Is This Profitable Defense Tech Stock a Better Bet Than Archer Aviation eVTOLs?

The electric vertical takeoff and landing (eVTOL) market is gaining attention. Archer Aviation is a leader in this emerging sector. The company is developing its Midnight eVTOL aircraft. This is for future commercial air taxi operations. Archer currently has a market capitalization near $6.5 billion. However, the company remains in a pre-revenue state.

Archer is advancing through the regulatory process. The company is in Stage 4 compliance testing with the Federal Aviation Authority (FAA). Full certification is a critical milestone. It will unlock Archer’s $6 billion order book. Customers include major carriers like United Airlines. Archer also plans a commercial launch in the UAE. This could happen as early as late 2026. This launch would generate its first passenger revenue.

The Defense-Tech Connection

Archer Aviation is also focused on defense applications. It has an exclusive partnership with Anduril Industries. This collaboration is for a hybrid VTOL aircraft. The goal is a potential program of record with the U.S. Department of Defense (DoD). Archer has already secured over $142 million in Air Force contracts.

This defense focus offers a potential growth driver. However, the company’s valuation is high. It is based on future revenue potential. This presents a significant investment risk. The eVTOL aircraft market is still developing.

A Profitable Alternative: Kraken Robotics

Some investors see a better opportunity elsewhere. Kraken Robotics offers a contrasting investment profile. Kraken is a Canada-based deep-sea technology specialist. It provides deep-sea battery and sonar mapping technologies. Kraken's market capitalization is about $1.8 billion. This is a fraction of Archer Aviation’s valuation.

Kraken Robotics is already a profitable business. The company is not a pre-revenue concept. Sales grew 60% year-over-year in a recent quarter. This revenue reached C$31.3 million. The company also reported strong margins. Gross margin was 59% in the same period. Its net income margin was 10.5%.

Shared Defense Sector Tailwinds

Kraken also benefits from the defense sector. It shares a key partner with Archer: Anduril. Kraken supplies battery and Synthetic Aperture Sonar (SAS) technology. This is used for Anduril’s autonomous underwater vehicles (AUVs). This positions Kraken to benefit from rising military spending. This includes spending from NATO allies like the U.S. and Canada. Kraken’s existing profitability allows for scaling. It can deliver returns as sales continue to grow.

Investment Outlook for Aviation Stakeholders

For aviation investors, the comparison is key. Archer represents a high-risk, high-reward bet. Its success hinges on FAA certification and commercial launch. Delays in this process compound risk. The company has secured a manufacturing commitment from Stellantis. This helps the production ramp-up. Kraken offers exposure to next-generation defense tech. It is already executing on revenue and profit. This model offers a more stable financial foundation. The deep-sea focus is separate from Urban Air Mobility. However, both companies leverage advanced defense technology partnerships. This dual-market exposure is a common theme. It links high-tech startups to government spending. The FAA's Advanced Air Mobility programs are vital for Archer’s future.