Unusual Machines Keeps Rising (UNLOCKED)

When I first wrote about Unusual Machines last year in 2025 the thesis was straightforward. Vertical integration. Regulatory protection. Trump family proximity. A supply-constrained drone industry with a demand wave coming from the DOD.

The story was good then. It has gotten better. Even better than my reiteration to buy from several months ago.

After reading through the recent deals and updates for Unusual Machines (UMAC), including companies they have invested in or do business with, as well as, meeting with company representatives on a NYSE conference call that was me and just one other analyst, I have made Unusual Machines my biggest position at 10% of my portfolio. I note the “just one other analyst” because I think that’s about to change.

In addition to my UMAC shares, I have a host of cash-secured puts written at $15, $17.50 and $20 strike prices, that if assigned could make UMAC a 20% position. Clearly, I have a conflict of interest in discussing this stock publicly, but, remember, if I’m wrong, I pay the price twice. That my conviction is this high, is rare for me.

The U.S. drone market sits at roughly $29 billion today. By 2030, conservative estimates having it cross $52 billion. That is the baseline — built on models that do not fully account for the policy shift already underway, the industries just beginning to adopt drones at scale, or the eVTOL market that is not yet in the numbers at all.

Follow the money and you see a market that is bigger than any current forecast. I believe that the drone market will exceed $100 billion by 2030-31.

Start with defense. The “drones as ammunition” doctrine is now policy, not theory. The $1.1 billion Drone Dominance program is funded and running. A broader $50 billion autonomous warfare budget is on the table. The U.S. military spent decades building expensive, irreplaceable platforms — fighters, ships, satellites. That model is changing.

Cheap, expendable, swarming drones are the new asymmetric weapon. They do not come back. That means recurring demand, every year, permanently embedded in the defense budget. The global military drone market alone hits $22.8 billion by 2030. The U.S. owns the largest share of that.

Again, I think that estimate is light and poised for upward surprises not factored into share price models. The drone spending numbers coming out of Washington are not incremental. They are generational. (Seriously, I don’t pound the table like this often.)

In FY2026, the Pentagon requested $13.4 billion for autonomous systems — the first time drones got their own budget line. Congress has not been slow. A Trump supplemental request added another $2.4 billion specifically for drones and $5.1 billion for cybersecurity and autonomy on top of that base.

Then the FY2027 proposal landed in April, and the math changed completely.

The $1.5 trillion total defense budget request includes nearly $75 billion for drones, counter-drone systems, and unmanned weapons. The Defense Autonomous Warfare Group — which received $225.9 million in FY2026 — is proposed to receive $54.6 billion in FY2027. That is a 240x increase in one year for a single department.

Management at the Pentagon said the intent is not one-time procurement. It is to build and sustain permanent industrial base capacity. The doctrine is explicit and it means recurring orders, every year, as a permanent feature of the defense budget rather than a pilot program waiting for the next administration to cancel it.

Put those numbers against what UMAC’s CEO said earlier this year — that the Drone Dominance Gauntlet alone represents a $90 million component opportunity in 2026 and $250 million in 2027. Those estimates were built against a much smaller spending baseline. Against a proposed $54.6 billion autonomous warfare budget, they look conservative.

The budget has not passed Congress yet. That is the honest caveat. Defense budgets get trimmed, delayed, and redirected. But the direction is not in question. Every administration before this one treated drones as a supplemental capability. This one is building a war-fighting doctrine around them and requesting the money to match the ambition.

For domestic drone suppliers positioned on the Blue UAS cleared list, the spending wave has not arrived. It is still building.

Defense is not the only one driver for drones. The commercial wave is just starting to break.

Agriculture is already there. Drones spray crops, survey fields, and monitor livestock on farms across the country. The $3 billion annual agriculture drone market grows as precision farming becomes standard practice rather than early adoption. Drive through rural Wisconsin or Iowa and you are watching the future in real time.

