ARK Invest, led by Cathie Wood, has reduced its positions in two high-profile growth names while increasing its stake in a defense-technology company that has suffered a sharp decline this year. The trades reflect a notable shift in strategy, as the firm moves capital from richly valued AI and space plays into a contrarian bet on defense.
On Thursday, ARK sold 29,048 SpaceX shares worth approximately $4.7 million and 22,500 AMD shares valued at nearly $14 million. Simultaneously, the firm purchased 159,918 shares of Kratos Defense & Security Solutions for roughly $6.7 million. These transactions are not necessarily a direct dollar-for-dollar rotation, but they signal a clear directional preference.
AMD remains up about 190% in 2026 despite a nearly 4% decline on Thursday, while SpaceX continues to be a significant holding for ARK. Both companies are backed by strong growth narratives, from artificial-intelligence chips to satellite broadband and launch services. In contrast, Kratos presents a different setup, with shares closing Thursday at $41.93 after a punishing year marked by investor concerns over capital spending, cash consumption, and the timeline for returns from investments in unmanned aircraft and hypersonic systems.
ARK's buying in Kratos appears more persistent than opportunistic. The firm purchased more than 309,000 Kratos shares across Tuesday and Wednesday before adding another 159,918 on Thursday. This pattern suggests ARK sees a more asymmetric opportunity in a company where expectations have already been cut sharply.
The stock-price collapse sits awkwardly beside improving operating momentum. Kratos reported second-quarter revenue of $458.8 million, up 30.5% from a year earlier, while organic growth reached 19.1%. Management raised its full-year organic revenue growth forecast to between 18% and 23%, even as heavy investment continues to pressure near-term cash generation.
Wall Street has become increasingly bullish into that weakness. Barclays analyst Anthony Valentini initiated Kratos at Overweight with a $90 price target, arguing that the US is in the “early innings of a modern-day industrial revolution.” The bank prefers faster-growing defense-technology companies over many traditional large-cap contractors.
TipRanks puts Kratos’ average 12-month target at $95, implying roughly 126% upside from Thursday’s close. Its current consensus consists of 16 Buy ratings and one Hold. The gap is striking, as the market is pricing execution risk aggressively, while analysts are still underwriting rapid growth.
The bullish case rests on more than a rebound in valuation. Kratos is exposed to areas where Pentagon priorities are shifting quickly, including low-cost autonomous aircraft, hypersonics, rocket systems, propulsion, and space. These markets fit a broader move towards systems that can be produced at scale alongside expensive traditional weapons.
Rothschild & Co Redburn analyst Maggie Schooley initiated Kratos with a Buy rating and $70 target this week, noting that “military spending is increasing globally as forces adapt to changes in modern warfare.” Guggenheim analyst Michael Ciarmoli has also started coverage with a Buy rating and $74 target, seeing Kratos as well positioned for Pentagon spending on unmanned systems, affordable munitions, space, and hypersonics, while partnerships with larger defense groups could help it gain market share.
This article is for informational purposes only and does not constitute financial advice.
