The Future of Warfare Is Drones. This Defense Stock Is Perfectly Positioned to Benefit.
Key Points
The Strait of Hormuz closure is showing the importance of underwater superiority.
Kraken Robotics is a key battery supplier for underwater drones, which are attracting massive government investments.
The stock is expensive and risky, but could be a long-term winner if this aggressive revenue growth continues.
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The world is discovering what happens when the oceans are not free for global commerce. It has been less than a month since the Strait of Hormuz was closed, and it is already causing disruptions worldwide for countries that cannot access oil and petroleum products.
In the future, the United States and its allies will want to invest in modern defense technologies to maintain subsea superiority and keep global trade flowing. One way to do this is by monitoring the oceans with subsea drones from the likes of private company Anduril. There is a public company that is key to the subsea defense supply chain, and it should benefit as countries invest to make sure this debacle does not happen again.
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Its name is Kraken Robotics (OTC: KRKNF). Here's why this small Canadian company's subsea battery technology will see massive demand in the years ahead.
Batteries for subsea drones
Kraken Robotics builds batteries for underwater drones and submarines, as well as imaging technology to map underwater areas. These have some commercial and scientific use cases, but are mainly used for defense drones.
Underwater drones are a massive new investment from defense departments around the world, with the likes of Anduril investing in a huge fleet of monitoring drones for governments. Kraken Robotics is the premier supplier of batteries that perform well underwater, thanks to its high product density, which helps it win contracts over the competition. In March, it announced a $24 million order for subsea batteries, as well as a $35 million sale in January.
This will help revenue continue to compound rapidly. In the third quarter of 2025, the most recently reported quarter, the company posted 60% year-over-year revenue growth to 31 million Canadian dollars, while management spent heavily to expand its manufacturing output capabilities.
Image source: Getty Images.
Is Kraken Robotics stock a buy?
The company is not resting on its laurels and aims to be the key subcontractor on projects such as Anduril's Dive-LD, among other defense providers.
It announced the acquisition of Colvya Group for $615 million, which primarily sells systems that help drones and submarines navigate directionally underwater. The combined businesses generated $365 million in revenue in 2025, giving Kraken Robotics still an expensive valuation with a market cap of CA$2.1 billion before the merger announcement.
Further shareholder dilution has already happened, with Kraken raising hundreds of millions in a stock offering to fund the acquisition. However, the combined businesses have a long runway to grow, tackling the underwater defense market, which should grow rapidly over the next decade and beyond. This could make Kraken Robotics a solid stock to buy today.
Should you buy stock in Kraken Robotics right now?
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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kraken Robotics. The Motley Fool has a disclosure policy.
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