Monte Independent Investment Research

Research & Analysis: Vistance Networks (NASDAQ: VISN)

Monte Investments — Fri, 19 Jun 2026 11:03:41 GMT

Vistance Networks is quietly stripping itself down to a single business unit — and that unit may be worth more than the entire company currently trades for.

Vistance Networks (NASDAQ: VISN) is undergoing a major organization shift, simplifying the structure in order to focus on its core cable connectivity technology stack. With the imminent transition to DOCSIS 4.0 amongst the cable providers, Vistance is set to undergo the next cyclical upswing over the coming years as the technology is rolled out, presenting a case for margin-accretive growth that can drive value to shareholders through the 2028-2030 time period. While the cable industry has been in gradual decline over the past several years, the driving need to upgrade the technology stack in order to compete with fiber-to-the-premises [FTTP] providers should support Vistance’s operations for the time being. With the cyclical growth opportunity at hand paired with the potential for a merger, VISN shares are positioned to deliver substantial upside potential given their deep discount at 1.90x EV/aEBITDA [10.84x when netting out the return of capital distribution in April 2026] when isolating the Aurora Networks business.

Vistance Networks Operational Update

Vistance has been going through a major organizational transformation in recent years, rightsizing operations while spinning out various business units in order to focus on core operations.

On January 6, 2026, Vistance completed the sale of its Connectivity and Cable Solutions business segment to Amphenol Corporation for $10.5b in cash. As a result of the substantial cash raise, Vistance redeemed its Series A convertible preferred stock and issued a one-time special distribution of $10/share in the form of return of capital in April 2026.

On April 30, 2026, Vistance announced the sale of the RUCKUS business to Belden Inc. for a total cash consideration of $1.85b, expecting to close the sale in e2h26. Similarly to the close of the sale of the CCS business, Vistance is expecting to issue a special cash distribution within 60 days of closing.

Following the close of the deal, the Aurora business unit will remain as Vistance’s only reportable business segment. Strategically, management is evaluating reinvesting in growth opportunities as well as acquisitions to broaden the technology portfolio in this segment.

Aurora Networks has a long history of ownership:

Initially sold to UK-based Pace in 2013 for $310mm.
Sold to Arris for $2.1b in 2015
Acquired by CommScope for $7.4b in 2018, which has rebranded to Vistance Networks.

Aurora Networks is a developer of end-to-end access network solutions, supporting global service providers with high-performance, scalable network infrastructure. Aurora Networks offers various equipment such as cable modem termination systems, video infrastructure, distribution and transmission equipment, and cloud solutions for residential and metro distribution networks, servicing telco operators, cable TV providers, and multi-system operators.

Aurora Networks’ core products include:

DOCSIS 4.0 - a multi-gigabit broadband modem
Extended Spectrum DOCSIS for separate data paths for upstream and downstream
Full Duplex DOCSIS for simultaneous two-way communications within a shared frequency band.

The DOCSIS 4.0 amplifier business has a large market opportunity through the HFC infrastructure upgrade cycle, which will require new amplifiers, nodes, headend virtualization, and distributed access architecture [DAA].

DAA decentralizes and virtualizes headend and network delivery by placing the digital-to-RF interface at the optical-coax boundary in the access node, replacing analog fiber links with IP-based Ethernet transport, expanding bandwidth and improving network performance.

As for emerging technologies, Vistance will be rolling out unified nodes in eq2’26 with the goal of volume shipments in e2h26. Unified nodes provides customers with the flexibility to switch between 1.8 gigahertz ESD or FDX technology all from a single device. Unified amplifiers are expected to begin shipping in early eFY27.

The growth driver is that the cable industry is migrating to DOCSIS 4.0 to solidify their positioning in the market, competing with fiber-to-the-premises [FTTP] providers like AT&T. The upgrade cycle is intended to futureproof cable operators’ broadband subscribers with symmetrical gigabit and multi-gigabit services. Accordingly, Vistance is providing 3 platforms that can enable competitive broadband connectivity:

Extended Spectrum DOCSIS (ESD)
Full Duplex DOCSIS (FDX)
Distributed Access Architecture (DAA)

In terms of the timeline for rollout, Phase I, which includes creating the standards and lab tests, was conducted from 2020-2023. Phase II has been ongoing from 2024-2025, entailing early adoption across 10 US markets. Phase III is expected to occur from 2026-2030, which will bring DOCSIS 4.0 to the broader market for widespread adoption. The rollout is expected to reach 32mm cable homes in the US by 2030. European counterparts are currently undergoing trials and are expected to make DOCSIS 4.0 available by 2027.

The shift in infrastructure is expected to require a number of technology upgrades, including amplifiers, access nodes, headend, fiber transport, CPE & modems, and video infrastructure, creating a rich market for Vistance to participate in. The global DOCSIS 4.0 market is expected to grow from $1.2b in 2024 to $5.7b by 2033, growing at a 19.2% CAGR.

Demand for DOCSIS 4.0 is largely tied to the requirements for faster data rates for remote work, cloud gaming, 4k streaming, and smart home density, as well as the need to remain competitive with FTTP.

Other markets set for growth include the virtualized cable modem termination systems [vCMTS], which is highly scalable as a software cable headend running on commercial off-the-shelf [COTS] servers. vCMTS enable cable operators to shift to DDA for voice and data services, converging with video and other legacy services that may be phasing out. Aurora Networks’ platform is cloud-native, providing scalability and high availability CCAP functionality, effectively allowing operators to select their preferred server, switch, and PTP clock vendors for deployment.

In q1’26, Vistance rolled out its vCCAP solution as a scalable, cloud-native product used by service providers to deploy DDA technology. Vodafone was one of the adopters of this technology, displacing a legacy competitor.

Strategically, Vistance is aiming to create a more vertically integrated product offering around the DOCSIS platform, potentially engaging in multiple bolt-on acquisitions post closure of the RUCKUS sale. This raises the strategic question: is management building toward a sale of Aurora, or genuinely investing in standalone growth? The actions are not yet reconcilable.

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Thesis for a Merger

Vistance has undergone significant change in the last year through a rebranding, the sale of two core business units, and the paydown of all debt outstanding. In addition to this, Vistance has distributed virtually all excess cash to shareholders post-CCS sale and intends to do the same following the sale of RUCKUS. While management has voiced keeping the remaining Aurora business as a standalone business unit under Vistance, the reinvestment strategy comes into question given the near complete distribution of excess cash, limiting Vistance’s ability to execute large-scale acquisitions. From a strategic standpoint, keeping the Aurora business as a standalone unit imposes significant risk to future growth, particularly as the cable business gradually fades out of existence. With limited optionality beyond cable operators, Vistance will either need to pivot to other market verticals or risk its own demise.

Vistance Networks Financial Position & Forecast

Vistance is experiencing strong growth in new orders, growing 49% in q1’26 when compared to the prior year’s quarter, driving the backlog to $843mm, up 33% sequentially. Roughly half of the backlog is tied to Aurora.

Given that Vistance is planning to carve out RUCKUS, we’re going to focus on the Aurora business unit. Taking into consideration the market environment and the expected ramp-up in DOCSIS 4.0 over the next year, I’m forecasting revenue to reach an inflection point in eFY27 and sustain an elevated growth rate through eFY28 as the rollout of the new architecture takes place. This should result in incremental improvements to the adjusted EBITDA margin as higher volume sales leans into operating leverage.

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Vistance closed q1’26 with $2.5b in cash & equivalent and no debt on the balance sheet; management is expecting to reduce its cash position to $125mm by the close of eq2’26 while normalizing its cash position to $150-200mm post closure of the RUCKUS transaction. Vistance paid down its $8.5b debt position in q1’26 following the sale of the CCS business. Given management’s intention of reducing the company’s cash position, this will likely mean that Vistance will distribute its cash through multiple special distributions throughout the fiscal year as it narrows its business to core operations.

In early April 2026, Vistance entered into revolving credit agreement for upwards of $300mm, $100mm of which is available for letters of credit for the purpose of financing working capital and operations. The revolver has a borrowing cost of SOFR+ 1.25-1.50%.

Risks Related to Vistance Networks

Bull Case

With the expectation of the next refresh cycle occurring over the next two years, Vistance should see a substantial step-up in margin-accretive growth, delivering improved cash generation for the Aurora business.
The transition to new technology amongst the cable operators will be a driving need in order to remain competitive with fiber providers, creating market demand for Vistance’s products.
While management has voiced that the sale of RUCKUS is to unlock greater value for Vistance as a standalone company, I’m expecting that the remaining business will be sold or merged with a peer. My assessment is based on the notion that management may be preparing the Aurora business unit for sale by paying down the entirety of Vistance’s debt position while carving out various business units in recent years.

Bear Case

The subscriber base for the cable industry has been in gradual decline for the last decade+, inclusive of broadband offerings as customers transition to broadband and fiber offered by telco providers. This will effectively narrow the market breadth for Vistance over time.
The broadband market is becoming significantly more crowded, with satellite connectivity emerging as an additional competitive layer that Vistance does not directly address.
Vistance has significant customer concentration with the top 3 customers accounting for 75% of revenue.
Margins may face some pressure over the coming quarters prior to the transition towards higher volume sales.

Valuation & Shareholder Value

Maintaining our focus on the Aurora business unit, we’re going to value the company based on our forecast for the business net of RUCKUS operations.

Fundamentally, I believe VISN shares should be priced at $17.19/share at 8.31x eFY28 EV/aEBITDA, presenting substantial upside potential for Aurora as a standalone operation. Given that this is a cyclical market and potentially going through a slow-burn decay, investors should take some precautions when making a final investment decision in VISN shares.

Using the model: the valuation table above references my financial forecast in the firm’s “financial position” section and ties it to the stock’s historical trading premiums. The trading premium array is derived through the normal operating cycle with the blue-sky scenario being the stock’s peak multiple and the gray-sky scenario being the lowest point. The target multiple aims for the midpoint, or the most likely trading range for the company’s stock. The trading multiples from there are set to a probability factor reflecting the likelihood of the stock trading at that premium given its historical trading range. From there, the trading multiple is tied to the probability factor to derive its relative market capitalization and relative multiple.

Disclaimer: No information found within this publication should be considered as investment advice. Information shares in this newsletter should ONLY be used for educational purposes. Monte Independent Investment Research and author are not liable for any financial decisions in relation to the information provided or discussed whether written or verbal. Information within this newsletter should not be shared or replicated. Information presented was independently written and is solely the opinion of the author.

Xtract One Technologies Inc. (XTRA:CA) q3’26 Earnings Update

Monte Investments — Thu, 18 Jun 2026 11:11:51 GMT

Xtract One Technologies is emerging as a leading provider of next-generation physical security solutions as a replacement for traditional metal detectors in critical environments with high foot traffic, including stadiums & arenas, hospitals, schools, office buildings, and industrial parks. The company has experienced a major inflection point in q3’26, turning to higher growth and profitability. With geopolitical tensions on the rise, Xtract One is quickly becoming a central theme to ensuring public security without hindering the convenience of mobility. With the increasing importance of public safety, Xtract One is positioned to continue its elevated growth path.

We initiated coverage of Xtract One Technologies in mid-February 2026.

All figures in CAD unless otherwise stated

Top-Line Performance

Xtract One delivered $10.3mm in net revenue in q3’26, equivalent to all of the first 3 quarters of FY25 for an annualized growth rate of nearly 200%, underpinned by demand for AI-enabled scanning technology. This equates to delivering Gateways to 16 distinct customers throughout the quarter. Xtract One closed the quarter with a backlog of $45mm and over $110mm in its qualified sales pipeline, providing a durable runway for growth that should compound revenue growth with the addition of the recurring services component of the product.

