Drone Stocks Show Resilience Amid Tech Sell-Off

**Implied Volatility / Movement:** **High Volatility** Drone stocks showed relative strength Tuesday, with the sector drawing support from government procurement budgets, a contrast to the sharp declines seen in AI hardware. The iShares Semiconductor ETF (SOXX) fell 5%, while the iShares U.S. Aerospace & Defense ETF (ITA) edged up 0.38%. Red Cat Holdings (NASDAQ:RCAT) closed down 2%, and Ondas Holdings (NASDAQ:ONDS) finished up 1%, demonstrating a flat performance. AeroVironment (NASDAQ:AVAV) was an outlier, dropping approximately 4% due to profit-taking after a recent 27% monthly gain, and its significant institutional ownership of 88.4% likely amplified the move. Despite recent performance, $AVAV+WL is down about 25% year-to-date and 27% over the past year, though analysts maintain an average target of $226. Red Cat's momentum is supported by a reaffirmed FY26 revenue target and substantial year-over-year Q2 revenue growth of 527%.