Kratos Defense & Security Solutions (KTOS) experienced a significant pre-market surge of 5.08% on Friday, continuing its recent upward momentum in the defense sector.

The stock's rise is attributed to reports that the Trump administration is advancing negotiations with multiple U.S. drone companies to provide financial support aimed at expanding domestic production capacity and reducing costs. According to sources, the Pentagon is discussing potential agreements that could include both debt financing and equity investment, meaning the U.S. government might take partial ownership stakes in these companies through the Office of Strategic Capital.

The broader drone and defense sector has rallied on this news, with the Department of Defense's fiscal year 2027 budget proposal allocating nearly $75 billion for drone systems, counter-drone technology, and related capabilities. Kratos, which operates an Unmanned Systems segment producing jet-powered drones and related defense technology, is positioned as a direct beneficiary of this increased government investment in unmanned systems.