Xtract One added $9.1mm in new bookings in q3’26 for a book-to-bill ratio of 0.88x. 80% of the bookings in the quarter were subscription-based, meaning that these agreements will result in recurring revenue over time, smoothing out the revenue growth rate going forward. Adding to the subscription stream, the summer months tend to be higher product delivery periods given the transition from spring to fall semesters for schools, which may mean that Xtract One is set up for a strong runway of revenue growth for eFY27 given the growing deployments for its Gateways. Year-to-date, the booking split has been 60/40 upfront to subscription contracts based on seasonality of product deliveries.

To support the growing demand for the Xtract One Gateway and SmartGateway products, Xtract One has significantly expanded its manufacturing footprint to convert more backlog into revenue. Xtract One presently has 200 units pending delivery tied to upfront deals, valued at $27.2mm, the majority of which are expected to be deployed within the next 12 months.

Xtract One Technologies Operational Shift

Xtract One delivered its first quarter of positive adjusted EBITDA driven by substantial improvements to operational leverage resulting from scaled growth. With larger volumes of sales flowing through the operating statement, particularly as Xtract One Gateway systems scale, margins should continue to improve as orders grow into the company’s operating footprint. Looking ahead, I’m forecasting this trend to continue, particularly as Xtract One delivers stronger recurring revenue with a higher product base, which should create scale with less incremental operating costs.

Xtract One Technologies Financial Forecast

Looking ahead, I’m forecasting Xtract One to maintain a stable, more durable runrate as it scales volume product sales, compounded by stability provided by annual recurring revenue from services growth. The combination of the land-and-expand model for product and software subscription services should drive profitability over the coming quarters, providing more certainty to growth rather than choppy periodic deployments. Given that Gateway deployments, in part, are out of Xtract One’s control given customers’ developmental timelines, an increase in subscription services on the larger Gateway base should smooth the revenue growth trajectory over time.

Xtract One closed q3’26 with $15.6mm in cash & equivalent and no debt on the balance sheet. Xtract One made some improvements to the balance sheet in the quarter, reducing its inventory on hand to 160 days, likely the result of the large ramp-up in product deployments in the quarter. Working capital may fluctuate from period to period depending on deployment timing rather than market dynamics.

Risks Related to Xtract One Technologies

Bull Case

Xtract One is scaling sales to operations, realizing significant improvements to operating leverage that has resulted in a turn to positive adjusted EBITDA. With a growing concern for security across offices, schools, hospitals, and other high-foot trafficked facilities, Xtract One may be in a position to continue its elevated growth trajectory over the coming years. A major catalyst will be the growing serviceable footprint with new product deployments, providing a broader runway for recurring subscription revenue that can further enhance margins over time. While the backlog contracted sequentially in q3’26, Xtract One has maintained a book-to-bill ratio of 1.30x year-to-date, suggesting a healthy flow of new bookings.

Bear Case

The market remains highly competitive and potential customers may elect to maintain their existing protocol, particularly if inflationary costs impact the total cost to operate. Xtract One is reinvesting in expanding its manufacturing capabilities and may not recognize the level of growth to sustain the larger footprint, potentially resulting in a return to negative adjusted EBITDA. Orders for Gateway products may be choppy from period to period and may not sustain the heightened level going forward.

Valuation & Shareholder Value

XTRA shares are currently trading at 6.28x price/sales, a relative discount when compared to the 1-year trading range. Despite the share price trajectory in recent months, I have reason to believe that XTRA shares can realize substantial growth going forward underpinned by improving operating performance and a higher growth market environment. With customer adoption quickly expanding, driving more depth in recurring subscription revenue, Xtract One should be in a position to maintain profitability and potentially exhibit more durability from quarter to quarter.

Given the upbeat performance in q3’26 and outlook for the market, I believe XTRA shares should be priced at $1.46/share at 7.29x eFY27 price/sales.

Research Roundup Vol. XLI

Monte Investments — Wed, 17 Jun 2026 11:03:32 GMT

Equity Updates

Fund Updates

IGF Provides International Transportation Exposure With US Energy Creating A Foundation

Risk-on is back on the table with momentum returning to the markets. Despite the high CPI print for the month of May 2026, the steps towards war resolution superseded the macroeconomic risk, as if opening the Strait of Hormuz will suddenly alleviate any added inflationary pressures year-to-date. While I’m not opposed to an optimistic market outlook, I remain skeptical that the market may be too optimistic as we’re not quite out of the woods beating down inflation. With oil prices expected to remain elevated throughout the remainder of the year, inflationary pressures are likely to remain prevalent over the coming months. What seems to be overlooked is that the stranded barrels destined for shipment will likely not return to the market due to flat production levels outside of the Middle East. Adding to the mix, the shelled natural gas export facilities will likely remain offline through the end of the decade, leading to the need to offset 20% of the global LNG shipments to ensure European and Asian regions have adequate gas supply.

Nonetheless, we’ll take this optimism as a good sign for healthy market activity, trading on the notion that good news is good news.

Small-caps were the big winner in last week’s trading with the Russell 2000 outpacing the S&P 500 by nearly 2%.

SPCX shares commenced public trading on Friday, June 12. SPCX is expected to be added to the Nasdaq-100 in about two weeks’ time, potentially acting as a catalyst for the space tech company in the near future. Thematically, being added to the Index means that shares will need to added to a number of tracking funds as well as funds that derive their stock universe from the Index, meaning that SPCX shares are about to receive a significant amount of institutional fund flows. This can be bullish for SPCX shares over the coming weeks, though we continue to standby our initial thesis for the company.

Most sectors performed positively in the last week with the exception of energy. Despite near-term pricing, the energy complex is about to get significantly more… well… complex. Our thesis is being echoed by energy executives, suggesting that the market may be overlooking a key detail about the functionality of the physical oil market.

Long story short, inventories are significantly down and new production just isn’t coming online, leaving a 20% gap in the market that will show its ugly face over the coming months. While the strip price says otherwise, energy traders aren’t necessarily trading solely on the basis of supply & demand imbalances as exogenous factors often play into futures pricing. We’ve maintained our positions in IOCs and natural gas producers for a reason and aren’t looking to exit on near-term weakness in the equity market.

Think of it this way, if there was an auction for 20 pencils for an upcoming exam with 20 participants and each participant could only enter one bid, the pricing would be pretty normalized, right? Now take out 20%, or 4 of the pencils up for auction, leaving 16 remaining to be bid on amongst the 20 participants. See where I’m going with this?

Anyways, with inventories at their lowest since 1985, the oil market is nearing a major inflection point that can drive prices significantly higher, even with Middle East oil capacity coming back to market.

To contextualize the supply impact with some estimates:

The war began on February 28, 2026 and the Strait of Hormuz is expected to be reopened this Friday, equating to around 110 days of closure.
Global oil production is estimated to be around 108.6MMbbl/d.
Assuming the Middle East produces roughly 21.72MMbbl/d, that leaves roughly 2.4Bbbl out of the equation.
I don’t know about you, but that’s a significant volume of oil.

Anyways, oil prices have been in decline since the announced peace agreement. Perhaps we’re overthinking the problem and oil executives are attempting to maintain the elevated price of oil. Who knows.

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I’m upgrading my view on Voyager Technologies as the company moves beyond a compelling concept and into a more tangible launch cycle, with Starlab and its broader space and defense platform beginning to align around a clearer commercialization path into 2027 and beyond. What stands out to me is that Voyager is building exposure across multiple long-duration themes at once, including national security, mission-critical space infrastructure, and the transition to a post-ISS environment, which should strengthen its strategic relevance as execution unfolds.

I continue to view StandardAero as a durable aerospace growth story, and the recent pullback looks more like an opportunity to build exposure to a business that remains tied to long-cycle demand across commercial aerospace, defense, and business aviation. The more compelling factor here is the strength of the company’s aftermarket positioning, where scale, platform breadth, and long-duration maintenance demand create a more resilient setup even as the broader market works through volatility.

I believe the market is focusing too heavily on FuelCell Energy’s manufacturing expansion when the bigger issue remains whether the company can convert strategic opportunity into durable commercial execution across its end markets. What stands out to me is that the long-term story still has relevance where distributed power, energy resilience, and emerging demand pockets like data infrastructure can support the thesis, but that setup will only matter if execution begins to catch up with the narrative.

I view Vishay Intertechnology as a longer-duration recovery story, but the near-term setup remains constrained by macroeconomic pressure across key end markets even as management holds to its 2028 framework. Notably, Vishay has meaningful leverage to an eventual normalization in industrial and automotive demand, supported by its broad component portfolio, internal capacity buildout, and positioning across electrification and power management trends.

I view the recent weakness in Broadcom as an opportunity to build long-term exposure to one of the more important infrastructure beneficiaries of the AI buildout, particularly as custom silicon, networking, and enterprise software continue to converge. What stands out to me is that Broadcom is not just participating in AI demand, but helping define the stack through deeper relationships with hyperscalers and a broader platform strategy that extends beyond semiconductors alone.

I believe Microchip Technology is beginning to show credible signs that the cycle is turning, with improving demand patterns and a healthier channel backdrop starting to support a more constructive setup. The differentiating element is that Microchip still offers meaningful leverage to a broader industrial and automotive recovery, while its expanding relevance in data infrastructure and embedded compute adds another layer to the long-term thesis.

I believe Lattice Semiconductor is moving into a stronger part of the cycle, with improving demand conditions and a broader set of growth drivers beginning to support a more durable upturn. What this underscores is that Lattice continues to differentiate through low-power programmable solutions that are becoming increasingly relevant across edge AI, data infrastructure, industrial systems, and embedded security, giving the company leverage to both cyclical recovery and structural demand.

ChronoScale Corporation (CHRN) emerged as an independent entity following Applied Digital’s spin-off of its cloud business, completed May 5, 2026, positioning the company as a purpose-built infrastructure operator tasked with outfitting Applied Digital’s data center shells with compute capacity for enterprise, AI developer, and hyperscaler customers. The separation is a strategically sound move, effectively freeing up capital for both entities to pursue their respective markets — Applied Digital as a site developer and ChronoScale as a scalable infrastructure operator — though the company’s limited financial footprint of $75mm in FY25 revenue suggests meaningful capital raises will be necessary to gain market share in what remains a highly capital-intensive sector. With no initial financial statements yet released and shares trading at an elevated premium relative to available disclosures, I am maintaining a Hold rating on CHRN until greater financial transparency enables a more rigorous assessment of the company’s capital structure and intrinsic value.

Monte Investments Market Brief Vol. CXV

Monte Investments — Tue, 16 Jun 2026 11:03:28 GMT

S&P 500 Outlook, CPI May 2026, Oil Supply Risk, and Xtract One Technologies Q3 Earnings Analysis

The war is over, a preliminary peace agreement is being signed, the Strait of Hormuz will be reopened, and the unrest may finally end, assuming all parties participate in the terms of the agreement.

Did you know that the original title for 'War and Peace' was 'War, What Is It Good For?'

Jerry Seinfeld

This proved constructive for markets entering the week. We’re nearly halfway through the year and our technical analysis of the S&P 500 is going according to plan. With no fundamental or macroeconomic theory applied to this chart, we’ve mapped out the path of the market nearly to a T in our 2026 market forecast.

What’s left is dealing with the aftermath of the war, which includes reconstructing supply chains and energy infrastructure in the Middle East and paying the price of rippling inflationary effects. We discussed in last week’s newsletter the effects of higher oil prices and how they may trickle across the Consumer Price Index [CPI], which rose to 4.2% for the month of May 2026.

Energy remained a sticking point in the CPI reading and will likely continue this trend for the duration of 2026 given the subdued oil market in 2025. While oil prices will certainly normalize from their 2026 high watermark of $113/bbl WTI, we must remember that oil was priced in the $60-to-low-$70/bbl throughout 2025, meaning that if oil prices settle in the high-$70-to-low-$80/bbl range as guided by the strip price, CPI will remain pressured throughout the remainder of the year.

