KTOS stock surged 190% in 2025. Not because Kratos builds the most advanced drones, but because it builds the cheapest ones that are worth losing. The Pentagon learned a lesson from Ukraine. In modern war, mass beats precision. The Valkyrie drone targets two million dollars at scale. An F-35 costs one hundred ten million dollars. One can be expended. The other cannot. Warfare is no longer optimized around perfection. It is optimized around math. And Kratos is the company building the factory that makes that math work.
Attritable Warfare: The End of the $1.7 Trillion Jet Era
The F-35 program will cost $1.7 trillion over its lifetime. Each hour of flight runs $42,000. These jets are too expensive to lose, which causes commanders to hesitate when risk matters most. Ukraine proved a different model works. Warfare shifted toward attritable mass, systems cheap enough that losses are acceptable. The economics flipped. Mass became the weapon. Scarcity became the weakness. The Pentagon responded by targeting one million expendable drones by 2028.
Vertical Integration: Kratos's Secret Engine Moat
General Atomics and Anduril are building collaborative combat aircraft for twenty to thirty million dollars each. Kratos targets $2 million at scale. The difference is vertical integration. Kratos acquired TDI and now manufactures its own small turbojets. Most drone startups struggle to source propulsion. Kratos controls the supply chain. Valkyrie is also a flying platform for AI companies like Shield AI to test autonomy software. Kratos provides the hardware layer for the Silicon Valley-fication of the Pentagon.
Force Design 2030: Why the Marines Chose Rail-Launch
The Marine Corps made Valkyrie a program of record in 2025. The reason is Force Design 2030, a shift from large bases to small, dispersed units across Pacific islands. Traditional jets need runways. Valkyrie launches from a rail with rocket assist. The MACH-TB hypersonic contract ceiling is 1.45 billion dollars over several years. Total backlog hit $1.48 billion. The bid pipeline sits at $13.5 billion. Kratos is the only company ready for runway-independent, high-performance warfare.
Backlog Visibility: Why 190% is Just the Start
The stock is near all-time highs because the story has finally changed. For years, Kratos was viewed as a research company, burning cash on prototypes while investors waited for proof. That proof is now here. The backlog provides clear visibility, production is underway, and unmanned systems are no longer an experiment but a business. Valkyries are shipping to Germany, Airbus is a partner, and the U.S. Marines have made it official with a Program of Record. This is why the stock surged 190%. Investors pay up for companies that build and deliver, not for ideas still forming in the lab.
The last time warfare changed this completely was the shift from cavalry to tanks. That transition took decades of resistance from generals who loved horses. This one is happening faster because the math is undeniable. A pilot takes fifteen years and millions to train. A drone costs two million and can be replaced in weeks. The future of airpower is not fewer, better jets. It is swarms of autonomous systems working together.