We recently published a list of the 10 Worst Performing Defense Stocks So Far in 2025. In this article, we will take a look at where Nauticus Robotics, Inc. (NASDAQ:KITT) stands against other worst performing stocks this year.

US defense stocks have wobbled this year, amid concerns about government budget cuts. In February, President Trump hinted at significantly reducing future military spending if things settle down with China and Russia. The creation of DOGE has also reshaped investors’ views of the industry.

READ ALSO: 10 Best Performing Defense Stocks So Far in 2025 and 13 Best Defense Stocks to Buy According to Billionaires.

Elsewhere, particularly in Europe, stocks have soared this year, with governments unlocking billions to supercharge their militaries. EU leaders met in Brussels in March to discuss the ‘ReArm Europe Plan’, which will allow the bloc to mobilize funds up to $860 million through bonds and relaxed rules on borrowing and spending.

Despite a shaky start to 2025, analysts at UBS are hopeful about America’s defense sector and believe the downside is shrinking and the FY26 budget request would present a better visibility into long-term expenditure plans. Here is what the firm recently stated:

“Consensus estimates have moved higher since the election despite the 40% sell-off. The downside potential seems increasingly smaller. We believe that the current environment is markedly different from Sequestration and do not believe a similar outcome is likely.”

Citi analyst Jason Gursky is also urging investors that this is the right time to buy American defense stocks.

“We recognize the world order is evolving under the current President, perhaps to a multi-polar one in which three countries control spheres of influence over the Americas, Europe and Asia. However, we don’t view that world to be any less dangerous or one that decreases the need to acquire the tools of deterrence.”

Gursky argues that as long as the global threat environment remains and the United States maintains its leadership role, regardless of whether it is as a sole superpower or as a power in a multipolar world order, defense spending is expected to remain robust, which would benefit stocks in the sector.

Gursky argues that as long as the global threat environment remains and the United States maintains its leadership role, regardless of whether it is as a sole superpower or as a power in a multipolar world order, defense spending is expected to remain robust, which would benefit stocks in the sector.

Methodology

For this article, we went through screeners to identify stocks in the aerospace and defense industry. From there, we picked the top 10 stocks with the worst year-to-date negative returns in share price, as of the close of business on March 26, 2025. Pure-play aerospace stocks that do not deal in defense contracts have been excluded from the list. The stocks are ranked according to their share price decline.

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).

Nauticus Robotics, Inc. (NASDAQ:KITT)

YTD Decline in Share Price: -31.61%

Nauticus Robotics, Inc. (NASDAQ:KITT) develops autonomous robots for the ocean industry. The company is also a key player in the defense sector. With a year-to-date dip of nearly 32% in its share price, KITT is among the worst performing stocks in 2025.

In January this year, Nauticus Robotics, Inc. (NASDAQ:KITT) forged a strategic alliance with Leidos to advance subsea autonomy solutions. This builds on a successful past collaboration between the two organizations, which was well-received by their mutual customer. The partnership aims to combine the expertise of the two to build next-gen autonomous underwater systems for tackling complex missions.

On March 20, Nauticus Robotics, Inc. (NASDAQ:KITT) announced an earlier-than-scheduled closure of its acquisition of SeaTrepid International, LLC, a company that provides subsea robotic services. The strategic acquisition is likely to result in significant revenue growth for the company in the fiscal 2025.

Nauticus Robotics, Inc. (NASDAQ:KITT) has been under pressure over the last several months to comply with NASDAQ’s listing requirements, which it regained in late February. However, the stock price has been declining over the past week and risks falling below the $1 mark again.

The company is also facing significant financial challenges. During the third quarter of fiscal year 2024, Nauticus Robotics, Inc. (NASDAQ:KITT) reported a revenue of $0.4 million, down from $1.6 million during the prior year’s period. Net loss was recorded at $11.4 million, up by $6 million sequentially.

Overall, KITT ranks 8th among the worst performing defense stocks so far in 2025. 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 30 Best Stocks to Buy Now According to Billionaires

Disclosure: None. This article is originally published at Insider Monkey.