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Drone and defense stocks rally as Middle East tensions intensify

March 2, 2026 10:58 AM
IH Market News

Shares of drone manufacturers and defense technology companies moved sharply higher on Monday as rising geopolitical tensions involving the United States, Israel and Iran fueled investor demand for defense-related assets.

Markets reacted after weekend military strikes by U.S. and Israeli forces and subsequent Iranian retaliation heightened concerns about a widening regional conflict, lifting defense-sector equities across the board.

AeroVironment (NASDAQ:AVAV) surged 17%, reaching its highest level in more than a month. Kratos Defense & Security Solutions (NASDAQ:KTOS) gained 8%, while Red Cat Holdings (NASDAQ:RCAT) posted one of the strongest advances of the group, jumping 26%.

Unusual Machines (NYSE:UMAC), which produces ultra-low-latency video goggles used by drone operators, climbed roughly 11% during the session.

nLIGHT (NASDAQ:LASR), known for its high-power semiconductor and fiber laser technologies used in aerospace and counter-drone applications, rose 14% and touched new record highs.

Canadian firm ZenaTech (NASDAQ:ZENA), focused on AI-enabled drone solutions serving agriculture, logistics and defense markets, added about 7%.

Large U.S. defense primes also participated in the rally, with Lockheed Martin (NYSE:LMT) and RTX (NYSE:RTX) each advancing more than 3%.

The escalation in hostilities over the weekend rippled through global financial markets, with defense and security companies emerging as key beneficiaries as investors repositioned toward sectors expected to see increased demand amid geopolitical uncertainty.

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Original: Drone and defense stocks rally as Middle East tensions intensify