Construction and infrastructure follow the same curve. Drones inspect bridges, survey job sites, monitor pipelines, and map terrain faster and cheaper than any human crew. Every major infrastructure project in the next decade will have drones embedded in it. The bipartisan infrastructure law alone seeded years of inspection and monitoring demand.

Energy is the underappreciated segment. Wind turbine inspection, solar farm monitoring, oil and gas pipeline surveillance — these are not aspirational use cases, they are happening now. The oil and gas drone market was valued at $17 billion in 2026 and projected to nearly triple by 2030. That number alone would shock most investors who still think of drones as consumer toys.

Public safety, logistics, and delivery round out the commercial layer. Amazon, Walmart, and others are already running delivery trials. As FAA approvals expand and beyond-visual-line-of-sight (BVLOS) regulations mature, the delivery market scales fast. Companies like Matternet — already working with Amprius on drone delivery batteries — are positioned at the front edge of a market that barely existed three years ago.

Do you understand why I said above that the $52 billion drone TAM in 2030 has been vastly understated by analysts and consulting companies?

Now extend the timeline into the 2030s and add eVTOL. While drones and eVTOLs are different, a lot of the parts and supply chains are shared or similar.

Electric vertical takeoff and landing aircraft are the next step in the same technology curve. They use the same battery chemistry, the same flight control software, and the same autonomy stack that commercial and defense drones use today. The eVTOL market is projected to reach $30 billion globally by 2030 and could exceed $100 billion by 2035 as urban air mobility becomes operational in major cities.

Think about what that means. The battery suppliers, the software platforms, and the component ecosystems being built right now for drones become the infrastructure for eVTOL. Companies like Amprius with 450 Wh/kg cells are not just selling into today’s drone market — they are positioning for aircraft that need every gram of energy density they can get. More on Aprius and Unusual Machines one degree of separation below.

The total addressable market for the full drone and autonomous aerial systems ecosystem — defense, commercial, consumer, and eVTOL — almost certainly crosses $200 billion in the U.S. alone by the mid-2030s and a number in the $300 billion to $500 billion near decade end seems not only feasible, but likely, especially if we ever get serious about building a sustainable world (the climate and secular trends matter).

That is not a speculation. It is a compounding of trends already in motion. The question is not whether the market gets there. The question is which companies capture it. Unusual Machines should be a player on the supply chain side.

Q1 2026 confirmed the inflection. Revenue hit $8.1 million, up 296% year-over-year and 65% sequentially from Q4. That made it the eighth consecutive quarter of record revenues since the IPO.

The revenue mix ran approximately 90% enterprise, 10% retail. That shift from hobbyist supplier to defense contractor is essentially complete. You are now looking at a different company than what listed on NYSE American in early 2024.

The operating loss was $7.3 million — because the company is still burning cash building out its capacity. That is expected and fine at this stage. What matters is the balance sheet.

UMAC raised $150 million at $17 per share in March, ending Q1 with $222.9 million in cash and working capital near $312.7 million. That is an unusually strong war chest for a company at this revenue scale. It tells you management intends to build, not merely exist.

A very important development since the original article and an reiteration a few months ago, is that Unusual Machines initiated approximately $75 million in strategic materials purchases to support program-driven demand.

That sounds mundane, but think about what it means.

A company with $11.2 million in full-year 2025 revenue just ordered $75 million of inventory. Management does not do that on a hope and a prayer. They do that when they have program commitments and a manufacturing ramp that requires pre-positioning materials ahead of scheduled production.

CEO Evans said visibility into demand from DOD programs, including the Drone Dominance Gauntlet and a proposed $50 billion defense autonomous warfare budget, drove the decision. That $75 million is the clearest public signal yet that UMAC expects revenue to move into a materially different range than the current run rate.

The bears will note the company has not given explicit full-year guidance in the same way as a more established company. They are right to flag that. But the combination of the $75 million materials order, the Upgrade Energy acquisition, the new Orlando battery facility, and management commentary on sequential growth through 2026 and into 2027 paints a consistent picture.

