Fighter jets have long been the conveyors of American military might. But disruptive technologies led by drones and artificial intelligence are raising questions about their role in the next-generation arms race, rattling defense stocks in the process. In the Pentagon's dream arsenal, U.S. military drones clearly loom large.
Elon Musk, head of the federal government's new Department of Government Efficiency, is a leading proponent. The Tesla chief executive and top DOGE strategist in November shared a video of what appeared to be autonomous, coordinated drone swarms.
Along with the video Musk texted, "Meanwhile, some idiots are still building manned fighter jets like the F-35." In a separate post, Musk added, "And manned fighter jets are obsolete in the age of drones anyway. (They) Will just get pilots killed."
Musk's "idiots" include Boeing, RTX, Lockheed Martin and other leading defense stocks that comprise a major piece of the U.S. defense industry. Shares of Lockheed dropped 4% on Nov. 25, after Musk's posts. The stock had already started what has become an almost six-month slide in October, after reporting a third-quarter revenue miss.
RTX and Boeing stock have fared better, up 11% and 20%, respectively, since the end of October. Investors backing the three companies still have more than $420 billion in market capital invested.
Whether defense stocks like these will rise or fall as new technology takes off remains to be seen. Many defense contractors also are, or are hustling to become, drone builders. They face innovative new competitors, such as military and commercial software maker Palantir and privately held drone builder Anduril. But does that mean fighter jets are set to go the way of war horses and bayonets? If not, just what should we expect the next-generation Air Force — and defense stocks — to look like?
Current U.S. Military Drones
Remotely piloted vehicles (RPVs), also called unmanned aircraft systems, have been part of the U.S. military arsenal since the 1990s. That's when privately held General Atomics Aeronautical Systems introduced the MQ-1 Predator, a reconnaissance and offensive drone.
The military's drone fleet has evolved into an array of unmanned vehicles that can assist with various offensive, surveillance and logistics missions. Current drones include the MQ-1C Gray Eagle, MQ-4C Triton, RQ-4 Global Hawk, and others.
| Examples Of Current U.S. Unmanned Military Drones | |||
|---|---|---|---|
| Name | Lead Contractor | Military Branch | Wingspan |
| MQ-9 Reaper | General Atomics Aeronautical Systems | Air Force, Marines, Navy | 66 feet |
| RQ-4 Global Hawk | Northrop Grumman | Air Force | 130.9 feet |
| MQ-4C Triton | Northrop Grumman | Navy | 130.9 feet |
| MQ-1C Gray Eagle | General Atomics Aeronautical Systems | Army | 56 feet |
| MQ-25 Stingray | Boeing | Navy | 75 feet |
| Sources: U.S. Air Force, Naval Air Systems Command, General Atomics |
These unmanned aircraft have become a vital component in military strategy. And Musk is partly correct: In certain settings, they have proved more effective than piloted jets.
In Iraq and Afghanistan, the MQ-9 Reaper — successor to the MQ-1 Predator — sometimes provided a far-better option for precision strikes than piloted fighters and bombers, according to Mark Gunzinger, director of future concepts and capability assessments at the Mitchell Institute for Aerospace Studies.
He notes that piloted aircraft are typically faster, but they cannot dwell in the battlespace as long as RPVs. Drones like the MQ-9 can assess threats and capture decision-quality intelligence, surveillance and targeting information.
But the unmanned aerial vehicles (UAVs) now in operation were designed to operate in relatively benign airspaces, Gunzinger says. They are less robust and maneuverable under fire, and have less firepower compared to fifth-generation and beyond piloted fighters and bombers, according to Gunzinger, who also heads Mitchell's Collaborative Combat Aircraft workshop.
Wingman Drones Team With Fighter Jets
The next wave of U.S. military drones and jets aim to be more advanced and to require less human involvement.
The U.S. Air Force is developing an unmanned, semiautonomous drone called a Collaborative Combat Aircraft (CCA), part of its Next-Generation Air Dominance (NGAD) family of systems.
The military intends for the CCA drones to serve as "wingmen." They will accompany crewed fighter jets and assist with missions including combat, electronic warfare, targeting, intelligence and reconnaissance. The drones will be unpiloted, employing AI software to collaborate with and take direction from the actual fighter pilots.
