Drone Tech Maker’s 1,000% Surge Shows Latest Wall Street Fad

(Bloomberg) -- The eye-popping market debut of a tiny drone software company this week reveals a newfound investor appetite for stocks that fall at the intersection of geopolitics, defense technology and artificial intelligence. Shares of Austin, Texas-based Swarmer Inc., whose AI platform is used to deploy and coordinate drone swarms, soared nearly 1,000% in the first three trading sessions after its initial public offering. Though the stock has retreated from its peak and closed down 30% to $36.71 on Friday, shares are still up 634% from their IPO price of $5. Most Read from Bloomberg - Iranian Navy Guided Indian Tanker Through Hormuz, Crew Member Says - Super Micro Co-Founder Charged With Smuggling, Departs Board - China Pulls Silver From Global Markets to Meet Surging Demand - Target Plans to Tighten Dress Code Rules for Store Employees - Iran Says Ready to Let Japan Vessels Use Hormuz, Kyodo Reports Market watchers said the rally reflects how the war in Iran has swiftly reshaped the outlook for the defense industry as governments around the world rush to retool their militaries to combat a new generation of threats. “Whether the geopolitical tensions remain extremely high or not, military spending is going to increase around the globe,” said Matt Maley, chief market strategist at Miller Tabak + Co. “The defense sector is attracting a lot of money in general, but the stocks that are associated the most with AI technology are gaining meme-like attention.” Swarmer’s rise and fall this week has echoes of the violent swings associated with so-called meme stocks, where a combination of a relatively small number of tradeable shares, the company’s ability to capture the interest of retail investors with popular themes and strong social-media momentum can lead to massive spikes and subsequent crashes. Swarmer generated just $309,920 in revenue for the year ended December 31, 2025, a roughly 6% decline from the same period a year earlier. Its profitability also worsened over that stretch, as the company reported a loss of about $8.5 million, more than four times larger than its net loss in 2024. “There’s clearly a paradigm shift in what warfare itself is,” said Alex Fink, CEO of the company’s US operations. The old model of very large and expensive systems is being replaced by a new one where lower cost weaponry launched at scale and coordinated by AI is potentially more effective, he said. “Those large systems of the past are essentially just becoming very large targets.” Drones have drawn particular attention because they are being used heavily by Iran, Israel and the US in the current war, echoing the pattern seen since Russia’s 2022 invasion of Ukraine. That has highlighted a shift in warfare toward lower-cost, often autonomous and unmanned systems that rely heavily on software. Even though US military spending significantly dwarfs that of any other country, Iran has still been able to inflict damage in the current war by using drones to hit several Gulf nations, spiking global energy prices and sending regional countries scrambling for more air defense.