The “physical AI” revolution has found its wings. As geopolitical tensions continue to recalibrate global priorities, Oppenheimer sees the drone sector skyrocketing from $45 billion to $400 billion over the next decade.
According to the investment firm, we’re witnessing a “paradigm shift” where autonomous swarms and unmanned systems redefine both the battlefield and the boardroom.
With the US defense budget surging toward $900 billion for fiscal 2026, the race is on to dominate the lower skies and orbital networks.
For investors, this creates a “high-stakes map of opportunity” not just across hardware – but AI software, and satellite connectivity as well – with the following three stocks particularly strongly positioned to benefit.
Ondas Holdings: dominating the lower-skies frontier
In the burgeoning lower-skies category, a segment growing at twice the rate of the broader defense market, Ondas shares have emerged as a clear frontrunner.
Oppenheimer’s Timothy Horan identifies ONDS as a top-tier platform stock, uniquely positioned to integrate autonomous aerial security with ground-based robotics.
The company’s momentum is anchored by its recent selection as a “prime contractor” for a major governmental border protection program.
This initiative utilizes AI-enabled drones in fixed and mobile configurations to offer continuous, unmanned surveillance.
Oppenheimer has an “outperform” rating on Ondas Holdings with a $16 price target, indicating it’s no longer been viewed as just a hardware provider, but a critical infrastructure play for the physical AI era.
BlackSky Technology: eyes in the high ground
While drones provide the tactical edge on the ground, BKSY provides the essential “observability” required to manage them.
As a leader in real-time satellite imagery, Herndon-based BlackSky Technology enables operators to detect, monitor, and coordinate drone fleets across vast geographies.
In an era where “whoever wins the drone swarm arms race wins the war,” its ability to deliver high-frequency orbital intelligence is indispensable.
By turning space-based data into actionable insights – BKSY ensures drone deployment isn’t just autonomous, but strategically informed and precisely targeted.
Oppenheimer’s “outperform” rating on BlackSky stock comes with a $30 price objective, signaling potential upside of roughly 75% from here.
Iridium communications: the essential connectivity link
No autonomous system can function without a secure, unbreakable tether, and that is where Iridium Communications thrives.
Outperforming the broader market with a nearly 35% gain year-to-date, IRDM shares provide the satellite connectivity necessary for drones operating “Beyond Visual Line of Sight” (BVLOS).
As missions become more complex and remote, the reliance on Iridium’s L-band network grows, offering a level of reliability that terrestrial networks cannot match.
This connectivity is the “nervous system” of physical AI, enabling real-time command and control between operators and unmanned units.
Iridium’s role as a complementary force to the drone observability market makes it a foundational pick for the longevity of autonomous systems, making Oppenheimer predict upside in its stock to $34 this year.
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