What a strange few days for BAE Systems (LSE: BA.) shares! The share price has been on the move. It’s up 22%, adding over £10bn to the company’s market cap in less than a month. But it’s recent developments in the Ukraine war that have been making headlines.

In short, it turns out this could be a window into the latest tech coming out of BAE Systems. It might even be a reason the share price is going to continue its hot streak…

What happened?

So what happened? Basically, reports emerged that drones designed and manufactured by the UK are being used by Ukraine in the conflict.

The salient detail is that Nyan drones are produced by Callen-Lenz, a fully owned subsidiary of BAE Systems that manufactures them in Wiltshire, England. In other words, the FTSE 100 defence firm produces some of the Unmanned Aerial Vehicles (UAVs) that Ukraine is using.

Nyan is just one part of BAE Systems’ portfolio of uncrewed air systems that comes under the banner of Falconworks – a “new combat air research facility” created in 2023. This division deals not just in UAVs, but in all manner of advanced kit, including use of artificial intelligence. A similar comparison might be Lockheed Martin‘s famous Skunk Works division – which Falconworks is collaborating with.

Before I go on, I must say that the moves of a company’s share price are irrelevant in contrast to the wider tragedy of the conflict. And given the nature of the firm, I’d not blame anyone who doesn’t feel comfortable with this kind of investment.

A buy?

So are the latest developments going to send the BAE Systems share price spiralling upwards? All on their own, probably not. Collen-Lenz is a tiny operation next to the £60bn market cap behemoth of the larger company. I can’t get exact figures on earnings. But it seems like the Nyan manufacturer accounts for less than 1% of total earnings.

What it is, in my view, is another piece of evidence that BAE Systems is on the cutting edge of the latest technology. The last few years indicate the future of defence manufacturers is likely going to involve drones to a large extent. It looks like BAE is already making moves in this direction – and getting valuable testing data.

I’ve been saying for years that defence is one of the first places investors who want to buy UK stocks should look. This rings especially true as Europe continues to increase defence budgets in light of recent events. And I think BAE Systems is one of those worth considering. Who knows? The stock might see another 300% gain in the next five years…

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John Fieldsend owns shares in BAE Systems.