19.9% and 22.8%.
What moved the drone stocks before Palantir reported?
The drone makers were already running before Palantir's numbers came out. Ondas gained 11.5% on Thursday, July 30 and another 11.7% on Monday, August 3, the session before the report. Palantir was down 0.6% and then up 2.1% on those two days.
The Department of War's Office of Strategic Capital announced a conditional loan commitment of up to $820 million to Performance Drone Works on Friday, July 31, its largest such commitment so far, for high-volume domestic manufacturing of drone components. Adding a separate award to CACI International (CACI), the Pentagon committed about $1.3 billion to the supply chain in a week, and none of it reached the stocks that rallied. A small brushless drone motor runs $12 to $25 from China against $100 to $225 from a US supplier, which is the gap the money is meant to close.
Ondas has had its own week since. The company said on August 3 that David Barnea, the former director of Israel's Mossad, joined Ondas Defense Ltd. as global president and chairman, and the stock is up on three straight announcements ahead of its August 13 earnings report.
The component money isn't finished. David A. Lorch, director of the Office of Strategic Capital and senior advisor to Deputy Secretary of War Steve Feinberg, said in the July 31 announcement that Performance Drone Works "will be one of several domestic component producers receiving OSC loan commitments in support of President Trump's Executive Order 14307, 'Unleashing American Drone Dominance.'"
Expanding that production, Lorch said, "will benefit manufacturers throughout the ecosystem and improve supply-chain resilience."
Price data from exchange records through the August 7, 2026 close. Nothing here is investment advice.
