U.S. Defense Budget Set to Surge by 44% to $1.5 Trillion
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Source: NASDAQ.COM
- Defense Budget Surge: The U.S. plans to increase its defense budget by 44% to $1.5 trillion by 2027, which will significantly benefit contractors like Kraken Robotics and Leidos, particularly in the procurement of new military technologies and key products.
- Kraken Robotics Orders Boom: In the first few months of 2026, Kraken Robotics announced $87 million in new orders focused on batteries and sensors for unmanned underwater vehicles, highlighting its competitive edge in battery manufacturing for high-pressure environments, which is expected to drive substantial growth in the coming years.
- Leidos Steady Growth: Leidos reported $17 billion in revenue over the past 12 months, a 31% increase over the last five years, and recently secured a $2.7 billion contract for hypersonic missiles, which is anticipated to generate steady cash flows and further solidify its position in the defense sector.
- Market Underestimation: Despite Leidos trading at a low P/E ratio of 11.5, indicating market undervaluation, the company's stock buybacks and steady business growth, combined with potential developments in hypersonic technology, suggest it could be a “hidden gem” for investors.
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Analyst Views on LDOS
Wall Street analysts forecast LDOS stock price to rise
11 Analyst Rating
7 Buy
4 Hold
0 Sell
Moderate Buy
Current: 131.590
Low
178.00
Averages
219.70
High
235.00
Current: 131.590
Low
178.00
Averages
219.70
High
235.00
About LDOS
Leidos Holdings, Inc. is a holding company, which operates through its wholly owned subsidiary, Leidos, Inc. (Leidos). The Company's segments include National Security & Digital, Health & Civil, Commercial & International and Defense Systems. Its National Security & Digital business provides technologically advanced services, solutions and products, as well as mission software capabilities for defense and intelligence customers in the areas of cyber, logistics, security operations and decision analytics. Its Health & Civil business provides services and solutions to federal and commercial customers in the areas of public health, care coordination, life and environmental sciences and transportation. Its Commercial & International business delivers a portfolio of products, services, and solutions aimed at securing national assets, modernizing energy and critical infrastructure, and enhancing mission outcomes. The Company serves government and commercial customers.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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U.S. Defense Budget Increased by 44% to $1.5 Trillion
- Defense Budget Surge: The U.S. plans to increase its defense budget by 44% to $1.5 trillion by 2027, reflecting a strong response to potential future conflicts, which is expected to significantly boost spending on military technologies and key products.
- Subsea Drone Market: Kraken Robotics is at the core of the subsea drone supply chain, having announced $87 million in new orders in the first few months of 2026, focusing on providing subsea batteries for drone manufacturers, positioning itself to benefit from the rising defense budget.
- Leidos' Steady Growth: Leidos reported $17 billion in revenue over the past 12 months, a 31% increase, and secured a $2.7 billion contract for hypersonic products, indicating strong growth potential in defense technology despite a lukewarm market response to its stock.
- Emerging Investment Opportunities: With the increase in defense spending, companies like Leidos and Kraken Robotics are seen as potential investment opportunities, particularly in the fields of drones and hypersonic technology, which could yield substantial returns for investors.
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U.S. Defense Budget Set to Surge by 44% to $1.5 Trillion
- Defense Budget Surge: The U.S. plans to increase its defense budget by 44% to $1.5 trillion by 2027, which will significantly benefit contractors like Kraken Robotics and Leidos, particularly in the procurement of new military technologies and key products.
- Kraken Robotics Orders Boom: In the first few months of 2026, Kraken Robotics announced $87 million in new orders focused on batteries and sensors for unmanned underwater vehicles, highlighting its competitive edge in battery manufacturing for high-pressure environments, which is expected to drive substantial growth in the coming years.
- Leidos Steady Growth: Leidos reported $17 billion in revenue over the past 12 months, a 31% increase over the last five years, and recently secured a $2.7 billion contract for hypersonic missiles, which is anticipated to generate steady cash flows and further solidify its position in the defense sector.
- Market Underestimation: Despite Leidos trading at a low P/E ratio of 11.5, indicating market undervaluation, the company's stock buybacks and steady business growth, combined with potential developments in hypersonic technology, suggest it could be a “hidden gem” for investors.
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- New Industry Participation Model: Some participating companies are expected to reach production scale through private capital investment rather than direct government funding, marking a shift in defense procurement models aimed at accelerating weapons development and procurement processes.
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- DoorDash Investment Advice: Cramer sees DoorDash as a buy despite competition from hardware stocks, suggesting that its market potential remains significant and could appeal to investors seeking diversification.
- Leidos Stock Outlook: Although Leidos' stock is underperforming, Cramer believes its contributions to security are noteworthy, recommending investors consider buying during this downturn for potential future gains.
- Flex Stock Potential: Cramer expresses optimism about Flex's prospects, suggesting it could rise by 50% in the future, indicating strong market confidence in its business model that may draw more investor attention.