Core inflation, which nets out the impacts from energy and food, still rose 2.9% from the previous year’s period. As someone who consumes a considerable amount of cheese, I was pleased to see that segment decline by -2.9% sequentially in May and -1% when compared to the previous year’s period. On the other hand, beef prices increased by nearly 13% when compared to last year’s figures, which doesn’t help with my breakfast routine.

Monte Investments Model Update

Our model experienced some recovery going into the end of the last week, resulting in a modest decline of -26bps. While the last month was full of volatile trading conditions and muted performance, we remain up over +50% since inception. While I cannot predict where the market will take us going forward, we remain convinced that our balance of durability and growth will perform well throughout the remainder of the year. Let’s look at last week’s performers:

Biggest Gainers: INTC (+25.61%); CRS (+16.11%); PKE (+9.72%)

Biggest Laggards: FLY (-11.72%); ONDS (-10.55%); AVAV (-6.25%)

Complete model available at the end of this report for premium subscribers.

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Xtract One Technologies Inc. (XTRA:CA) q3’26 Earnings Update

We initiated coverage of Xtract One Technologies in mid-February 2026.

All figures in CAD unless otherwise stated

Top-Line Performance

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Xtract One Technologies Operational Shift

Xtract One Technologies Financial Forecast

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Risks Related to Xtract One Technologies

Bull Case

Bear Case

Valuation & Shareholder Value

Given the upbeat performance in q3’26 and outlook for the market, I believe XTRA shares should be priced at $1.46/share at 7.29x eFY27 price/sales.

Monte Independent Investment Research Model Portfolio

Research & Analysis: Applied Aerospace & Defense, Inc (NYSE: AADX)

Monte Investments — Fri, 12 Jun 2026 11:02:05 GMT

A Vertically Integrated Space & Defense Subsystems Play With a $1B Backlog, IPO Fresh Capital, and eFY27 as Its Profitability Inflection Point.

Applied Aerospace & Defense, Inc has a high-growth opportunity across space and defense as one of the latest space technology IPOs to hit the market in early June. With a $1b backlog for its critical subsystems across civil, commercial, and defense space technology and a growing market for defense munitions, AADX may be in a position to realize a long-tailed growth cycle with eFY27 being a major inflection point as the organization transitions to profitability.

TL;DR — Applied Aerospace & Defense, Inc (NYSE: AADX) | Q1 2026 Initiation

AADX is a vertically integrated space and defense subsystems manufacturer that IPO’d on June 3, 2026, raising $650mm in fresh equity at $20/share. The company operates across three segments — Space & Launch Systems, Defense Aviation & Airborne Systems, and C5ISR & Precision Strike — serving primes such as Lockheed Martin, Northrop Grumman, SpaceX, and NASA.

The Bull Case centers on a $1B+ backlog (up from $871mm in FY25), accelerating civil and commercial space investment toward a projected $780B market by 2035, growing Pentagon munitions procurement, and eFY27 as a projected profitability inflection point following IPO-related SG&A normalization.

The Bear Case is the balance sheet. AADX carried ~$1B in net debt pre-IPO at 8.83x net leverage, the legacy of its private equity ownership under Greenbriar Equity Group, which retains 81% voting control and represents a meaningful overhang risk. The IPO proceeds should compress leverage to approximately 3.10x, but the path to net profitability is not expected until eFY28.

The Verdict: Our DCF prices AADX at $23.34/share against a current trading multiple of 42x EV/aEBITDA — leaving limited fundamental upside at current levels. AADX has been added to the watchlist for a future entry point. We’re sitting this one out for now.

About Applied Aerospace & Defense, Inc

Applied Aerospace & Defense, Inc (NYSE: AADX) is a vertically integrated space technology company that operates across space & launch systems, defense aviation & airborne systems, defense intelligence systems across command & control, communications, surveillance, and reconnaissance, as well as precision strike systems, developing subsystems used as part of larger space programs.

AADX is the result of the merger between Applied Aerospace [founded in 1954] and PCX Aerosystems [founded in 1900]. With a 120-year history of aerospace development, AADX operates across 11 facilities in the US with over 1,300 employees.

AADX came to the public markets on June 3, 2026, issuing 32.5mm shares at a price of $20/share, raising $650mm in fresh capital. As a private entity, the company has raised substantial amounts of capital through the debt and credit markets, leveraging up the balance sheet to a net debt position of $1b, split between long-term debt and its revolving credit facility. With the new capital on the books, AADX will have substantially greater flexibility to reinvest and engage in additional acquisitions to develop its operational footprint.

The timing of the IPO comes at a pivotal moment in history as the development of the space economy accelerates across civil, defense, and commercial missions. With investments expanding over the coming years to develop the Golden Dome program, lunar inhabitability, and satellite infrastructure, AADX may be set for growth as part of its subsystem development programs. What’s most interesting about AADX’s IPO is that it entered the public market just before SpaceX’s (SPCX) planned $1.75t IPO on June 12, 2026. While AADX doesn’t appear to be held in any space-oriented ETFs, the stock may gain associated momentum tied to SPCXs public offering.

One challenge AADX was facing prior to the IPO was the relatively high cost of its debt burden, which has effectively strained the company’s financial position in recent years. AADX was previously private equity-owned, making it challenging to raise capital outside of the debt markets, resulting in the high level of debt on the books. As for its operational footprint, AADX’s debt burden has turned an operationally profitable company into one that’s bleeding cash.

Given the recent run-up in the debt position from $627mm to over $1b when comparing q4’25 to q1’26, I wouldn’t be surprised if AADX pulled from its revolver in order to pay out its previous owners. Prior to the IPO, AADX acquired Consolidated Boring, a portfolio company of Greenbriar Equity Group, which also owned AADX prior to the IPO.

Applied Aerospace & Defense, Inc Operations

AADX manufactures a variety of subsystems across the space economy that can be segmented into 3 distinct segments:

Space & Launch Systems
Defense Aviation & Airborne Systems
C5ISR & Precision Strike

Space & Launch Systems includes the production of subsystems across launch vehicles and satellites, including propellant tanks, engine nozzles, nose cones, fairings, payload adapters, solar array & deployable systems, satellite bus & payload assemblies, landing legs, and antennas & precision radio frequency [RF] platforms, amongst other products. One of the core products is AADX’s Spinnaker deorbit drag sail for deorbiting satellites to limit space debris during decommissioning.

Defense Aviation & Airborne Systems is primarily geared toward defense aircraft components for rotary- & fixed-wing military platforms, including fuselage sections, radomes, rotor systems, and ISR platform structures.

C5ISR & Precision Strike [command & control, communications, computers, cyber, intelligence, surveillance, and reconnaissance] involves the production of antenna systems, precision RF platforms, missile and munitions structural components, and subsystems for ground-based air defense.

AADX has grown through a number of acquisitions in recent years to expand its technological footprint while closing the gap in its manufacturing platform to gain more content across spacecraft and launch vehicles. AADX’s acquisition targets enhance the company’s design-to-delivery strategy, expanding its capabilities in working with space and defense primes. Recent acquisitions include:

Innovative composite Engineering in 2024: manufacturer of specialized carbon fiber solutions and composite tubing, compression and bladder molding, and complex structural assemblies made of carbon fiber, glass, Kevlar, and specialized epoxies.

NeXolve Holdings in 2025: developer of flexible solar array technology including solar sails, sunshields, and atmospheric drag sails [deorbit systems]. NeXolve develops various materials designed to withstand extreme temperatures between -200C and 400C, a critical feature to ensure material stability in Low Earth Orbit [LEO]. NeXolve’s thin polymide films are also used in electronics and displays.

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Vestigo Aerospace in 2026: developer of Spinnaker drag sail systems to deorbit satellites and launch vehicle components operating in LEO. AADX was a customer of Vestigo for its thin-film polymer sail materials and deployable booms prior to the acquisition, rolling up the supply chain and creating a vertically integrated operation.

Ultracor in 2026: designs and manufactures honeycomb core composites, applying specific mechanical, thermal, and electromagnetic properties at the fiber and resin level using woven fabric. Systems are used in satellite platforms, spacecraft, aircraft, missiles, high-performance antennas, and radomes.

The acquisition of Vestigo can be a critical growth driver for AADX over the coming years driven by the 2022 5-Year Rule issued by the FCC for new orbital licenses, effectively requiring all satellites to deorbit within 5 years of the end of life in order to limit space debris. A similar regulation was enacted in 2023 for upper stage launch vehicle components, creating a growing market opportunity for AADX as the space economy expands. Spinnaker was designed to replace onboard propulsion systems used for deorbiting spacecraft, an expensive, fuel-intensive system that added substantial costs to the systems.

AADX contracts with a variety of high-profile defense primes, including Lockheed Martin, Northrop Grumman, L3Harris, Boeing, RTX, BAE Systems, GE Aerospace, Anduril, and Kratos. In addition to this, AADX works with NASA, the Department of War, SpaceX, Firefly Aerospace, Blue Origin, AeroVironment, and Sierra Space as a provider of critical subsystems.

Within munitions, the Pentagon is expected to spend $27b in procurement, growing to $70.5b in 2027 as part of the $1.5t budget request for the Department of War.

$4.8b for 373 THAAD interceptors
$2.2b for 280 Standard Missile-6
$1.8b for 685 Tomahawk Block V

Within munitions, AADX manufactures the casings, missile & bomb bodies, solid rocket motors, missile launcher tubes & sleeves, and strategic missile components.

The satellite market is expected to grow from $25.2b in 2025 to roughly $780b by 2035.

Satellite Communications: grow at a 13% CAGR to $83b
Satellite Manufacturing: grow at a 15% CAGR to $86.7b
Satellite Data Services: grow at a 23% CAGR to $105.6b
Small Satellites: grow at a 17% CAGR to $32.7b
Defense Satellites: grow to $80.5b
LEO [broadband/mobile/auto]: grow to $65b

AADX’s satellite footprint includes the sun shields/solar sails, solar array assemblies, bus & payload modules, radar & communications antennas, propellant tanks, and optical & sensor platforms. As for the launch vehicles, AADX manufactures the nose cone & fairings, payload dispensers, interstage sections, aero control surfaces, and reusable landing systems.

Civil space is also a growing market with an expected spend of $72.7-88.5b from 2026-2050. Accordingly, the NASA CLPS program is aiming to accelerate the launch cadence to monthly missions to develop the infrastructure necessary to sustain life on the lunar surface, creating a large market opportunity for companies participating in launch vehicles, spacecraft, robotics & landers, power, and other critical components for the missions. The Artemis program is also expected to accelerate to two manned missions with the goal of landing the first crewed mission on the lunar surface in 2028. From there, NASA is planning bi-annual crewed lunar missions to further develop the planned moon base.

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AADX Financial Position & Forecast

With the growing defense budget for 2027 as well as the accelerated launch cadence for civil, commercial, and defense space missions, I’m forecasting double-digit revenue growth across the Space & Launch Systems as well as C5ISR & Precision Strike Systems segments with mid-single-digit growth in the Defense Aviation & Airborne Systems segment. Given the costs associated with going public, I’m forecasting a higher SG&A expense throughout eFY26 before moderating in eFY28-29, resulting in the company returning to an operating profit in eFY27.

With the equity raise from the IPO, I believe AADX will allocate capital to pay down debt over the coming quarters so as to rightsize and clean up the balance sheet, resulting in AADX turning a net profit in eFY28. AADX closed q1’26 with $16mm in cash & equivalent and $1b in debt on the balance sheet for a net leverage position of 8.83x net debt/aEBITDA. With the $650mm in capital raised through the IPO, AADX’s leverage position may look closer to 3.10x, a more moderate rate.