The Air Force officially launched the CCA program in 2024, but began pursuing the technology in 2022. Former Air Force Secretary Frank Kendall planned for 1,000 CCAs, to accompany 500 advanced fighters. Kendall has stated the true requirement could be as many as 2,000 drones by 2030, according to reports.
The CCAs would expand the fighter fleet and protect human pilots at a lower cost than current fighter jets. CCAs currently cost less than $30 million each, while fighter jets range up to $350 million or more.
Defense Stocks Mixed On F-47 News
The Air Force expects CCAs to be compatible with the F-35, as well as the NGAD's sixth-generation fighters, referred to as Penetrating Counter-Air aircraft. These are meant to replace the F-22 Raptor by 2030.
President Donald Trump on March 21 awarded Boeing the Air Force contract to build the NGAD fighter, which has been designated the F-47.
Fifth-generation fighters, such as the F-22 and F-35, essentially serve as stealthy supercomputers with a multitude of advanced sensors and superior maneuverability to handle a range of engagements.
Sixth-generation fighters promise to be the most sophisticated aircraft yet. Exact specifications are classified. But designs reportedly incorporate stealth and AI technology, increased computing power and laser weapons. The sixth-generation fighter itself will serve as central command to a "system" of U.S. military drones, able to coordinate with an array of various systems.
Trump said in his announcement that the F-47 is equipped with "state-of-the-art stealth technologies — virtually unseeable — and unprecedented power, the most power of any jet of its kind ever made." He added that the F-47 is expected to operate with the upcoming fleet of CCA drones.
Among defense stocks, the NGAD news sent Boeing up more than 5%. Lockheed shares tumbled 6%, reversing a three-week rebound. The Navy was expected to award its own NGAD contract, with Reuters reporting that an announcement could be imminent.
Development Costs For U.S. Military Drones
Although Trump declined to specify the exact value of the contract, initial reports estimated it could be worth around $20 billion. That could balloon into hundreds of billions for orders over the multidecade lifetime of the contract.
The Air Force budget justification from March 2024 indicates the U.S. military plans to spend over $28 billion on the NGAD program and CCA development through 2029.
Members of the House and Senate appropriations committees in mid-March outlined their spending plans for 2025, after the continuing resolution passed earlier in the month. Lawmakers reportedly proposed a $325 million cut to the NGAD program, bringing the 2025 budget for the sixth-generation aircraft to around $2.4 billion. They also proposed reducing the CCA program by $70 million, bringing down funding for the year to $487 million.
The recommendations, however, are not legally binding because Congress failed to pass a full appropriations bill, Todd Harrison, senior fellow at the American Enterprise Institute, told Defense News.
NGAD Fleet Size And Costs
Different fighter jets carry different price tags. The F-35 can range from around $80 million to $109 million apiece. The F-22 base cost is around $140 million, according to reports.
Air Force officials have privately discussed an NGAD fleet ranging from 220 to 250 aircraft, according to Air & Space Forces Magazine. Previous reports indicate that the sixth-generation jets could cost between $200 million and $300 million each.
Kendall reportedly estimated the unit cost for CCAs at $25 million to $30 million, with the goal of putting the price point between one-quarter and one-third of an F-35 Joint Strike Fighter.
CCA Contractors: Who Will Build The New Drones?
The Air Force, Air Force Research Laboratory and Defense Advanced Research Projects Agency (DARPA) handle much of the research for developing CCA software, technology and platforms, according to the latest Congressional Research Service report in January.
One previous project incorporated AI technology into three converted F-16 aircraft. It was a base experiment to collect data and familiarize pilots with how AI software behaves.
In January 2024, the Air Force awarded initial CCA contracts to five companies: Costa Mesa, Calif.-based Anduril, as well as Boeing, General Atomics, Lockheed Martin and Northrop Grumman.
In April, Anduril and General Atomics won Air Force contracts to build production-representative test units of their drones for the first block, called Increment 1.
