Beyond nuclear, the "powering up America" theme, AI, and the more recent "own the bottlenecks" theme, we have also outlined incoming tailwinds for drone and counter-UAS companies as the Department of War adapts to the wars in Ukraine and the Gulf area. That requires massive drone stockpiling and the development of conflict-free supply chains.
To do this, Defense Secretary Pete Hegseth is creating a four-star combatant command for autonomous warfare, seeking to accelerate the DoW's purchases across all categories of drones, robotics, and AI to prepare the military for warfare that has forever changed - that inflection point arrived in March.
The Autonomous Warfare Command, dubbed "AutoWarCom," is set to become operational in the fall of next year, according to a new Wall Street Journal report.
The WSJ quoted Hegseth as saying in a speech earlier at US Marine Corps Base Quantico, Virginia, that this effort will be "the fastest peacetime shift in modern military history."
The key is the massive rearmament supercycle set to kick off, if it hasn't already. It will provide massive tailwinds for drone companies as the military begins stockpiling all categories of drones and counter-UAS technology while fortifying military installations around the world.
To do this, the US supply chain must be built out to produce millions of one-way attack drones with components made domestically or in conflict-free areas. In other words, drone engines, blades, sensors, and other components must be sourced outside China.
Owen West, a former Marine, assistant defense secretary, and Goldman Sachs trader, will initially lead the effort alongside Navy SEAL test pilot Max Strasiser, according to the outlet.
"Once we apply sustained budget to changed doctrine, we will outperform the world," said West, who has been leading the Pentagon's Defense Innovation Unit. "And by snapping in AI, we will be ahead of the world, because we are the leaders in AI."
To understand the tailwinds coming to the drone industry, the report notes that the DoW has sought to triple spending on autonomous warfare, proposing $74 billion for drone and counterdrone technology in its largest-ever budget request.
Our drone theme began in late January, when we warned (read report) that every data center needs a kinetic interceptor (read here). The worst-case scenario materialized a month later when Iran attacked several data centers in the Gulf with one-way attack drones. Our pick in the space is Ondas.
Our reporting from last weekend shows that the DoW nearly doubled the value of a contract for Ondas' ULTRA platform, which appears to be a lower-cost Group 5 drone that could complement the MQ-9 Reaper and eventually assume some of its ISR missions (read report).
Follow the money.
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