New York, Jan 8, 2026, 11:18 EST — Regular session
Kratos Defense & Security Solutions shares jumped 17.3% to $107.30 in morning trading on Thursday, lifting the San Diego-based defense contractor to one of the market’s strongest gainers. The move followed news tied to a U.S. Marine Corps effort that pairs Northrop Grumman’s mission systems with Kratos’ Valkyrie uncrewed aircraft.
The Marine Corps program sits inside a wider U.S. push for “collaborative combat aircraft,” or CCA — drones meant to fly with piloted fighters, adding capacity without putting more people in cockpits. For smaller suppliers, landing a spot early can matter even before production orders show up.
Defense shares were already bid up after President Donald Trump called for a sharp increase in the 2027 U.S. military budget, even as he pressed contractors to put money into output rather than shareholder returns. “Budget increase would offset the negative investor sentiment … but there is significant uncertainty associated with a final defense budget,” RBC Capital Markets analysts led by Ken Herbert wrote. Reuters
The award is structured as an Other Transaction Agreement, or OTA — a contract-like vehicle often used for faster prototyping outside some standard procurement rules — with an initial value of $231.5 million, Northrop’s Krys Moen told Breaking Defense. “The OTA covers development with an initial period of performance of 24 months,” Moen said, adding that milestones were not releasable; Kratos executive Steve Fendley called the setup “a high-capability CCA at a price point” that can be “deployed in mass.” Breaking Defense
The move in Kratos came alongside gains in other defense names. Northrop rose 4.9%, L3Harris Technologies added 6.2% and drone maker AeroVironment gained 9.3%.
Kratos, in a separate statement on Thursday, backed Trump’s emphasis on reinvestment over buybacks, saying it does not repurchase shares or pay a dividend. “At Kratos, every dollar we earn is viewed through the lens of readiness and capability,” Chief Executive Eric DeMarco said. Kratos Defense
A regulatory filing earlier this week showed DeMarco sold 200,000 Kratos shares on Jan. 5 and Jan. 6 at weighted-average prices around $90 to $91, under a pre-arranged Rule 10b5-1 trading plan adopted in August — a plan that sets trades in advance. The filing also showed shares withheld to cover taxes tied to vested stock awards.
Still, investors do not yet know what portion of the Marine Corps work ultimately flows through to Kratos, or how the program looks once it moves from development to larger buys. Timelines can slip, and Washington’s budget math — and the rules around capital returns — can shift fast.
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