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In terms of capital allocation, I’m expecting AADX to focus on paying down its debt burden over the coming quarters as well as engage in additional bolt-on acquisitions to expand its integrated footprint in space systems. With the high-growth opportunity across civil, defense, and commercial space, AADX is in an appealing position to realize a strong, long-tailed runway for growth over the next decade.

Bull Case

AADX has experienced substantial backlog growth in recent quarters, expanding to over $1b in q1’26, up from $871mm at the end of FY25, suggesting a significant runway for future demand for its subsystems.
Investments in civil, commercial, and defense space technology is expected to expand to a $780b market by 2035, creating a substantial opportunity for growth across subsystems in spacecraft and launch vehicles.
Accelerated investments in munitions can deliver a strong runway through the end of the decade as the US and ally nations stock up on interceptors and other munitions.
The transition to profitability with eFY27 being a major inflection point can drive operational flexibility.

Bear Case

AADX is faced with a substantial debt burden that has resulted in substantial cash outflows in recent years and may not turn profitable in the foreseeable future.
Greenbriar Equity Group owns 81% of the voting power in AADX and may undergo large blocks of share sales in the future, significantly diluting the float.

Valuation & Shareholder Value

Fundamentally, I believe AADX shares can see some upside based on fundamental growth and momentum trading. While our model prices AADX shares at $23.34/share, shares could see further upside potential given the growing interest in space technology across the market. Given AADX’s recent debut to the public markets, we cannot discern how the market prices shares in terms of a trading premium range, though shares have traded at a relatively expensive price since going public, now sitting at 42x EV/aEBITDA.

Given the expansive market opportunity and the potential to transition to profitability in the coming fiscal year, AADX shares could be interesting to own at an appropriate price point. AADX shares will be added to our watchlist for a potential future allocation. As for now, we’ll be sitting this one out given the narrow fundamental upside potential.

The DCF model can be read with the array of discount rates at the top and terminal growth rates to the left of the model. The forecasted cash flows are denoted at the bottom of the model. The share price array ties the respective discount rates and terminal growth rates. The highlighted prices denoted in the model associate with my expected range for intrinsic value per share.

Information presented was independently written and is solely the opinion of the author.

Research Roundup Vol. XL

Monte Investments — Wed, 10 Jun 2026 11:04:15 GMT

Equity Updates

Fund Updates

All markets were down last week led by the technology sector. While we do not believe that there has been a structural shift in the AI theme, the market is setting lofty expectations for companies’ shares to maintain their high-flying premiums. While operations are expected to catch up to trading premiums in due time, setting the goal post not far enough beyond forecasts appears to be detrimental to the growth story. Makes sense, right?

Health care, real estate, and energy were the biggest sector gainers last week, likely the result of investors taking a defensive position in the turbulent market. Taking into consideration our model portfolio performance last week with Altria outperforming, it’s quite clear that this was the motivation for the sector performance.

I see Hexcel as a compelling way to gain exposure to some of the strongest long-duration growth vectors across aerospace, space, and defense, where advanced composite materials are becoming increasingly essential to next-generation platforms. What stands out to me is that the story is not limited to a commercial aerospace recovery, but also includes expanding relevance across defense modernization and space infrastructure, which together create a broader and more durable demand backdrop.

Woodward is entering a particularly attractive phase where strength across aerospace and industrial appears to be aligning in a way that can support a broader and more durable growth profile. Woodward is set to benefit from improving demand conditions across commercial aerospace, defense, power systems, and industrial automation, which together create a more balanced runway for execution. From my perspective, Woodward looks increasingly well-positioned to translate this cross-vertical momentum into sustained strategic relevance as multiple end markets move in its favor.

Rocket Lab is evolving beyond being a niche launch provider into a far more strategically diversified space platform, with vertical integration giving it greater control across mission-critical infrastructure and customer relationships. What stands out to me is that the company is building an increasingly differentiated position by combining launch capabilities, spacecraft systems, and national security relevance in a way that broadens both its opportunity set and competitive moat.

Caterpillar is well-positioned to capitalize on one of the most important industrial shifts taking shape today, as surging power demand and energy infrastructure needs create a far broader opportunity to allow for a substantial manufacturing capacity expansion for gas engines and turbines. Caterpillar is not simply benefiting from traditional cyclical exposure, but is emerging as a critical enabler of power generation, distributed energy solutions, and infrastructure buildouts tied to data centers, electrification, and industrial demand, creating a long-duration serviceable market that should generate growth over the coming years.

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Monte Investments Market Brief VOL. CXIV

Monte Investments — Tue, 09 Jun 2026 11:03:51 GMT

Our model took a bit of a hit last week, declining by -2.76% driven by the sharp decline in aerospace & defense and our AI-related technology names.

Biggest Gainers: IESC (+6.25%); MO (+3.75%); XOM (+3.21%)

Biggest Laggards: FLY (-22.35%); ONDS (-21.10%); AVGO (-13.66%)

The market effectively took a dive late last week, likely the result of multiple negative catalysts as outlined in yesterday’s report in addition to AVGO’s upbeat, yet disappointing earnings report. We’ll be updating AVGO in Thursday’s stock report.

The markets have been gyrating over the last few weeks as exogenous influences make their way into market analysis, creating substantial uncertainty as to the direction of the broader markets. Friday was a challenging day for the markets with the Nasdaq-100 down over -4% by the close of the trading day. While I’m not seeing any structural shift in investment themes, the market is facing some challenges that we’re going to unpack in today’s report.

The major investment theme for the last 3-4 years has been AI and all things associated with the development of AI, whether it’s advanced semiconductors, AI-optimized servers, cooling infrastructure, networking and interconnects, and now photonics. The market has been faced with modest disruptions over the years resulting from a variety of factors, including the emergence of DeepSeek back in 2025, higher-than-expected capital investments in 2026, or the catalyst that kicked the market this last week, which I believe was a combination of macroeconomic forces as well as the dwindling public opinion of AI data centers.

From a macroeconomic level, inflationary pressures have been on the rise following the military mobilization in Iran, sending oil prices well north of $100/bbl before sustaining levels in the high-$80-90/bbl range. Natural gas also faced a similar trajectory driven by capacity in the Middle East being taken off the market resulting from the closure of the Strait of Hormuz and the missile strikes on LNG export facilities in Qatar.

What’s being overlooked by the futures markets is that the long-term ripple effects have yet to take shape, which will result in higher for longer oil and natural gas prices. The stranded barrels are not going to suddenly appear on the market once the war is over, let alone if a cease fire is agreed upon. These barrels are gone, meaning that the deficit is set to expand as the war drags on.

Domestic producers aren’t increasing production. They’ve been through this scenario before and aren’t about to be caught flatfooted during what appears to be a market peak.

What’s bound to happen is that the Consumer Price Index will become more reflective of higher oil and natural gas prices as costs trickle through the economy. While headline inflation has already felt the impact, costs associated with manufacturing have yet to settle in, presenting the risk of rapidly expanding pricing pressure over the coming quarters. The obvious will be the transportation sector being faced with higher costs. The headline is pressure on the airlines hiking airfare resulting from higher jet fuel prices. What’s bound to set in is higher costs for commodities like copper and steel resulting from the higher costs to transport, tickling down into the cost of durable goods, vehicles, consumer electronics, and agriculture [fertilizer/farming equipment], etc.

This has placed the Fed in a peculiar position of contemplating a rate hike to fight inflationary pressures, particularly following Friday’s strong jobs report. The challenge is that higher rates will not likely have any positive impact on oil prices and may increase the pressure with higher financing rates and less incentive to expand production. The manufacturing reshoring theme for 2026-2030 doesn’t necessarily require lower rates per se, but they certainly would help with project financing costs. Higher rates have been somewhat of a headwind across the construction sector over the last few years with critical infrastructure like power and data center sites being the industry’s saving grace, and now that market is being challenged.

Large-scale data center developments are facing increasing pressure from local governments as public opinion takes a negative shift on the novel technology. While GenAI has become a household staple for the next generation of productivity, the infrastructure required to support development and growing demand have become quite the eyesore.

What’s being uncovered is that these facilities require a lot of power, water, and real estate to operate, which is a factor that has been known but not seen up until recently. It’s easy to hide behind a spreadsheet and model the growth trajectory and the appeal of increased investments towards AI infrastructure, but the physicality of the infrastructure is what’s earning a negative perception by local populus.

The dog fight has become public with Kevin O’Leary’s tactful approach to public relations in developing his 9GW facility in Utah, which has now been downsized to about half the capacity to appease local residents. Accordingly, the site, dubbed the Stratos Project, was set to cover 40,000 acres in Box Elder County, about the size of a small city. With projected power consumption of 9GW, which is roughly 40% larger than New York City, I can see why public opinion has shifted from praising AI factories to demonizing the market.

Accordingly, there are currently 8 states with local bans or moratoriums and 26 that are actively considering a ban. While some states like Texas remain favorable regions for these types of sites, many local municipalities have faced substantial backlash from residents given the potential for water and noise pollution, as well as the eyesore of a windowless building taking up more space than the town itself. Given the rising negative tone towards large-scale data center sites, I wouldn’t be surprised if the public continues to turn on the industry, at least in markets that can be overshadowed by such facilities.

There are regions like in West Texas that are suitable for said sites given the vast amounts of energy resources and the out-of-sight-and-out-of-mind regionality, presenting an appealing opportunity for landowners like Texas Pacific Land and LandBridge that own and lease acreage in the Permian Basin.

Overall, I do not see the theme concluding on the basis of public pushback; however, I do see a shift in regional expansions, redirecting resources from large metro areas and local municipalities to more remote regions that can facilitate data center development. It’s not like a data center needs to be in anyone’s backyard these days given broadband connectivity. And besides, if Elon Musk turns out to be the innovator he says he is, space-based data centers will overcome virtually all said challenges in terms of resource utilization and real estate, eliminating any public-related risk associated with the theme.

Model Portfolio Update

Research & Analysis: Iridium Communications (NASDAQ: IRDM)

Monte Investments — Fri, 05 Jun 2026 11:07:52 GMT

Can Iridium hold its ground as SpaceX moves in on its government contracts?

Iridium Communications is one of the legacy satellite communications companies on the market that is currently in the process of transforming its operations to more heavily focus on IoT connectivity devices. With 66 satellites in Low Earth Orbit [LEO], Iridium boasts one of the most complete coverage networks for remote communications capabilities for voice & data as well as two-way IoT data transfer.

While competition for communications and broadband intensifies, Iridium is focusing more heavily on its growth niche, IoT data, which should experience a paradigm shift beginning in 2028 as AI-enabled robotics begin entering the market. Along with industrial applications, Iridium may realize significant growth in the drone market through its alternative tracking technology and anti-jamming solutions that can be beneficial on the battlefield.

With space stocks gaining momentum in recent months in anticipation of the upcoming SpaceX IPO, IRDM shares have experienced a similar uplift, pricing the company at just north of $7b. With SpaceX expected to be valued at $1.75t in its public debut, investors must question whether Iridium will maintain its place in the market and if it can keep up with the growing competition for direct-to-device connectivity, broadband, and industrial IoT.

About Iridium Communications

Iridium Communications (NASDAQ: IRDM) is a leading provider of low-Earth orbit [LEO] satellite services, covering voice, data, and positioning, navigation, and timing. Iridium primarily serves business, governments, NGOs, and consumers through its constellation that consists of 66 satellites with in-orbit spares and ground infrastructure.

The driving need for Iridium’s services is to support regions that may not receive communications coverage, or have limited coverage in desolate areas. The organization supports a variety of customers, including emergency services during severe weather and catastrophic events, maritime, aviation, government, utilities, oil & gas, mining, recreation, construction, and other markets. Iridium’s coverage supports a broad range of commercial needs, including telephony, data transfer and data communications, personal location tracking, and mobile communications services.