In May 2026, Unusual Machines agreed to acquire DroneNX LLC, operating as Upgrade Energy, for approximately $52 million — structured as 1,792,012 UMAC shares, $1 million cash at closing, and up to $26 million in earn-out tied to hitting $10 million in annual revenue.

Upgrade Energy builds battery packs for unmanned aerial systems. And they build those packs using Amprius (AMPX) SiCore silicon-anode cells. That connection matters more than either company has publicly emphasized.

Amprius silicon-anode advantage is not a marketing claim. It is a physics requirement. Amprius SiCore cells deliver roughly 450 Wh/kg — 25-30% more energy-dense than the best graphite alternatives. For a drone where every gram of battery weight trades against payload capacity and flight endurance, that difference determines whether the mission is achievable. Defense customers do not choose the cheaper cell when the cheaper cell means the platform underperforms.

Once the Upgrade deal closes — expected Q3 2026 — UMAC controls the cell-to-pack integration step. Amprius cells go in. Performance-differentiated, Blue UAS-compliant battery packs come out.

Defense customers who need NDAA-compliant power systems for tactical UAS, ISR platforms, and nano-drones get a domestic, certified solution. That is a value chain that works for both companies right now, and it gets stronger as DOD procurement scales.

Batteries are 5-15% of total drone bill-of-materials, per the Amprius CFO. The FY2027 defense budget proposes $54.6 billion for the Defense Autonomous Warfare Group alone. Apply just 5% of that spend converting to procurement. The demand numbers start to look very different from what any current analyst models assumes.

Upgrade Energy did approximately $6 million in unaudited 2025 revenue. The acquisition's $26 million earn-out requires $10 million annually within two years — less than doubling a business ($6 million most recent year) that UMAC now controls and can feed directly from its own defense order flow. That is not a stretch target. It is the whole point of the deal.

Amprius guided $130 million in full-year 2026 revenue across all markets. The gap between that baseline and what a $54.6 billion autonomous warfare budget implies is not small. That would argue for potential in Amprius as well.

There is a risk to watch for Amprius though, which is an opportunity for Unusual Machines. What if Unusual Machines finds a better battery? It is easy enough for them to switch relatively quickly. This is why I am invested in UMAC and not Amprius.

UMAC is building out battery manufacturing capacity aggressively — 18,500 square feet in Torrance from the Upgrade Energy acquisition, plus a new 14,000 square foot facility leased in Orlando as of late June 2026.

What if Unusual Machines licenses technology and produces batteries without Amprius? What if they simply squeeze Amprius the way Apple squeezes its suppliers. Either outcome is good for Unusual Machines.

The performance demands of defense drone applications make Amprius cells the obvious call right now. But, in coming years, I’m sure Unusual Machines will be looking around for upgrades and/or lower costs.

The XTEND-JFB merger is progressing. The $1.5 billion all-stock deal between JFB Construction Holdings and XTEND, the Israeli drone operating system company, had investor materials released in March 2026. The combined company will operate as XTEND AI Robotics under ticker XTND.

XTEND has deployed more than 10,000 systems across 30+ countries, with customers including the Israel Defense Forces, Singapore Army, and UK Ministry of Defence. The addressable market estimate for the XOS platform across defense, law enforcement, and private security is approximately $67 billion. That is not a whiteboard number — XTEND is already winning contracts ahead of its Nasdaq debut.

Unusual Machines is part of the $152 million investment group alongside Eric Trump, Protego Ventures, Aliya Capital, and American Ventures. Closing was targeted for mid-2026. As of late June, no formal announcement has been made, but the transaction appears on track.

If XTND begins trading on Nasdaq this summer, the mark-to-market on UMAC’s position could generate investment gains similar to what drove the Q1 net income number. That is a bonus in my opinion.

I think the real potential value lies in the order flow for drone components that XTND is integrated into. If Unusual Machines captures some or most of that business, which is likely short run as it is the only significant supplier so far, that is real revenues and profits dropping in.

The stock closed the quarter on June 30 at $22.30. Six analysts cover UMAC with a consensus Strong Buy. The average price target is $33.67, with a high of $40 and a low of $20. At consensus, that implies roughly 75% upside from here. The high target is more than a double.

