Wars and Drones

$Global X Defense Tech ETF(SHLD)$  

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$SPDR S&P Aerospace & Defense ETF(XAR)$  

Modern warfare is changing faster than many expected. Expensive tanks, aircraft, and missile systems are increasingly being challenged by drones that can be produced at a fraction of the cost. Conflicts around the world have demonstrated that small unmanned systems are no longer niche tools - they are a core component of military strategy, surveillance, intelligence gathering, logistics, and precision strikes.

I have seen the potential of $DRONESHIELD LTD(DRO.AU)$  since it was sub $1 and shared it for free for fellow investors on this platform in 2024. It had a phenomenal run to $6.7 by Oct/2025. Almost +900% increase in less than a year. It has consolidated to $3.5 since then, so what do I think about it now?

Since 2024, we have 5 ongoing wars:

- Russia-Ukraine

- Israel-Hamas

- Sudanese Civil War

- Red Sea Crisis

- Iran-Israel Conflict

Drones was first introduced into large-scale military use in the Russia-Ukraine war in 2022 as they are good at targeting in hard to reach areas. Prior to this, warfar was much more dependent on humans physically observing targets and on expensive manned platforms for reconnaissance and precision strikes. For a typical mission, commanders relied on scouts and reconnaissance patrols, special forces teams, observation posts, reconnaissance aircraft and satellites. Today, a $1000 drone can inspect an area that previously required a patrol, helicopter, or aircraft. As Ukraine started using drones as munitions, some estimates attributed ~70% of casualties to drone-related attacks.

The Israel-Hamas war began with surveillance and grenade-dropping drones. Expanded to coordinated attacks on communications, observation towers, targeting support and widespread use of loitering munitions from Iran-backed groups.

In a similar manner, drones was used for long-range one-way attacks and loitering munitions launched against shipping and military targets in the Red Sea Crisis and Iran-Israel Conflict. Notably in the Iran-Israel Conflict where drones demonstrated large-scale state-on-state saturation attacks integrated with missile warfare and air-defense efforts.

Drone operators and drone jammers become the main focuses in the midst of chaos.

For investors following counter-UxS companies like $DRONESHIELD LTD(DRO.AU)$  , the key takeaway is that the drone story is no longer just about building drones. The fastest-growing military requirement is increasingly counter-drone capability - detection, electronic warfare, jamming, AI classification, and layered defense systems - as drones become ubiquitous across modern conflicts.

On the 8th April 2026, former-CEO of DroneShield stepped down as Angus Bean, the company's Chief Technology Officer, took on the responsibility to steer the ship to grow technologically. It is a message to investors: DroneShield will focus on technological expansion with a wider vision. In my opinion, Oleg Vornik - the first employee - had done a great job to pull in continuous contracts and fundings for the company at its earlier stage. The pipeline is established at the current stage, as seen with the latest AU$24.9 million contract supporting the mission of the US Department of War's Joint Interagency Task Force 401 and a AU$50 million contract with an unnamed in-region European military client, after Oleg's departure. The sixth employee, Angus Bean, advances the company's mechanical domain in AI-powered, multi-mission counter-UxS solutions for military, government and critical infrastructure. Above all, radio frequency AI (RfAI), sensor fusion AI (SFAI), and RfAI-attack techonologies from DroneShield are going to be important for the current and next phase in warfare.

At a high level, the company benefits if global defense spending continues to prioritise counter-UxS technologies. For this reason, I am bullish on the stock. That said, it remains a high-volatility defense stock, and valuation can be sensitive to sentiment, contract announcements, and broader market risk appetite.

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Disclaimer: This is not financial advice. My thesis is my own after many degrees and research hours. You should always conduct your own research and take into account your financial situation, objectives and risk tolerance.