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One of the biggest growth markets Iridium is focusing its efforts on is in the IoT market. Similar to Globalstar (GSAT), Iridium is aiming to enhance its offerings through its value-added reseller partnerships to provide greater coverage for IoT integration across asset tracking, monitoring, and orchestrating autonomous systems, amongst other solutions that may be critical for operations. What differentiates Iridium from Globalstar is its interlink mesh architecture using radio frequency crosslinks across its constellation, which doesn’t require local ground infrastructure.

With the direct-to-device [D2D] market becoming more crowded with SpaceX Starlink, AST SpaceMobile, and now Amazon Kuiper gaining market share, Iridium may be limiting its exposure to the market by focusing on its strategic niche. Iridium’s 3^rd Generation Partnership Project [3GPP], which involves providing Narrowband Internet of Things [NB-IoT] and D2D connectivity is set to be delivered in 2027 as a broader suite of offerings.

Iridium holds licenses to use up to 8.725MHz of contiguous spectrum in the L-band [1617.775-1626MHz], which allows for 2-way communication between devices and satellites.

This can be particularly appealing as more connected devices are expected to enter the market over the coming decade. With the emergence of AI-enabled robotics and self-driving vehicles, constant 2-way communications connectivity will be critical for maintaining and monitoring operations, creating a unique moat for Iridium. While we suspect that Tesla vehicles and Optimus humanoid robots will connect to SpaceX’s spectrum and Amazon will leverage Globalstar constellation [Amazon announced the acquisition of Globalstar in April 2026], the market for robotics and industrial IoT can support significant growth beyond these two peers.

As part of its acquisition of Satelles in 2024, Iridium will begin rolling out its custom ASICs to effectively integrate its PNT services into various applications to enhance GPS and GNSS systems, time synchronization and location data to support critical infrastructure like financial services, telecommunications, cybersecurity, shipping, and transportation.

Iridium’s largest customer is the US government, which accounts for 29% of total revenue. The US government operates under a multi-year, fixed-price contract and consists of a contract for Enhanced Mobile Satellite Services [EMSS] to provide specific satellite airtime services for the Department of War [DoW] and other federal government subscribers. The agreement was initially signed in 2019 and is set to end in September 2026 unless extended. Iridium is currently in talks with the US government in extending its 6-month option as part of the existing contract and will likely execute the extension and re-sign an extended contract.

Iridium’s products are installed in vehicles, ships, and aircraft, and are used for command-and-control and situational awareness. As part of the agreement, the US government has invested directly and indirectly in R&D and implementation support across the network, including Distributed Tactical Communications Services [DTCS], Iridium Managed Access-Distributed Tactical Communication System NEXT [MA-DNX], and Iridium Certus.

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Solidifying its positioning with the US government, Iridium was awarded an indefinite-delivery/indefinite-quantity system infrastructure and hybridization contract with the US Space Force in August 2025 as part of the gateway evolution contract signed in 2019.

In addition to this, General Dynamic Mission Systems was awarded a contract by the Space Development Agency in May 2022 with Iridium acting as a subsontractor to build ground entry points and operations centers for the DoW’s Proliferated Warfighter Space Architecture [PWSA] along with providing network ops and systems integration services. Accordingly, Iridium is expecting to receive a follow-on contract with the US government prior to the term date.

In commercial aerospace, Iridium services a wide variety of major airlines, including Hawaiian Airlines, United Airlines, UPS, FedEx, Cathay Pacific Airways, Delta Airlines, Southwest Airlines, American Airlines, Iceland Airlines, and El Al Airlines. Aircraft services include air-to-ground telephony and data communications for various tasks like email.

As for the defense sector, Iridium’s small antennas are suitable for unmanned aerial vehicles [UAVs], which is a major growth market for the US Department of War. As part of the 2027 defense budget, investments in drone technology are expected to significantly expand to $54b, delivering a broader market for Iridium to participate in.

Iridium offers a variety of commercial services, including:

Prepaid mobile voice and data satellite communications services
PTT service
IoT services
Broadband data services
PNT services
US government services

On the products side, Iridium provides a variety of communications devices designed to connect to its satellite constellation, providing semi-customized offerings that are purpose-built for specific markets. Iridium also provides Certus terminals for the maritime, aviation, land mobile, and government markets, voice & data modems, IoT data devices, and PNT ASICs.

Iridium has a number of competitors in the market across various stages of development and markets, including:

ViaSat
Globalstar
ORBCOMM
Thuraya Telecommunications

These companies compete in mobile and fixed communications, offering similar IoT-related services.

In D2D, Iridium competes with:

SpaceX
AST SpaceMobile
Globalstar
EchoStar

One major area of growth for Iridium over the coming years will be the drone market as it relates to its PNT technology. With location tracking and two-way communications, Iridium could see a ramp-up in sales growth as the US and international allies invest more heavily in developing a drone arsenal. Accordingly, the US will be investing $54b in drones as part of the 2027 defense budget, a substantial step-up from the 2026 figure of roughly $12.5b. With an increased focus on developing the Drone Dominance program and the Defense Autonomous Warfare Group [DAWG], Iridium could see the drone market create substantial tailwinds for its communications technologies for tracking and two-way communications as well as its satellite network.

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A key shift in operations is the phaseout of Iridium’s broadband network, which has been in slow decline since 2024 as Starlink emerged as a driving force. While a declining userbase can appear as a negative factor for Iridium, it can benefit the organization by freeing up capacity for higher growth markets like IoT and PNT, which each use spectrum more efficiently. Investors must bear in mind that Iridium was one of the first to provide satellite broadband in 2019, around when SpaceX began beta testing Starlink.

Iridium Communications Operational Update

In q1’26, Iridium introduced the TriMode module designed for the IoT market with an expected release date in June 2026. The module combines short-burst data IoT services, cellular IoT, and GPS in a single system. The module was designed to service a variety of IoT customers, including maritime for vessel tracking, transportation & logistics for asset tracking and location-aware routing, energy for remote extraction sites, agriculture for precision equipment with integrated positioning, and government & emergency response for secure and resilient communications.

As referenced above, Iridium is rolling out its ASIC in July 2026 used across autonomous systems like drones and self-driving vehicles as well as transport vehicles, commercial aviation, and critical infrastructure.

In terms of growth and expansion, Iridium will likely begin launching new satellite infrastructure beginning in 2030, replacing and expanding its constellation to further address the growing market for autonomous robotics and drones. With the expected inflection point beginning in 2028 for AI-enabled industrial robotics, We’re expecting Iridium’s IoT data userbase to scale and expand, driving a higher ARPU over time. In addition to this, if Iridium secures the next government contract for 2027, the company should see a smooth increase in government utilization driven by DoW usage for drone and satellite connectivity overseas.

The biggest question is whether SpaceX will impose on Iridium’s government territory with the US Space Force given its vertically integrated operating footprint between launch, satcom, and subsystems. At the end of May 2026, SpaceX announced a $4.16b contract award by Space Systems Command for the US Space Force to track airborne threats using SpaceX’s satellite network. At this point, the contract is up in the air and can go ether way, though I have reason to believe that the US government will renew its contract with Iridium given its long-standing partnership and the need to diversify resources.

Iridium Communications Financial Position & Forecast

Looking ahead, We’re expecting revenue to maintain a low-to-mid-single-digit growth rate over the coming years largely driven by IoT, offset by a decline in other commercial services revenue. A major growth driver over the coming years will be subscriber equipment sales as Iridium brings to market its PNT ASIC solution for advanced communications for IoT, particularly autonomous technologies. This should deliver a step-up in revenue while pushing up IoT services adoption, offsetting the decline in voice & data and broadband.

Iridium closed q1’26 with $112mm in cash & equivalent and $1.76b in debt on the balance sheet for a net leverage ratio of 3.37x net debt/aEBITDA, a modest improvement from the previous year’s quarter of 3.68x. While Iridium’s leverage position is relatively elevated, management is expecting to continue to reinvest in operations as well as target bolt-on acquisitions to expand its technology footprint.

Risks Related to Iridium Communications

Bull Case

Iridium has differentiated itself in the market through its IoT offerings, creating a niche that can generate substantial value over the coming years as autonomous drones and AI-enabled robotics are further adopted. Being one of the few service providers for two-way communications for IoT devices, Iridium may have a large market opportunity to address as these technologies are brought to market.

Iridium should see an inflection point beginning in eFY27 for IoT and equipment sales that should deliver growth through at least 2030, providing an uplift in growth and profitability that should translate into stronger free cash flow.

Adoption of direct-to-device can deliver substantial growth, reversing its decline in standalone voice & data services.

Bear Case

The satellite communications market is becoming more crowded with SpaceX and AST SpaceMobile taking on market share for direct-to-device communications and broadband. With SpaceX providing a complete ecosystem of solutions from launch to connectivity, Iridium’s government contract may be at risk of disposition given SpaceX’s dominance in the market. If Iridium were to lose its US government contract, the intrinsic value of IRDM shares would be priced at $42/share given its 12% revenue concentration. Renewal could also create some headwinds if ARPU is negotiated at a lower rate.

Further weakening of standalone voice & data and broadband may result in slower growth if Iridium does not realize a strong transition to direct-to-device services.

Valuation & Shareholder Value

IRDM shares are currently trading at 14.70x EV/aEBITDA, a relative premium when compared to its historical trading range of roughly 10-12x, making it difficult to justify purchasing shares at the current price level. Using our multiples model, we believe that IRDM shares are priced to perfection, if not, overextended given the growth trajectory over the coming years.

Using a discounted cash flow model, which assesses our views of cash generated from operations through 2030, suggests a price target of $65/share, providing some upside potential over the coming years. Given the limited upside potential and long-term trajectory, as well as the risks involved in the government contract renewal, we will be holding off on purchasing IRDM shares at this time; however, given the growth opportunities for IoT, we will keep IRDM shares on our watchlist for any pullback in price. While we do not expect any gray-sky scenario happening anytime soon given the significant interest in space technology, our target price of $43/share would be an appealing entry point for IRDM shares, particularly if the industry undergoes a repricing cycle that pushes premiums higher.

Multiples Model Description

Using the model: the valuation table above references my financial forecast in the firm’s “financial position” section and ties it to the stock’s historical trading premiums. The trading premium array is derived through the normal operating cycle with the blue-sky scenario being the stock’s peak multiple and the gray-sky scenario being the lowest point. The target multiple aims for the midpoint, or the most likely trading range for the company’s stock. The trading multiples from there are set to a probability factor reflecting the likelihood of the stock trading at that premium given its historical presence. From there, the trading multiple is tied to the probability factor to derive its relative market capitalization and relative multiple.

DCF Model Description

Information presented was independently written and is solely the opinion of the author.

V2X q1’26 Update

Monte Investments — Thu, 04 Jun 2026 14:51:57 GMT

V2X has been focusing on enhancing its internal operations through the use of AI, deploying 3 AI platforms across its enterprise IT infrastructure in order to improve productivity. As for external deployments, V2X has been prototyping an AI-enabled aerospace sustainment platform designed to integrate with Google Cloud for hosting, Taktile for agentic decision making, and Nvidia as the infrastructure backbone. The program V2X is developing is geared towards leveraging unstructured data in the battlefield to enhance decision-making capabilities so as to streamline real-time military operations.

On May 16, 2026, V2X announced a strategic partnership with Elastic to strengthen its AI capabilities across government mission workflows. The partnership will enhance V2X’s capabilities in search and analytics to strengthen national security standards, leveraging multi-source data analysis through Elasticsearch. The partnership will also help optimize logistics and the supply chain for tracking, predictive maintenance, and asset management as well as enhancing cybersecurity.

In the quarter, V2X fully spun up its T-6 support program and is expecting to generate over $160mm in revenue as part of the 8-year, $4.3b IDIQ contract. Accordingly, the T-6 program accounted for the majority of bookings in the quarter, making up $3.3b of the $4.1b in total bookings.