The analysts reflect the current uniqueness of a domestically vertically integrated drone company with Blue UAS clearance, a clean balance sheet, and $222.9 million in cash positioned in front of a very large drone procurement expansion in the U.S.

The analysts covering it believe the revenue ramp justifies the valuation. I believe they are light and overly cautious.

The bull case rests on three things converting in sequence.

• First, the $75 million strategic materials order placed in May 2026 converts into finished product and recognized revenue in H2 2026 and into 2027.

• Second, the Upgrade Energy acquisition closes cleanly and the combined battery operation begins contributing pack revenue on its own Defense Department order flow.

• Third, the DOD program pipeline — Drone Dominance, the proposed $54.6 billion autonomous warfare budget, and follow-on orders from the 101st Airborne and similar customers — continues to accelerate through 2026 and 2027.

The bear case does not question the market. It questions the execution. UMAC expanded headcount from 81 to roughly 200 employees in a single quarter. Operating losses will persist while that infrastructure scales. The $75 million materials order is a demand signal, not a guarantee — if government procurement moves slower than anticipated, that inventory sits on the balance sheet and cash burns faster than expected.

And the stock, at roughly 10x forward revenue on optimistic 2026 estimates, already prices in a lot of good news. A miss — or even a delay — compresses the multiple quickly. I believe this is the cause of most of the volatility and yields opportunities to buy the dips.

Consensus 2026 revenue sits around $37.7 million, which would represent roughly 236% growth over 2025’s $11.2 million. That is achievable. The materials order and existing backlog support it. But it is not guaranteed, and the range of outcomes is wide.

Even a softer outcome — say $28-30 million this year — still represents a company growing triple digits with a fortress balance sheet and a two-to-three year runway to prove the full thesis without needing to raise capital. That matters. The bear case here is slow execution, not existential risk.

The Q2 earnings report is the next hard data point. You want sequential revenue growth above Q1’s $8.1 million, gross margin holding at or above 32%, and some indication from Evans on when the $75 million of materials begins shipping as product. If the numbers confirm the demand signal, the stock has a clear path toward the $30 consensus. If they do not, you will get a better entry.

Again, I am already at a double position (8-10%) and if I am assigned the puts I have sold, then it will be higher. I’m ok with that, but, I am very aggressive with my portfolio - you need to measure your risk tolerance against your financial situation and long-term goals. You also need to be very aware of your emotions and control them like Spock analyzing a chess game.

The original thesis remains intact. The regulatory protection from Blue UAS and the NDAA ban on Chinese components is still in place. The DOD is still spending aggressively on drones, and UMAC is still the only domestically vertically integrated supplier on the cleared list.

What changed is the balance sheet. At $222.9 million in cash, UMAC can fund its expansion without a dilutive raise for years. The acquisition of Upgrade Energy extends the vertical integration thesis into battery packs — a natural and logical move. The $75 million materials order is forward evidence of demand visibility management does not publicly quantify.

It also remains a show-me story on revenue ramp. The gap between the company UMAC is building and the current run rate is still large. Operating losses will persist while headcount and facilities scale. The Powerus deal remains speculative in terms of financial contribution. Volatility is almost a surety.

The original article noted a support level near $12 and a breakout above the prior $19 high as the next technical trigger. The stock ran to $40 and has given back a large portion of that rally, but did hold support around $19.

The Q2 earnings report is the next event that matters. You want to see sequential revenue growth above Q1’s $8.1 million and some commentary on when the $75 million of materials begins shipping as finished product.

If Evans says production capacity is online and orders are shipping, the stock has room to run. If Q2 revenue disappoints relative to the implied demand signal, then traders will be traders with the bears winning a round.

I continue to love selling cash-secured puts on dips. Again, I have a double position. I generally suggest people nibble a little and sell a cash-secured put out of the money.

As always, scale in slow, small and at wide price points (10-50% swings) if you see the bright future that I do.