** Drone-related stocks rise premarket after U.S. Defense Secretary Pete Hegseth reportedly ordered sweeping new orders to fast-track drone production and deployment

** Shares of AeroVironment AVAV.O and Kratos Defense & Security Solutions KTOS.O both up ~4% before the bell, and Red Cat Holdings' RCAT.O stock rallying ~18%

** As part of an aggressive push to outpace Russia and China in unmanned warfare, "the Department’s bureaucratic gloves are coming off," Hegseth wrote in a memo, according to report by Fox News

** For the first time, commanders with the rank of colonel or captain can independently procure and test drones, including 3D-printed prototypes and commercial-off-the-shelf systems, as long as they meet national security criteria, per the report

** The Pentagon's FY26 budget ramped up investment in unmanned aerial systems (UAS) and counter-drone technology — a 78% increase that's reshaping the entire military landscape

** Through Thurs close, AVAV and KTOS up 54% and 75%, respectively, YTD. Conversely, RCAT has nearly halved in 2025

** Broader NYSE Arca Defense Index .DFII has gained 23% YTD through Thurs

(Lance Tupper is a Reuters market analyst. The views expressed are his own)

((lance.tupper@tr.com 1-646-279-6380))