Subsequent to the close of q1’26, V2X was awarded a contract by the US Navy’s Naval Air Systems Command to support the Large Aircraft Infrared Countermeasures [LAIRCM] program, which was designed to protect military aircraft from infrared-guided missile threats. Accordingly, V2X will integrate LAIRCM systems on multiple US Marine Corps KC-130J aircraft in an effort to modernize the systems.

V2X Financial Position

V2X kicked off q1’26 with running momentum with a total backlog of $13.8b, up roughly 24% from the previous quarter, for a book-to-bill ratio of 3.14x. V2X secured 50 contract awards valued at $4.1b in bookings in the quarter for a variety of projects across the business, likely driven by increased operator deployment in the Middle East. Notably, V2X was awarded work to modernize critical components of the F/A-18 and to integrate advanced infrared countermeasures for the KC-130J. Other awards involved expanding V2X’s preparedness training footprint across North America and Europe, which may be associated with the possibility of greater threats brewing in the Middle East and between the European Bloc and Russia.

As a result of the upbeat operational outlook, management raised eFY26 guidance from revenue down to earnings with the expected adjusted EBITDA target increasing by 3% at the midpoint. For eq2’26, I’m forecasting V2X to generate $1.2b in net revenue with an adjusted EPS of $1.45/share. The basis for my forecast includes momentum in preparedness efforts along with its defense modernization contracts, delivering incremental growth above our previous forecast.

V2X closed q1’26 with $209mm in cash & equivalent and $1.075b in debt on the balance sheet for a net leverage position of 2.54x net debt/aEBITDA. V2X has an untapped revolving credit facility of $500mm, providing substantial flexibility to grow through acquisitions while reinvesting in operations. The goal for V2X is to improve its financial position throughout eFY26, reducing its net leverage position to under 2x, a feasible target given the expectations for operational improvements throughout the fiscal year.

Valuation & Shareholder Value

VVX shares are currently trading at an appealing valuation at 10.17x EV/aEBITDA, presenting a modest trading premium given the growth potential for the organization. The moderate premium suggests that investors aren’t overzealous over the growth opportunity but rather, over pricing shares for the stable growth trajectory for V2X’s operations, an appealing trajectory for long-term investors.

Fundamentally, we see shares trading at $91/share at 8.72x eFY28 EV/aEBITDA with the long-term target of $110/share.

Research Roundup Vol. XXXIX

Monte Investments — Wed, 03 Jun 2026 11:04:03 GMT

Equity Updates

Fund Updates

Markets performed exceptionally well in the last week with the technology sector outperforming the broader market indices. With another banner quarter for the AI theme, I have reason to believe that growth will remain strong across the theme over the coming years, driven by heightened demand for compute capacity and supporting infrastructure. While our industrials names took a bit of a beating in the last week, we remain bullish on the sector, expecting continued growth for EPC and electrical infrastructure.

I continue to view LiveWire as a company with a credible product roadmap and improving execution, but one that is still operating in a demand environment that remains highly unforgiving.

While management is making the right moves around product launches, market expansion, and cost discipline, I believe the broader consumer backdrop is still likely to limit how quickly that progress can translate into durable momentum.

The story here is less about whether the brand has strategic relevance and more about whether LiveWire can navigate the current headwinds long enough for its operational improvements to meaningfully take hold.

I believe Rush Enterprises is beginning to show credible signs of an operational turnaround, particularly through the resilience of its diversified customer mix and the steadier performance of its core service-oriented business.

That said, I still see the broader freight cycle and economic softness as meaningful constraints, which in my view limits how quickly improving internal execution can fully translate into a cleaner recovery narrative.

Rush remains a fundamentally solid operator that is navigating the cycle better than many peers, but the pace and durability of the rebound will still depend heavily on when the end-market backdrop begins to cooperate.

I continue to view Nvidia as the clearest institutional beneficiary of the AI buildout, with the latest quarter reinforcing that this is evolving into a multi-year infrastructure cycle rather than a short-lived spending wave.

What stands out to me is not just the durability of hyperscaler demand, but the way Nvidia is broadening its relevance across enterprise, industrial, and inferencing workloads through a product roadmap that continues to stay well ahead of the market.

The central takeaway is that Nvidia is no longer simply riding the AI narrative, it is actively shaping the next phase of adoption as customers build against what increasingly looks like a durable secular transformation.

I view Enerflex as a company that is increasingly well positioned to benefit from the structural need for expanded natural gas infrastructure, particularly as energy security and LNG-related investment continue to support long-cycle demand.

What stands out to me is the quality of Enerflex’s operating mix, where recurring service exposure and project activity across multiple geographies are giving the company a more durable growth profile than the market may have appreciated in prior cycles.

The core story is that Enerflex is participating in a favorable global gas buildout, but the magnitude of that opportunity will still depend on how efficiently management can convert demand into sustained operational momentum.

Energy Services of America: Electrification Megatrend Sends Shares Higher (Upgrade)

I believe Energy Services of America is becoming an increasingly compelling way to participate in the broader electrification buildout, particularly as grid modernization and utility infrastructure spending create a more supportive backdrop for its end markets.

What stands out to me is that the company is no longer just benefiting from favorable industry rhetoric, it is beginning to show the kind of operating traction and project exposure that can support a more durable re-rating in how the business is viewed.

The outlook is ultimately rooted in the view that Energy Services of America is aligning itself with a long-duration infrastructure trend, though the strength of that thesis will still depend on management’s ability to convert opportunity into consistent execution.

I continue to view Dell as an increasingly relevant AI infrastructure supplier, with the latest quarter reinforcing that enterprise and hyperscale demand is broadening beyond a narrow early-adopter phase.

What stands out to me is that Dell is not simply participating in the AI cycle through server demand alone, it is leveraging its enterprise relationships, integration capabilities, and infrastructure footprint to deepen its role in how customers are building out AI environments.

The key takeaway is that Dell’s AI narrative is becoming more structurally credible, though the longer-term durability of that thesis will still depend on the company’s ability to translate current demand strength into sustained execution across the broader infrastructure stack.

I believe Red Cat is emerging as one of the more credible domestic drone platforms aligned with the Pentagon’s increasing emphasis on scalable, mission-ready unmanned systems, particularly as national security priorities continue to favor U.S.-based suppliers.

What stands out to me is that Red Cat’s story is no longer centered solely on technology validation, it is increasingly about whether the company can convert its defense positioning, manufacturing readiness, and ecosystem partnerships into repeatable operating traction.

Red Cat is priming itself for a larger strategic role in the drone market, but the durability of that leadership thesis will still depend on management’s ability to execute consistently as demand and defense expectations rise.

Monte Investment Brief Vol. CXIII

Monte Investments — Tue, 02 Jun 2026 11:03:57 GMT

Biggest Gainers: Dell (+42.60%); AVAV (+19%); VVX (+12.38%)

Biggest Laggards: SNPS (-9.36%); PKE (-7.90%); COST (-7%)

Last week was a bit choppy in our model portfolio with major gainers offset by lagging positions across industrials and aerospace & defense. Despite the setback, we remain convinced that the market will return to our growth expectations over our long-term holding period.

We rotated out of one of our high conviction positions this week following the shares nearing our price target, rotating into a high-conviction position in which we see upwards of 2.5x upside potential. Premium subscribers can view our tactical positioning in the Model Portfolio section at the end of this newsletter.

The big headline that caught the market’s attention was Anthropic’s announced plans for an IPO in the coming months. While we had a satellite company on deck for this week’s single-stock report, we’ll push that name back to next week or to next Tuesday to cover the details of Anthropic.

V2X Quarterly Update

V2X Financial Position

Valuation & Shareholder Value

Research & Analysis: SpaceX (NASDAQ: SPCX)

Monte Investments — Fri, 22 May 2026 12:02:46 GMT

SpaceX (NASDAQ: SPCX) released their S-1 SEC filing on May 20, 2026, targeting an IPO on June 12, 2026 on the Texas Nasdaq Exchange. While investors have been able to gain exposure to SpaceX through a number of ETFs using Forge Global to acquire private shares, the IPO will provide investors full access to actively trade SPCX for the first time in the open market.

Some of the ETFs investors can use to gain exposure to SpaceX pre-IPO include:

Tema: NASA
ERShares: XOVR
Baron Capital: RONB
ARK Funds: ARKVX

This report breaks down the various businesses and growth opportunities set forth by SpaceX over the coming years as the space economy further develops. With growing interest in commercial, civil, and defense space infrastructure, SpaceX’s vertically integrated operations should position the organization to realize significant value in time. While we don’t expect SpaceX to achieve its target date for an operational orbital AI data center, we do expect this technology to develop given SpaceX’s existing communications infrastructure, its manufacturing capabilities, as well as its reusable launch operations.

About SpaceX (NASDAQ: SPCX)

SpaceX, initially known as Space Exploration Technologies Corporation, was founded and launched by Elon Musk in 2002 as a private solution to lowering the cost of space exploration and launch services. With cost-effective space travel in mind, Musk set out to develop a launch platform with the long-term goal of achieving manned flight to Mars, an ambitious trajectory that would take space exploration far beyond lunar missions.

SpaceX was one of the most ambitious projects to be brought forth into the space exploration business. With aggregate costs across defense contractors making launch exceptionally expensive, exploration and commercial business was relatively limited to need-to-have programs largely tied to national defense rather than delivering innovation. Another factor that SpaceX innovated was the reduction of waste, moving beyond single-use rockets to vehicles that can be reused time and time again. With the commercialization of launch, the space economy has rapidly developed in recent years, expanding to satellite imaging, internet connectivity, industrial connectivity, and now direct-to-device communications, bringing to market companies like:

AST SpaceMobile (ASTS)
Maxar
Globalstar (GSAT)
Iridium Communications (IRDM)
EchoStar Corp. (SATS)
Viasat (VSAT)
BlackSky Technology (BKSY)

SpaceX has completed over 652 successful launches, 85% of which were done on reusable rockets. SpaceX’s entrance into the market was radically innovative, shifting the space culture from an aggregated flight system across multiple space domain contractors to a vertically integrated solution, significantly reducing the cost per launch by 65-85%. SpaceX operates a number of launch vehicles, including:

Starship
Dragon
Falcon 9
Falcon Heavy

Starship was designed as a reusable super-heavy transportation system to carry cargo and crew to Earth orbit as well as for lunar missions, capable of deploying over 100 metric tonnes to orbit. As part of Space’sX long-term strategy, Starship will be capable of busing up to 100 individuals on long-duration, interplanetary flights, whether to the future Moon base or beyond. Starship is expected to commence commercial payload delivery into orbit in e2h26.

Dragon is a spacecraft designed to be launched by Falcon 9. This vehicle is capable of carrying upwards of 7 crew into Earth orbit as well as transporting cargo to and from Earth as the first private spacecraft to transport crew members to the International Space Station [ISS]. Dragon gained recognition in 2024 when the spacecraft was used in a rescue mission to transport stranded NASA astronauts back to Earth from the ISS.

Falcon 9 is a reusable, two-stage rocket designed to transport crew and cargo into Earth orbit. This vehicle is most heavily utilized as the workhorse for launching SpaceX’s Starlink satellite constellation into Low Earth Orbit [LEO]. Falcon 9 has completed 638 missions, 557 of which have been reflights. A key factor of Falcon 9 was its ability to drastically lower the cost of launch from $18,500/kg to $2,700/kg, an 85% reduction in costs.

Falcon Heavy was the latest addition to SpaceX’s launch fleet, capable of transporting 64 metric tonnes of cargo into orbit. The vehicle gained the public’s attention in its first launch when Musk sent a Tesla Roadster on a mission to Mars in 2018, making it the first production vehicle launched into space. The Falcon Heavy also produced a significant reduction in the cost of delivering cargo, dropping by 92% to $1,400/kg.

