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Drone stocks surged Thursday on a report the Trump administration is in talks to fund several companies including one in which Donald Trump Jr. is a shareholder.
The Pentagon has held months of discussions with a group of drone companies about potential funding deals, people familiar with the matter told The Wall Street Journal. The deals could include equity stakes that give the federal government some ownership, the Journal reported.
Shares of Unusual Machines surged more than 65% after the Journal reported it is one of the companies in talks with the Pentagon. A deal would likely invite congressional scrutiny and raise conflict of interest concerns due to the company's relationship with Donald Trump Jr. The eldest son of President Donald Trump is a shareholder and advisory board member.
Shares of drone makers Kratos Defense & Security and AeroVironment jumped 15% and 18%, respectively. The Drone & Modern Warfare ETF (JEDI) rallied 12%.
If they were to happen, the Pentagon deals could aim to ramp up domestic production and lower the costs of drones, weapons that are viewed as critical in modern warfare.
"While not official, we believe this type of funding support makes particular sense for Unusual Machines given the critical and supply-constrained nature of drone components and domestic manufacturing capabilities," Needham analyst Austin Bohlig told clients in a Thursday note.
The Trump administration has taken direct equity stakes in companies on a scale unseen in the U.S. outside times of economic crisis, war or other calamities. The administration has focused mostly on industries viewed as important to U.S. national defense such a critical minerals and semiconductors.
Extracted and lightly reformatted for readability. · Source: pt
Shares of Unusual Machines and other drone-related companies jumped Thursday after a report said the Trump administration is considering taking financial stakes in parts of the U.S. drone industry. The talks reportedly involve potential government funding for several firms, including Unusual Machines, a company that has drawn attention because Donald Trump Jr. is a shareholder. The rally reflects investor expectations that Washington may treat domestic drone manufacturing as a strategic priority, especially as defense planners look to reduce reliance on foreign-made components and expand the use of low-cost unmanned systems. Readers should care because the report points to a possible shift in defense-industrial policy that could reshape valuations, procurement opportunities, and political scrutiny across a fast-growing technology sector.
The market reaction suggests investors are pricing in more than a one-off subsidy: they are betting that drones could become a favored national-security category, similar to semiconductors, shipbuilding, or critical minerals. Companies with U.S.-based manufacturing, defense relationships, or components that can replace Chinese supply chains would be the clearest beneficiaries, while smaller firms may gain credibility simply from being mentioned in policy discussions. The risks are equally significant: government equity stakes can bring dilution, oversight, procurement strings, and political controversy, particularly where individuals close to the administration have financial interests. There is also uncertainty over whether talks will translate into actual investment, what form the funding would take, and whether the Pentagon or another federal entity would lead the effort. Investors should watch for formal announcements, contract awards, conflict-of-interest reviews, and evidence that these companies can convert political momentum into revenue, production scale, and durable margins.