Key Stats for Kratos Stock
- Price Change for Kratos stock: 13%
- $KTOS Share Price as of Jan. 7: $91.44
- 52-Week High: $113
- $KTOS Share Price Target: $103
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What Happened?
Kratos Defense (KTOS) stock is up 13% in early-market trading after President Trump announced plans for a massive increase in defense spending, calling for a $1.5 trillion military budget in 2027.
In a late-night Truth Social post on Wednesday, Trump said the defense budget should jump from the $901 billion Congress approved for 2026 to $1.5 trillion in 2027. That represents a roughly 66% increase over current spending levels.
“This will allow us to build the ‘Dream Military’ that we have long been entitled to, and, more importantly, that will keep us SAFE and SECURE, regardless of foe,” Trump wrote.
The announcement triggered a rally across the entire defense sector. Northrop Grumman gained 8.3%, Lockheed Martin rose 7.9%, and RTX advanced 4.8%. KTOS stock led the charge among smaller defense contractors, up 13%.
The timing of Trump’s announcement follows several major geopolitical developments. U.S. forces recently captured Venezuelan President Nicolas Maduro, and Trump has renewed rhetoric about acquiring Greenland while announcing the U.S. will take control of Venezuelan oil indefinitely.
Defense stocks in Europe and Asia also rallied on the news. The Stoxx Europe Aerospace and Defense index added 1.1%, while Mitsubishi Heavy rose 2.4% and Bharat Electronics gained 0.3%.
KTOS stock has more than tripled over the past 12 months and trades at a premium valuation in January 2026. But does the massive military budget provide it with upside potential at current prices?
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What the Market Is Telling Us About KTOS Stock
The strong positive reaction to KTOS stock and across the defense sector shows investors believe Trump’s proposed budget increase could become reality, or at least signals sustained high levels of defense spending going forward.
Kratos is particularly well-positioned to benefit from increased defense budgets, given its focus on affordable, high-volume weapons systems and unmanned aircraft. The company recently reported third-quarter results that beat expectations and raised its growth forecasts for the next three years.
CEO Eric DeMarco has emphasized that the company is seeing a “generational recapitalization and rebuild of the West National Security apparatus.” He believes this rebuild is structural in nature, driven by both policy and threats, not temporary or a one-off event.
Kratos recently increased its 2025 organic revenue growth forecast to 14-15%, up from an original target of 11-13%. The company is also projecting 15-20% organic growth in 2026 and 18-23% growth in 2027, suggesting management sees sustained momentum even before factoring in potential budget increases.
Kratos has recently won several major contracts, including becoming the program of record for the Marines’ Valkyrie drone under the MUX TACAIR program. It has also partnered with Airbus to develop a German variant of the Valkyrie and is pursuing multiple international opportunities.
With Trump’s proposed $1.5 trillion budget representing a potential $600 billion increase in annual defense spending, companies like Kratos that specialize in affordable mass production of weapons systems could see significant additional opportunities.
KTOS stock appears to be pricing in at least some of that upside potential.
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How Much Upside Does KTOS Stock Have From Here?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