Anduril's Fury claims to be a high-performance, multimission autonomous aircraft that leverages the company's Lattice AI software. The General Atomics XQ-67A will also include autonomous capabilities, as well as advanced sensors and weapons. Both companies have published few details.
Both firms completed critical design reviews of their aircraft in the fall, and military flight tests are scheduled for later this year. The Air Force plans to make a competitive production decision on Increment 1 in 2026 and field fully-operational CCAs by the end of the decade.
Trump Tariffs Slam Stock Market. More Are Coming.
U.S. Military Drones Refuel Fighter Jets
There is another point on which Musk could be correct: refueling aircraft. The Boeing MQ-25 Stingray is a UAV designed as an aerial-based refueling drone. The Navy first awarded Boeing an $805 million contract for the MQ-25 in 2018.
The Navy aims for the MQ-25 to take over tanker-and-refueling duties from the F/A-18. This will free up the piloted aircraft to focus on its primary role as a strike fighter, a Navy spokesperson told Investor's Business Daily.
The Navy plans to begin testing the MQ-25 later this year and to start integrating it on carriers in 2026, Vice Admiral Daniel Cheever, commander of the Naval Air Forces, said in January at the WEST 2025 conference in San Diego.
The MQ-25 falls under the Navy's Unmanned Carrier Aviation program, which includes a mission control system. The Navy in 2025 allotted about $215 million for research, development, testing and evaluation for the UCA program. That's down from $220.4 million last year and $250.9 million in 2023.
The most recent selected acquisition report on the MQ-25 from December 2022 estimated the total program will cost $16.5 billion, National Defense Magazine reported in January 2024.
'Leap-Ahead Capability' In Fighter Jets And Drones
But despite drones' benefits, military pilots and analysts say Musk fails to appreciate a number of strengths that fighter jets hold over drones.
"The ranges, speeds, and weapons-payload capacity of small drones are not suited for long-haul missions across great distances into highly contested environments," said Gunzinger, who is a former deputy assistant defense secretary, director on the National Security Council staff and a command pilot with more than 3,000 hours in the B-52. Those conditions would make drones ineffective in conflicts against China, Russia and other advanced militaries.
In addition, current-generation UAVs are typically less responsive, maneuverable and stealthy than piloted combat jets like F-22s, F-35s and the future Penetrating Counter Air jet in the NGAD.
Cathie Wood Buys This Surging Drone Stock
Their slower speeds "make them less responsive to pop-up targets that are located beyond a certain range," Gunzinger said. "That is why both uninhabited and piloted aircraft are needed. They both have advantages that create a far more effective and resilient force in combination."
The fighter jet-assisting CCAs will handle more challenging missions. That means high-end fights in conflict environments. The Mitchell Institute, in a series of exercises with the Air Force and industry operators, found that CCAs supporting piloted aircraft can complicate and disrupt an adversary's maneuvers and tactics.
The combination of U.S. military drones and piloted aircraft "results in a leap ahead in capability," Gunzinger said.
'War Fighting Capacity' And Defense Stocks
Gunzinger says it's unlikely that drones will ever entirely replace piloted aircraft, at least not in the foreseeable future. The current AI-enabled aircraft will be "force multipliers" that complement, not replace, piloted aircraft like the F-22, F-35, B-21 and future NGAD aircraft, according to Gunzinger.
"Those who say otherwise are ill-informed on the nature of modern air warfare," he said.
Introducing CCA into the Air Force will increase the organization's warfighting capacity. "But the Air Force also desperately needs more fighters and bombers," he said.
"Yes, future UAVs will share many of these more advanced attributes," Gunzinger said. "But autonomous technologies will not replace the judgment and experience of human pilots for decades at best."
There are also broader questions, in the early days of the Trump administration. Europe-based defense stocks led by BAE and Airbus have rallied as EU countries and others expand budgets to fill the gaps created by the withdrawal of U.S. military assistance.
That has benefited at least some U.S. defense stocks. RTX earned a March 19 upgrade to outperform from Baird, based on rising global demand for missiles. RBC upgraded Northrop to outperform on Thursday, citing opportunities in "shifting Department of Defense priorities."
At the same time, RBC downgraded Lockheed, based on greater risk for international sales and on U.S. budget pressure.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
