We recently published a list of Why These Defense Stocks Are Declining This Week. In this article, we are going to take a look at where Nauticus Robotics, Inc. (NASDAQ:KITT) stands against other defense stocks that are declining this week.
Defense stocks were volatile last month. Shares fell sharply on February 13 after the American president suggested his country could rapidly cut military spending in the future. Trump made these comments in the context of a potential future conference with China and Russia to discuss cutting defense expenditure to spend the money in other areas.
READ ALSO: 10 Best Gun Stocks to Buy in 2025 and 10 Best Large Cap Defense Stocks to Buy Now.
Trump has also vowed to end the tumultuous wars in the Middle East and Europe. The U.S. is actively engaging key players in the Middle East for an extension of the truce in Gaza. On February 17, American and Russian officials met in Saudi Arabia to discuss ending the Ukraine war.
Some analysts view his anti-war stance as detrimental to defense stocks. The creation of the Department of Government Efficiency (DOGE), which aims to reduce wasteful spending, cut unnecessary regulations, and restructure federal agencies, is also reshaping investors’ views of the sector.
Byron Callan, managing partner at Capital Alpha Partners, believes there is a high level of uncertainty in the U.S. defense sector related to current and future programs and the likelihood of severe cuts to government workforces.
According to a Financial Times report, shares of the six largest American defense companies have fallen 4% since Trump’s return to the White House. In contrast, Europe’s top defense stocks have risen by nearly 40% over the same period. While the performance of the U.S. defense sector was lagging behind Europe and Asia well before the presidential elections, the gap has widened after Trump’s victory.
Globally, defense stocks have rallied over the past two weeks as European governments faced pressures to increase military expenditure. The momentum has further picked up after a conservative victory in Germany, signaling the shift to the right in Berlin. According to a Bloomberg report, Friedrich Merz, the country’s chancellor-in-waiting, has already opened talks between the Christian Democrats and Social Democrats over a $210 billion emergency defense fund.
While some US defense stocks have benefited from the wave, there are several that have missed out and continue to slide.
Please note that the stocks listed are based on one week’s performance. Our analysis does not reflect the prospects of the company. Their share price could go high or low in the future, depending on the external market conditions, industry-specific challenges, and the company’s capabilities. Additional research and caution are advised before making investment decisions.
Our Methodology
For this article, we went through screeners to see how stocks in the aerospace and defense industry performed over the past week (February 24-28). From there, we picked the top 10 stocks with the highest percentage decline in share price during this period. All data is as of the close of business on Friday, February 28, 2025.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
An autonomous underwater vehicle (AUV) gliding through the ocean depths.
Nauticus Robotics, Inc. (NASDAQ:KITT)
Weekly Decline: -25.35%
Nauticus Robotics, Inc. (NASDAQ:KITT) develops autonomous robots for the ocean industry. It is also a key player in the defense sector. In January this year, the company forged a strategic alliance with Leidos to advance subsea autonomy solutions.
The stock is down 92% over the past year and continued to fall throughout last week, with a decline of 25.35%. Nauticus Robotics, Inc. (NASDAQ:KITT) has been pressured by NASDAQ compliance requirements, with warnings of delisting.
Nauticus Robotics, Inc. (NASDAQ:KITT) is also facing significant financial challenges. During the third quarter of fiscal 2024, it reported a revenue of $0.4 million, down from $1.6 million for the prior year’s period. Net loss was recorded at $11.4 million, up by $6 million sequentially.
Overall, KITT ranks 3rd on our list of defense stocks that are declining this week. While we acknowledge the potential of defense companies, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KITT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap
Disclosure: None. This article is originally published at Insider Monkey.
