NATO Drones Fail in Latvian Forests, Wall Street Bets Big on U.S. Drone Parts, and Congress Still Has No Plan

NATO Just Ran Its Biggest Robot Exercise Ever — And Hit a Wall of Trees

From May 5-15, NATO conducted Exercise Crystal Arrow in southeastern Latvia — the alliance's first-ever brigade-level test of hundreds of unmanned ground vehicles (UGVs) in a real operational environment, according to Breaking Defense, which covered the event on the ground.

The location matters: Latvia is roughly 180 kilometers from the Russian border. NATO picked a country that is half forest to test robots that can't reliably operate in forests.

The results were humbling.

Multiple UGV operators reported that Starlink-based communication links degraded rapidly or failed entirely under dense forest canopy — and forests cover 50 percent of Latvia's territory, according to Latvia's Investment and Development Agency. Latvia's geography directly undermines the test itself.

A Latvian National Guard soldier operating the Natrix UGV — a Latvian-made platform already tested in Ukraine — told Breaking Defense directly: he would NOT feel comfortable relying on Starlink as the only connection option, citing how the service "can be beneficial but also subject to disappearing suddenly." SpaceX did not respond to a request for comment.

The Natrix has backup radio systems, which helped. But the American-made Raven-B drone used by Canadian reconnaissance soldiers hit the same wall. Corporal Elana Clement told reporters: "How high and dense the tree line is messes with our equipment and signal."

If NATO's drones and ground robots lose communications in wooded terrain, they are useless in exactly the kind of concealed, forested battlespace that a conflict with Russia in the Baltics would actually involve.

Wall Street Smells Money in the Drone Supply Chain

While NATO soldiers debug signal problems in Latvian forests, investors are already pricing in the next wave of U.S. drone dominance.

Roth Capital Partners this week initiated coverage of Unusual Machines (ticker: UMAC) — a drone components manufacturer — with a buy rating and a $25 price target, implying 77% upside from Tuesday's close, according to CNBC. Analyst Craig Irwin called UMAC "a diversified supplier and low-cost producer" well-positioned to capitalize on U.S. regulatory momentum.

President Trump signed an executive order last year to accelerate domestic drone production and integrate drones into the National Airspace System. The U.S. is also actively restricting DJI, the Chinese drone giant, from the American market. Irwin wrote: "Regulatory exclusion of China-made drone parts uncovers a multi-billion-dollar market."

Roth projects demand will flow first to the Department of Defense, then delivery drones, then consumer drones as DJI gets locked out. All four analysts covering UMAC have a buy rating, per LSEG data. Shares are up 11% since January 1.

The U.S. is also reportedly considering raising its defense budget to $1.5 trillion in fiscal year 2027 — a number that would flood money into exactly these kinds of platforms.

The Loyal Wingman Question Nobody in Congress Is Answering

Breaking Defense kicked off a new roundtable series this week on manned-unmanned teaming — the concept of AI-controlled "loyal wingman" drones flying alongside fighter jets. The panel included Caitlin Lee of the RAND Corporation and JJ Gertler of the Teal Group.

The concept dates to the 1940s. The technology has never been closer. Yet there is still no clear U.S. congressional framework governing how these systems get funded, tested, fielded, or governed in combat.

Fox News ran a column from former Republican Congressman Jason Chaffetz this week arguing that Washington is moving too slowly on drone defense. But a Fox opinion column is not a defense strategy. Chaffetz names no specific legislation, no budget line items, no committee markups. It's an alarm bell with no fire truck behind it.

What Mainstream Coverage Is Missing

The financial press — CNBC included — is treating this almost entirely as an investment story. Buy UMAC, ride the DJI ban, watch the defense budget expand. But that framing skips the operational reality NATO just demonstrated in Latvia: the U.S. and its allies are still figuring out whether these systems actually work in realistic combat environments.

Meanwhile, conservative media frames this as a political urgency story without naming specific policy failures, specific budget gaps, or specific congressional actors blocking progress.

Breaking Defense is doing the most honest work here: boots on the ground in Latvia, real soldiers naming real problems, real dollar figures and platform names attached to real failures.

The Bottom Line

The U.S. is spending enormous political capital banning Chinese drones and pushing domestic manufacturing. That's the right call. But if the military systems replacing them can't maintain a signal under a canopy of trees — in Latvia, let alone a Pacific island chain or a Ukrainian treeline — the swap is incomplete.

Investors are going to make money on this transition. The American taxpayer will also fund a $1.5 trillion defense budget on the promise that these platforms are ready.

They're not ready yet. NATO just proved it. Whether Washington figures that out before the next conflict does it for them remains to be seen.