See More
U.S. Defense Budget Increased by 44% to $1.5 Trillion
- Defense Budget Surge: The U.S. plans to increase its defense budget by 44% to $1.5 trillion by 2027, reflecting a strong response to potential future conflicts, which is expected to significantly boost spending on military technologies and key products.
- Subsea Drone Market: Kraken Robotics is at the core of the subsea drone supply chain, having announced $87 million in new orders in the first few months of 2026, focusing on providing subsea batteries for drone manufacturers, positioning itself to benefit from the rising defense budget.
- Leidos' Steady Growth: Leidos reported $17 billion in revenue over the past 12 months, a 31% increase, and secured a $2.7 billion contract for hypersonic products, indicating strong growth potential in defense technology despite a lukewarm market response to its stock.
- Emerging Investment Opportunities: With the increase in defense spending, companies like Leidos and Kraken Robotics are seen as potential investment opportunities, particularly in the fields of drones and hypersonic technology, which could yield substantial returns for investors.
See More
U.S. Defense Budget Set to Surge by 44% to $1.5 Trillion
- Defense Budget Surge: The U.S. plans to increase its defense budget by 44% to $1.5 trillion by 2027, which will significantly benefit contractors like Kraken Robotics and Leidos, particularly in the procurement of new military technologies and key products.
- Kraken Robotics Orders Boom: In the first few months of 2026, Kraken Robotics announced $87 million in new orders focused on batteries and sensors for unmanned underwater vehicles, highlighting its competitive edge in battery manufacturing for high-pressure environments, which is expected to drive substantial growth in the coming years.
- Leidos Steady Growth: Leidos reported $17 billion in revenue over the past 12 months, a 31% increase over the last five years, and recently secured a $2.7 billion contract for hypersonic missiles, which is anticipated to generate steady cash flows and further solidify its position in the defense sector.
- Market Underestimation: Despite Leidos trading at a low P/E ratio of 11.5, indicating market undervaluation, the company's stock buybacks and steady business growth, combined with potential developments in hypersonic technology, suggest it could be a “hidden gem” for investors.
See More
Leidos Secures Four Awards Under U.S. State Department's Evolve Contract
- Contract Awards: Leidos has secured four awards under the U.S. State Department's Evolve contract, positioning the company as a key player in supporting the modernization of global IT systems, which is expected to enhance its market position in defense and technology.
- Contract Scale: This contract is a multiple-award indefinite delivery, indefinite quantity contract with a total ceiling value of $10 billion, although individual task order values remain undisclosed, providing Leidos with substantial revenue potential.
- Technical Support: Leidos will focus on cloud and data center services, application development, network and telecommunications services, and customer support, aiming to enhance the State Department's cybersecurity, modernize applications and infrastructure, and ensure the security of diplomatic operations.
- Strategic Significance: The awards not only add to Leidos' backlog of federal IT modernization and cybersecurity work but also align with U.S. government priorities in addressing rising cyber threats and migrating to cloud systems, highlighting the company's strategic importance in an increasingly technology-driven environment.
See More
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- Xometry Growth Potential: Xometry is recognized for its strong performance in a rapidly growing market, and while there is limited deep understanding, the outlook for its industry is widely regarded as positive, potentially attracting more investor interest.
- Equinix Data Center Investment: Jim Cramer recommends Equinix as a prime investment choice for the data center sector, indicating its robust performance and future growth potential, which may draw more capital inflows.
- Positive Market Reaction: Jim Cramer's favorable comments on Xometry and Equinix could boost investor confidence, thereby enhancing the short-term stock performance of both companies and strengthening market expectations for their future developments.
- Industry Trend Impact: As demand for data centers increases, Equinix's market position may further solidify, while Xometry's growth potential could be further unleashed by trends within the industry.
See More
DoD Signs Framework Agreements to Expand U.S. Missile Production Capacity
- Missile Production Agreements: The DoD has signed framework agreements with Anduril, CoAspire, Leidos, and Zone 5 to procure over 10,000 low-cost cruise missiles starting in 2027, aimed at increasing munitions supply and reducing unit costs to address supply constraints in potential large-scale conflicts.
- Testing and Evaluation Plan: The agreements outline an experimentation campaign set to begin in mid-2026, with test missiles acquired from participating companies, and the results will inform formal military assessments that will influence full-scale procurement decisions, ensuring alignment with military demand.
- New Industry Participation Model: Some participating companies are expected to reach production scale through private capital investment rather than direct government funding, marking a shift in defense procurement models aimed at accelerating weapons development and procurement processes.
- Industrial Capacity Enhancement: This initiative is part of a broader effort to increase U.S. munitions production capacity, focusing on creating a flexible industrial base capable of scaling output during periods of heightened demand, reflecting the Pentagon's ongoing interest in leveraging commercial manufacturing approaches.
See More
