Defense Sector Pivot: Subsea Tech and Missile Defense Drive Long-Term Growth

The landscape of modern warfare is undergoing a fundamental transformation, shifting focus toward autonomous subsea capabilities and integrated missile defense systems. This evolution is driven by ongoing conflicts and the realization that traditional defense paradigms are insufficient against new drone-based threats. In the United States, the proposed 'Golden Dome' project, with an estimated budget of $185 billion, underscores the priority placed on domestic missile defense. Simultaneously, the integration of AI and robotics into naval warfare is creating new opportunities for specialized technology providers. Kraken Robotics (KRKNF) is emerging as a critical player in the underwater drone ecosystem. As a lead supplier of subsea batteries to Anduril, the company reported a 60% year-over-year revenue increase to $31 million in the last quarter. Recent momentum is evidenced by new orders totaling $59 million across multiple countries and the strategic acquisition of Covelya Group to enhance its sensor and navigation offerings. Lockheed Martin (LMT) continues to provide the backbone of aerospace and missile defense for the U.S. and its allies. With a record backlog of $194 billion at the end of 2025 and annual revenues of $75 billion, the company is scaling production of the PAC-3 interceptor and the F-35 fighter jet. While Lockheed Martin offers stability through long-term government contracts and a massive backlog, Kraken Robotics represents a high-growth play in the niche subsea battery market. Both companies are aligned with the broader trend of increased defense spending amid persistent global geopolitical instability.