Hey Influence Traders,
The last time the government decided it needed a new kind of aircraft, it didn't just buy planes…
It built an entire industry from scratch.
In 1939, the United States produced fewer than 3,000 military aircraft a year. The industry ranked 41st among American industries. By 1945, it had produced over 300,000 planes and become the largest in the country.
The workforce went from 59,000 to over two million.
That's what happens when Washington commits.
And right now, Washington is committing to drones.
A Billion Dollars Says This Isn't Hype
The 1.5 trillion dollar defense budget the White House proposed last week includes a major acceleration of spending on drones, autonomous systems, and the AI that runs them.
The numbers tell the story.
The Air Force is requesting nearly one billion dollars in fiscal year 2027 to begin procurement of the first Collaborative Combat Aircraft, autonomous drone wingmen designed to fly alongside manned fighters. That's the first time this program has moved from pure development into actual buying. On top of that procurement request, the Air Force wants another 1.3 billion dollars for continued research and development of future drone increments.
The total CCA investment since the program started has already reached nearly two billion dollars, with budget projections showing spending ramping to over three billion dollars a year by 2028 and 2029. The Air Force plans to buy more than 1,000 of these drones. Each one costs roughly 30 million dollars, about one-third the price of an F-35.
This is bigger than people realize. The Pentagon isn't just adding drones to the existing force. It's building a parallel air force of autonomous systems that can carry weapons, conduct reconnaissance, jam enemy electronics, and absorb risk that would otherwise fall on human pilots.
The Iran War Proved the Case
Here's what made this budget request land differently than the ones before it. The Iran conflict showed the world what cheap drones can do.
Iran's military has been largely decimated by the U.S. and Israeli campaign. But its waves of low-cost Shahed drones kept the Strait of Hormuz closed and inflicted significant damage across the Gulf, including on American assets. The economics are brutal. Interceptor missiles costing millions each are shooting down drones that cost tens of thousands.
JPMorgan analysts noted that the lesson at the Pentagon has not been to choose between advanced systems and cheap mass production. It's been to invest in both. The budget funds next-generation fighters like the F-47 alongside affordable, expendable drones that can be fielded by the hundreds. Ukraine already proved this model works on the battlefield. Iran is proving it again right now.
The defense secretary said publicly that the Pentagon believes in the loyal wingman concept, the idea that autonomous and semi-autonomous systems amplify lethal effects. That language from the top is what turns budget line items into multi-year procurement commitments.
The WWII Parallel Is Exact
This is where my history lens kicks in. The parallels between what's happening now and the WWII aircraft buildup are almost too clean.
In both cases, the government identified a critical capability gap. In both cases, it threw massive capital at the problem and demanded rapid scaling. In both cases, existing manufacturers couldn't meet demand, so the government brought in new players. Ford built bombers. Auto factories built aircraft engines. The entire industrial base transformed in under five years.
Today, the drone industrial base is following the same pattern. The Air Force has nine vendors working on CCA prototypes. General Atomics and Anduril are already flight-testing armed versions. The Marine Corps tapped Kratos to develop its own. Production decisions are expected this summer.
When Washington decides it needs something at scale, it gets it. The question isn't whether drones become a dominant defense category. That's already decided. The question is which companies ride the production ramp, the same way North American Aviation and Consolidated Aircraft rode the WWII buildup from small shops to industrial giants.
That's the pattern I watch: Washington commits, money flows, and the companies that can deliver at scale become the next generation of defense primes.
We're in the early innings of that cycle right now.
Take care,
Frank