Why Kratos Could Be Defense Tech's Biggest Growth Story | CEO Eric DeMarco

Kratos says production ramps in hypersonics, drones, and engines will drive multi-year growth. CEO Eric DeMarco highlights AI, vertical integration, and facility strategy while noting classification and execution risks. Strategic shift from services to hardware and nation-state capabilities: drones, hypersonics, satcom. Hypersonics growth path: management cites roughly $200M in 2025, $400M in 2026, and about $800M in 2027. Production-led margin gains: management expects ~100 basis points expansion in 2026 and another ~100 bps in 2027. Engines as a volume play: Auburn Hills facility qualified for up to 50,000 small turbojet engines per year, priced ~$30k–$50k. AI and digital engineering examples that compress schedules and lower costs (hypersonic glide vehicle in 24 months at ~$15M; solid motor stack in 30 months at ~$24M). Key risks to monitor: program classification limiting visibility, execution and scaling challenges, and geopolitical dependence on defense demand. ------------------------------------------------------------------------ This video is brought to you by The Motley Fool. Visit https://fool.com/Invest to get access to this special offer. The Motley Fool Stock Advisor returns are 941% as of 3/2/2026 and measured against the S&P 500 returns of 194% as of 3/2/2026. Past performance is not an indicator of future results. All investing involves a risk of loss. Individual investment results may vary, not all Motley Fool Stock Advisor picks have performed as well. ------------------------------------------------------------------------