SpaceX is made up of a number of distinct business verticals as part of an expansive effort to monetize in the space economy. For launch, SpaceX utilizes its rocket fleet for civil, commercial, and defense missions, providing rideshare capacity for peer satellite companies.

SpaceX also plays a critical role in NASA’s Artemis program, a multi-year, multi-phase lunar development project for creating an inhabitance on the lunar surface. Accordingly, SpaceX provides the Human Landing System [HLS], a variant of Starship, which is the vehicle designed to transport astronauts from lunar orbit on the Orion spacecraft down to the Moon’s surface and back. The initial contract was valued at $2.9b and was expanded by $1.15b for a second crewed landing mission. The mission was slated to be a part of the Artemis III project, which is slated for a 2027 mission. In addition to spacecraft, SpaceX is participating in the program by transporting critical infrastructure for the Lunar Gateway to develop an autonomous, inhabitable lunar base.

In March 2026 Jared Isaacman, NASA Administrator, announced the intention to accelerate lunar development with a monthly launch cadence to develop functional infrastructure on the South Pole of the Moon, including the development of a Moon base. While the development of a Moon base isn’t necessarily a novel topic of discussion, the actionable development of the infrastructure through private, commercial enterprises has yet to be touched. This can be a major program for SpaceX to participate in over the coming years, particularly when considering the total ecosystem of infrastructure developed between SpaceX and Tesla.

On the commercial side of the business, Starlink is the largest satellite constellation with over 6,000 satellites in operations. SpaceX began deploying Starlink in 2019 with a fleet of 60 satellites as part of the beta program before scaling up to its global constellation for near-global coverage. As of the release of SpaceX’s S-1 filing, Starlink had 10.3mm subscribers, making it the most viable broadband satellite connectivity company in existence. Furthering the program, SpaceX began deploying direct-to-mobile satellites in early 2024, initially providing text and emergency services before scaling to voice, data, and IoT services through partnerships with mobile carriers like T-Mobile in the US as well as Telstra, KDDI, Rogers, and Salt, amongst others, internationally. As part of its direct-to-mobile business, SpaceX entered into a Spectrum License Purchase Agreement with EchoStar to license up to 15MHz of unpaired AWS-3 spectrum valued at $19.6b. The deal involved $11.9b in equity, $8.5b to the payoff of designated EchoStar debt, and any shortfall below $8.5b to be paid in cash. The deal is expected to close in November 2027 and has been approved by the FCC.

SpaceX also offers enterprise solutions as part of its Starlink business, providing connectivity to a variety of sectors, including construction, agriculture, retail, and telecom, amongst others. Starlink has the capability to be deployed on a variety of structures and vehicles, including aircraft, ships, trains, oil rigs, and facilities to provide broadband connectivity.

In May 2025, SpaceX and xAI merged into a single operating company, combining Musk’s space exploration company with X Corp. [Twitter] and its AI development efforts. In addition to this, Tesla intertwined the organizations through an equity investment in SpaceX, calling the collaborative AI project “Macrohard,” likely a jab at Microsoft.

In early 2026, xAI secured an agreement with Anthropic to utilize 300MW of compute capacity at xAI’s Colossus 1 data center in Memphis, Tennessee, which is set to yield $1.25b in revenue per month through May 2029 with the option to be extended and scale. While the agreement will provide for a substantial revenue source, we believe that it may be suggestive of adoption and development challenges faced by xAI following lackluster performance and advancement when compared to peer models provided by Google [Gemini] and Anthropic [Claude]. Rather than attempting to compete in a high-cost market, xAI’s shift towards data center hosting may be a more appealing strategy and utilization of resources as the company repositions and refocuses on its broader efforts.

SpaceX also entered into an agreement with Anysphere [Cursor] to provide GPU clusters to collaborate and further develop xAI’s Grok. In addition to this, SpaceX is considering an acquisition of Cursor valuing the company at $60b.

To further develop its AI capabilities, xAI established a partnership with Intel Corp. (INTC) to develop Terafab, a multi-generation semiconductor fabrication program designed to produce upwards of 1mm chips per month when fully scaled. Terafab will operate on Intel 14a process technology, which will begin ramping up in the 2027-2028 timeframe. As part of the program, Intel will be contributing chip design, fabrication, and packaging for SpaceX. Terafab will fabricate both logic and memory chips purpose-built for SpaceX and Tesla Optimus and vehicles.

Advancing its commercial efforts, SpaceX has the vision of integrating satellite communications with xAI by developing the software and hardware infrastructure for a constellation of orbital data centers, leveraging solar arrays for continuous power generation. While this may seem like a farfetched idea, orbital AI inferencing may be the next frontier as a component of SpaceX’s broader infrastructure theme. Taking into consideration that SpaceX controls launch, satellite communications and direct-to-device satellites, orbital data centers could potentially shorten the path from data center to satellite to device, providing lower latency if successful. This can particularly be critical for Musk’s broader autonomous platform for self-driving vehicles and humanoid robots, connecting each node through satcom for real-time operations.

As for defense, SpaceX operates Starshield, which was established in late 2022. The program was effectively an adaptation of Starlink designed for defense agencies for the US and allied nations. Starshield is a government-owned system built for military applications with end-to-end encryption and anti-jam/anti-spoof features. The constellation involves multiple layers, including communications, reconnaissance, and missile warning and tracking, providing defense agencies a vertically integrated constellation.

SpaceX operates under a number of contracts with various agencies on its Starshield program, including the National Reconnaissance Office [NRO], US Space Force, the Space Development Agency [SDA], and the State Department. SpaceX also does business with Axiom Space, SES, Eutelsat, and OneWeb.

SpaceX Edge

Nvidia Corporation (NASDAQ: NVDA) q1’27 Outlook

Monte Investments — Thu, 21 May 2026 13:02:17 GMT

This report was initially published on May 19, 2026. The financial model was updated with information provided in the q1’27 earnings release.

Nvidia will be reporting q1’27 earnings on Wednesday after market close with high expectations for continued durability for compute & networking sales growth. With the broader AI investment theme facing substantial volatility and uncertainty since late-2026, every quarter counts going forward, meaning that one lackluster quarter of growth may completely unwind the entirety of the growth story.

Nvidia remains as the clear leader in AI acceleration, unveiling next generation Vera Rubin at the CES 2026 event in January 2026 before bringing the integrated CPU & GPU stack to market in e2h26. With the latest architecture stack, Vera Rubin is expected to operate using 4x fewer GPUs when compared to its predecessor Blackwell to train comparable models as well as requiring 10x fewer tokens to run similar inference workloads.

This step-up in inference performance comes at a critical time when compute capacity remains stretched and GPU rental rates turn higher with Nvidia Blackwell GPUs going for $4.08 per hour in April 2026, up 48% from $2.75 per hour two months prior. What remains clear is that demand for compute capacity continues to outstrip supply as major cloud services providers amplify their investment outlays to gain control of as much capacity as possible to convert their highly valued backlogs into margin-accretive revenue. With the price of compute stepping higher, there may be further interest in accelerating these investments in order to advantageously lock in higher rates.

Looking at the bigger picture, the market is set up to support earnings growth for Nvidia this quarter.

Microsoft: $627b RPO; up from $625b sequentially.
Amazon: $364b backlog [Anthropic accounting for $100b]; up from $244b in the prior quarter.
Alphabet: $460b backlog; up from $240b in the previous quarter.
CoreWeave: close to $100b backlog.

As it relates to Nvidia, capital outlays going forward will reflect this high level of demand:

Microsoft: $190b capital outlay for 2026, expecting an increase in capital spend towards compute, data, and talent in FY27.
Amazon: $200b capital outlay for 2026.
Alphabet: 2026 guidance: $180-190b, up from prior guidance of $175-180b. Expecting 2027 capital spend to “significantly increase compared to 2026.”
Meta Platforms: Increased capital outlay from $115-135b to $125-145b for 2026.

Overall, we can expect $700b+ in capital spend for 2026 for the sole purpose of building out data center compute capacity. Granted, the entirety of the budget isn’t tied to CPUs & GPUs and will include leases, gray-space infrastructure like electrical and cooling, as well as white-space infrastructure like networking, interconnects, storage, and servers. It’s clear that the growth trajectory is far from peaking, particularly as preliminary guidance for 2027 exhibits an even more robust outlook for capital spend.

What’s also occurring is the transition towards more AI inferencing, a major inflection point that differentiates the previous 5 years with the coming 5 years for the AI story. The biggest paradigm shift will be the adoption of agentic AI and physical AI, two critical turning points that will effectively transform office and factory operations. GlobalFoundries (GFS) is expecting the shift towards physical AI to take place beginning in 2028, which we believe is an adequate roadmap to undergoing the necessary training and development of robotics that can undergo the task of augmenting human capital.

As part of this paradigm shift, we’re expecting greater investments in edge compute, meaning that factories and enterprises will increasingly invest in private data centers to orchestrate these advanced software stacks to further enable real-time analysis while lowering the total cost of compute capacity. In addition to this, Amazon AWS may become a more heavily utilized CSP service for industrial IoT, particularly when considering its recently announced acquisition of Globalstar (GSAT), which provides 2-way IoT satcom services for remote operations. Overall, our market outlook for AI infrastructure remains robust, providing a longer runway than what the market is pricing in.

At Nvidia’s recent analyst event in March 2026, Jensen Huang indicated a $1t market for Blackwell and Rubin, up from $500b for Blackwell when previously forecasting 2026 demand. Accordingly, Huang’s guidance did not include Rubin Ultra or Feynman Architecture, the successor of Rubin.

Advancing its technology stack, Nvidia will be integrating Groq 3 LPX into the technology stack for Vera Rubin as a low-latency inferencing tool, which is expected to generate 3x the annual revenue per gigawatt of capacity to roughly $300b when compared to Blackwell architecture. What’s most appealing is that the advanced inference technology will enhance AI developers’ tiered models, enabling higher price points for higher throughput as the backend architecture becomes more advanced, effectively creating the demand for Vera Rubin + Groq. Taking into consideration that Nvidia invested $20b for a non-exclusive licensing and talent agreement with Groq, the economies of scale can far outweigh the initial investment as AI inferencing becomes more widely adopted.

In addition to its investment in Groq, Nvidia has been active in engaging in strategic partnerships to expand its technology stack and in so doing create a complete rack-scale solution for data center deployments, which includes investments in Lumentum, Coherent, Marvell Technology, Corning, Synopsys, TSMC, ASML, Intel, and Foxconn. Thematically, Nvidia’s investments are strategic by design, creating a more unified platform for greater compute efficiency across compute and networking, which should solidify Nvidia’s positioning in the market as the clear leader of AI.

With more integrated solutions comes more advanced architecture designs. Accordingly, Nvidia will be releasing a POD-scale AI platform that will consist of 40 racks outfitted with 1,152 Nvidia Rubin GPUs and 10PB/s scale-up bandwidth. The POD platform is a complete platform that integrates compute, networking, and storage all in one. In addition to this, Nvidia’s Vera CPU rack will consist of 256 Nvidia Vera CPUs as a liquid-cooled rack-scale solution for agentic AI.

At the macro level, the semiconductor market is expected to grow at a 13% CAGR from 2024-2030, expanding to roughly $1.5-1.8t by 2030, presenting an appealing growth opportunity for Nvidia over the coming years. Given the breadth of the market in 2026 and the guided capital spend for 2027, 2030 estimates may be conservative.

Taking all things into consideration, particularly with Nvidia’s POD architecture, I believe the market may have set its expectations for the growth rate too low for Nvidia. There are two factors to consider that will play into Nvidia’s growth trajectory through the end of the decade:

New data center capacity coming online.
Replacement of aging infrastructure.

