Archer Aviation (NYSE: ACHR) and Kraken Robotics are two companies operating at the forefront of new technologies. Archer is a leader in electric vertical take-off and landing (eVTOL) aircraft, and Kraken is a leader in subsea batteries, ocean-floor mapping technologies, Lidar, and mine detection. Both companies have substantial growth opportunities in the defense sector.
Military budgets are rising around the world, and countries are taking steps to ensure that they are sufficiently positioned when it comes to next-gen defense technologies. With that in mind, is Archer Aviation or Kraken Robotics the better defense stock buy?
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Archer Aviation and Kraken Robotics at a glance
Archer Aviation’s business didn’t post any sales last year, but the company did record revenue of $1.6 million in this year’s first quarter and expects to begin commercial flight operations this year. The company currently has a market capitalization of roughly $4.2 billion.
In addition to defense applications, Archer is also positioning commercial flights as a central component of its growth story. The company expects to begin commercial flights of its Midnight eVTOL aircraft in the United Arab Emirates this year, and it’s moving through the certification process to secure the approval to fly in U.S. skies and other markets.
Meanwhile, Kraken recorded sales of roughly 102 million Canadian dollars (about $72 million USD based on the current exchange rate) in 2025. Kraken recorded net income of CA$2.9 million (roughly $2.1 million) last year, and Archer Aviation posted a net loss of $618.2 million.
The scope of Kraken’s business is also poised to expand dramatically thanks to the company’s acquisition of Covelya — another leader in the maritime technologies space. Kraken currently has a market cap of roughly $1.7 billion, but that figure will likely rise closer to $2 billion when the company issues new stock to complete its acquisition of Covelya.
Notably, both Archer and Kraken have partnerships with Anduril — one of the most exciting companies when it comes to next-generation defense tech. Archer has teamed with Anduril to develop hybrid VTOL aircraft for military applications. Meanwhile, Kraken’s batteries and sensor technologies are used in Anduril’s GhostShark, Dive-LD, and Dive-XL unmanned, underwater drones. Covelya’s Sonardyne technologies are also used in Anduril’s sea drones, and the combination with Kraken should open up cross-selling opportunities across their respective customer bases and open the door for new selling and administrative efficiencies.
Which stock is the better buy?
Between the two companies, I think Kraken stands out as the better buy right now. Despite having a significantly lower market capitalization, Kraken’s commercialization ramp is significantly further along — while also still offering big long-term growth potential. With Anduril seemingly set to ramp up production of its underwater drone platforms in the coming years, Kraken has some powerful performance catalysts on the horizon.
The company is also posting gross margins that look quite encouraging for a heavily hardware-focused business. The subsea tech specialist recorded a gross margin of 62.1% last year, and it’s guiding for a gross margin between 55% and 60% this year.
Archer Aviation’s business could scale rapidly, but I see a longer and tougher path to profitability and strong earnings growth. With that in mind, I think that Kraken stands out as a better buy for investors seeking next-gen defense plays.
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Keith Noonan has positions in Kraken Robotics. The Motley Fool has positions in and recommends Kraken Robotics. The Motley Fool has a disclosure policy.
Archer Aviation vs. Kraken Robotics: With Geopolitical Risk Rising, Which Defense Stock Wins? was originally published by The Motley Fool
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