Droneshield vs Zip Co: Which tech share is the better ASX growth pick?

Droneshield vs Zip shares: Which ASX tech stock is better for growth investors?

Trying to choose between Droneshield Ltd (ASX: DRO) and Zip Co Ltd (ASX: ZIP) for your next growth-focused investment? Both are prominent names in Australia’s tech scene, but they offer very different business models and risk profiles. Droneshield is making waves with its counter-drone technology, while Zip is a key player in digital buy-now, pay-later finance. Here’s how they stack up for those seeking the next big thing.

The case for Droneshield

Droneshield is an Australian innovator focused on artificial-intelligence-powered solutions that detect and counter drones—a growing global threat for governments, defence forces, airports, and commercial venues. Its product suite features DroneGun Tactical, RfPatrol, and DroneSentry, among others. These technologies are already in use protecting infrastructure and assets in Australia, the US, and the UK.

Looking at Droneshield’s fundamentals:

• It has a market cap of $1.57 billion, promising for a company outside the mainstream ASX 100.
• The P/E ratio is reported at an eye-watering 433.75, and earnings per share are negative at -0.033, indicating the business is still burning through cash as it scales up. Note: Droneshield’s reported P/E ratio may be based on a different earnings measure (e.g. underlying or forward earnings) than the EPS figure shown, which is why they may appear inconsistent.
• Year-to-date, its share price is down 47.6% — a stark reminder of the volatility that comes with early-stage growth stocks.

Droneshield pays no dividend, opting instead to reinvest in its technology and growth pipeline.

The case for Zip

Zip is an established fintech best known for its Zip Pay and Zip Money platforms. The company offers interest-free buy-now, pay-later services across 12 countries, including major operations in Australia, New Zealand, and the US. Zip Co is a pioneer in delivering digital tools that help consumers split and manage payments, challenging traditional credit providers and tapping into a rapidly shifting payments landscape.

A glance at Zip Co’s metrics:

• It boasts a larger market cap at $2.53 billion, putting it among the more notable fintechs on the ASX.
• The P/E ratio sits at 22.30—a far more conventional number compared to Droneshield, with positive earnings per share of 0.091. This suggests Zip has moved past the loss-making start-up phase and into sustainable profitability.
• Like Droneshield, Zip doesn’t pay a dividend, choosing growth over income for now. Its YTD return is -38.6%, still deeply negative but slightly better than Droneshield’s.

Valuation comparison

Note: Droneshield’s negative EPS and its reported P/E ratio appear inconsistent, likely due to different calculation bases (forward/underlying earnings). For both, dividend yields sit at zero—a standard feature of high-growth tech names investing for the future.

Recent share price momentum

Comparing recent share price perfomance up to 30 September 2026:

• Droneshield closed at $1.70, up 4.95% on the day. Its price action across September has been volatile, but the late-month rally could hint at fresh investor interest or news flow.
• Zip finished at $2.03 on the same date, up just 0.5% for the session. Zip’s September showed a mix of sharp down days and small gains, reflecting ongoing uncertainty but also a willingness for traders to buy the dips.
• Both remain well below their January levels, with Droneshield lagging more sharply YTD.

Which is the better buy?

For growth investors, I’d lean toward Zip right now, even with its own sizeable share price slump. Zip has reached profitability, giving it a lower and more grounded P/E ratio, and offers greater operational scale as seen in its higher market cap and international reach. While Droneshield is an exciting play in the defence tech space, it remains loss-making and considerably more volatile—its negative EPS and extremely high P/E imply a lot of hope is baked in, but earnings haven’t caught up yet.

If you’re comfortable with risk and want “moonshot” potential, Droneshield could be your ticket—a single contract or regulatory change could turbocharge its prospects. But for most growth-focused portfolios, I think Zip offers the better balance of proven scalability and upside at today’s prices. Of course, neither is for the faint-hearted, and sharp reversals are always possible.

The post Droneshield vs Zip Co: Which tech share is the better ASX growth pick? appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended DroneShield. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial draft. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.