Demand clearly supports the growth trajectory of new data center capacity in development, which in turn will drive investments towards AI infrastructure. JLL estimates data center capacity to double to 200GW by 2030, which may be a conservative estimate when considering the massive facilities being announced more frequently. New developments include:

Softbank/American Electric Power’s 10GW AI data center campus under development in Southern Ohio.
xAI Colossus 2 in Memphis, Tennessee, scaling to 1GW in capacity.
Meta Hyperion campus in Louisiana, scaling to 5GW of capacity.
Amazon AWS aiming to quadruple its capacity to 12GW.
Kevin O’Leary is even planning a 9GW AI data center campus in Utah.

While many of these projects will phase in capacity over time, there is a clear runway for growth over the next decade, giving us reason to believe that the market is underestimating Nvidia’s total addressable market.

Monte Investments Research Roundup Vol. XXXVIII

Monte Investments — Wed, 20 May 2026 12:03:34 GMT

Equity Updates

Fund Updates

These last few weeks have been challenging with markets trying to find direction as macroeconomic data worsens. With interest rate spikes driven by an increased likelihood of a rate hike by the end of 2026 driven by a hotter-than-expected inflation print, equities have been pushed and pulled in every which direction in an attempt to find grounding.

As discussed in our Tuesday market brief, we remain constructive on the AI trade driven by durable investments in compute capacity and supporting infrastructure. While the trade may experience increased volatility in the near future, we’re expecting Nvidia’s q1’27 earnings release to clear up any uncertainty.

These are the days that separate the good and bad investors; those that panic in the short-term and those that logically hold off with the endgame in mind. A great mentor once told me:

Stocks go both up and down.

Such a simple, yet impactful statement. To expect stocks to only go up would be an investor’s worst perception of market operations, leading to lackluster results and the fear of loss. Another great investor once said:

Buy when there’s blood in the streets

- Baron Rothschild

Here’s another quote to keep us grounded:

Far more money has been lost by investors preparing for corrections, or trying to anticipate corrections, than has been lost in corrections themselves.

- Peter Lynch

Hopefully you can see the theme here. Investing is having the capacity to see losses at any given time before realizing the true potential of your investment thesis. Just because a stock is down 10/20/50%+ during your holding period doesn’t mean that it won’t reach your price target. Some of my greatest trades were down upwards of -60% before turning into multibaggers.

It’s part of the game.

Granted, this doesn’t mean invest in a bad company just because it’s down because a bad company’s stock can certainly continue to go down with the worst-case scenario resulting in liquidation. Our goal, as investors, is to find quality companies that may realize their true intrinsic value in 3-5 years. If we bought a stock in the last month that’s down 20%, that doesn’t mean that the stock will be a -20% loss in 3-5 years; that just means that the market doesn’t yet see what we see.

That is why we model and forecast every company’s financials and map it to our proprietary valuation table. While we take consensus estimates into consideration, consensus is fundamentally broken in which the guiding principles for sell-side analysts involve forecasting around the consensus estimates rather than being the outlier. This means that Wall Street essentially works in unison no matter the investment bank, voicing similarities across a narrow spectrum.

I was having a conversation with one of our readers the other day about a contrarian view of a company under our coverage on the basis of a Wall Street analyst presenting a more bullish outlook for the stock. While they may be correct in their analysis and see something I missed, investors must take sell-side research with the largest grain of salt they can find as equity research departments are effectively a marketing tool for gaining investment banking clients. A poor company analysis may drive that company to another bank to raise capital or engage in an M&A deal.

Market performance last week was relatively mixed, likely awaiting the highly anticipated Nvidia q1’27 earnings release for insights into growth. While investors are looking for direction, we remain optimistic in our positioning with investments spread across multiple megatrends that should deliver growth over the coming years.

Energy was the big winner last week with the XLE expanding by 6% while XOP was up 4.37%. With the market coming to terms with higher-for-longer oil prices, I suspect energy equities will remain strong over the coming year. We’ll be evaluating companies within our coverage universe to determine if it makes sense to rotate in. EOG’s story remains compelling as a producer, though may face some impact from the challenges in the Middle East.

Consumer staples was also a winner last week, underpinned by reports of consumers rotating more of their budget towards the necessities. Granted, these reports also suggested a sharper focus on private label brands due to budgetary constraints, which would explain the -2% decline in consumer discretionary.

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Cirrus Logic appears to be gaining strategic momentum by reinvesting in its next phase of growth, particularly through deeper R&D and broader product diversification. The core view is that the company remains well-positioned within its longstanding Apple relationship, while also expanding its relevance across industrial applications and AI-enabled devices. Although consumer exposure still creates some concentration risk, the bigger picture points to a company using today’s strength to build a more diversified and durable platform for the future.

Analog Devices appears well-positioned to benefit from several long-duration secular themes, with the core thesis centered on its exposure to industrial automation, automotive electrification, edge intelligence, and AI infrastructure. The broader view is that ADI’s analog and power management expertise gives it a durable role in enabling more complex and energy-efficient systems across the physical economy. While the company still faces cyclical swings tied to end-market demand, the bigger picture points to a high-quality franchise aligned with multiple megatrends that should support durable relevance over time.

Ametek appears to be leaning further into one of its more durable growth avenues by broadening its aerospace and defense footprint through targeted acquisitions and deeper exposure to mission-critical aftermarket services. The core thesis is that the company’s niche instrumentation and engineered systems portfolio is well-suited for markets where reliability, regulatory barriers, and long product cycles support staying power. While integration always carries some execution risk, the bigger picture points to a disciplined industrial compounder using M&A to strengthen its positioning in higher-value end markets.

Zebra Technologies appears well-positioned to benefit from the broader push toward industrial reshoring, with the core thesis centered on rising demand for workflow automation, asset visibility, and frontline digitization across manufacturing, warehousing, and logistics. The broader view is that Zebra’s portfolio of scanning, mobile computing, RFID, and software tools gives it a durable role in helping enterprises modernize operations and improve throughput in increasingly complex supply chains. While execution still depends on customer adoption cycles and industrial demand, the bigger picture points to a company aligned with structural trends that should support durable relevance over time.

Intuitive Machines appears to be emerging as a more important commercial player in the new space race, with the core thesis centered on its ability to expand beyond lunar landings into a broader space infrastructure platform. The bigger picture is that its NASA-aligned mission cadence, growing role in cislunar communications, and push into data and delivery services could position the company as a foundational enabler of sustained lunar activity. While execution risk remains elevated given the complexity of space missions, the broader view points to a company building strategic relevance as commercial and government demand for lunar services deepens.

Electrovaya appears to be broadening the reach of its battery platform beyond its core markets, with the central thesis focused on finding new demand pockets where safety, longevity, and reliability matter most. The broader view is that the company’s technology is well-suited for mission-critical industrial applications such as robotics, material handling, and other high-usage environments where total lifecycle performance can outweigh upfront cost. While execution will depend on converting these newer verticals into sustained adoption, the bigger picture points to a company building a more diversified and strategically relevant battery franchise over time.

Monte Investments Market Brief Vol. CXII

Monte Investments — Tue, 19 May 2026 12:01:22 GMT

Last week was a down week for our portfolio strategy, trailing the market by 105bps. While it is never fun to lose to the market, we believe our positioning remains strong, focusing in core growth markets like industrials, technology, and energy.

Biggest Gainers: ZBRA (+14.75%); XOM (+9.23%); VRT (+9.11%)

Biggest Losers: INTC (-12.93%); WSC (-12.88%); CRH (-9.27%)

We repositioned a number of our holdings throughout last week in order to hedge against a potential market pullback amongst our tech names. While we remain bullish on these names, we believe that their valuations have extended beyond our threshold, leading to some trimming of positions and taking profits. Depending on market activity over the coming weeks, we may begin building these positions back up, though we believe that our repositioning remains durable, particularly when considering the current market environment.

The memory and storage market has gone parabolic since the start of 2026, driving shares of SanDisk (SNDK), Seagate (STX), Western Digital (WDC), and Micron (MU) to triple-digit returns with SNDK being the clear leader by a wide margin. While we believe that the AI theme remains intact with compounded investment outlays across the hyperscalers, the market may have gotten over its skis in driving up shares on momentum. Despite the strong price returns, valuations remain relatively appealing – expensive, but not as expensive as other corners of the AI trade.

Taking a multi-year approach to valuation, the overarching theme is similar to what the market has experienced with NVDA shares in recent years where early momentum was maintained through operational scale, meaning that the company’s operations grew into its market capitalization, a phenomenon that isn’t too common by historical standards. While investors continue to question whether DOTCOM bubble 2.0 is imminent, there is a clear line-of-sight for demand for compute capacity and storage that isn’t just measured in the amount of fiber optic cables a company operates.

What’s just as impressive is that the economics behind AI is improving for the better of the hosts, meaning that demand has driven up the cost of tokens, supporting the growth cycle that was once thought to be a dead issue due to waning margins amongst Amazon and Microsoft.

It is clear that the market is looking for an excuse for a sell-off, which could happen, though it won’t be supported by operations or economics. A sell-off amongst the AI names will likely be driven by exogenous influence and momentum rather than fundamental dislocation.

With this theme in mind, we’ll be providing our Nvidia q1’27 earnings preview in this week’s investment brief. Premium subscribers will receive our earnings estimates, our 3-year financial forecast, and our price target with a supporting fundamental valuation model.

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Nvidia Corporation (NASDAQ: NVDA) q1’27 Earnings Preview

Looking at the bigger picture, the market is set up to support earnings growth for Nvidia this quarter.

Microsoft: $627b RPO; up from $625b sequentially.
Amazon: $364b backlog [Anthropic accounting for $100b]; up from $244b in the prior quarter.
Alphabet: $460b backlog; up from $240b in the previous quarter.
CoreWeave: close to $100b backlog.

As it relates to Nvidia, capital outlays going forward will reflect this high level of demand:

Microsoft: $190b capital outlay for 2026, expecting an increase in capital spend towards compute, data, and talent in FY27.
Amazon: $200b capital outlay for 2026.
Alphabet: 2026 guidance: $180-190b, up from prior guidance of $175-180b. Expecting 2027 capital spend to “significantly increase compared to 2026.”
Meta Platforms: Increased capital outlay from $115-135b to $125-145b for 2026.

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New data center capacity coming online.
Replacement of aging infrastructure.

Softbank/American Electric Power’s 10GW AI data center campus under development in Southern Ohio.
xAI Colossus 2 in Memphis, Tennessee, scaling to 1GW in capacity.
Meta Hyperion campus in Louisiana, scaling to 5GW of capacity.
Amazon AWS aiming to quadruple its capacity to 12GW.
Kevin O’Leary is even planning a 9GW AI data center campus in Utah.

Research & Analysis: Ondas (NASDAQ: ONDS)

Monte Investments — Fri, 15 May 2026 12:02:37 GMT

Ondas (NASDAQ: ONDS) is entering a pivotal period as the company turns towards higher growth driven by diversified government, civil, and commercial contracts regarding the use of UASs and C-UASs for homeland security and wartime defense. With a growing global production footprint through serial bolt-on acquisitions to diversify its technology capabilities paired with a strategic technology partnership with Palantir, Ondas may become a primary defense contractor for wartime drone technology, particularly when considering that its technology has been battlefield-tested in Ukraine.

About Ondas

Ondas is a US-based defense technology company with core operations in developing autonomous unmanned aerial [UAS] and ground systems [UGV], counter-UASs [C-UASs], as well as integrated mission solutions for defense, homeland security, public safety, and the security of critical infrastructure. The systems Ondas develops are purpose-built for aerial intelligence, surveillance, and reconnaissance [ISR].

In April 2026, Ondas completed its merger with US defense prime contractor Mistral, providing Ondas direct access to the US Army and Special Operations contract vehicles while expanding US-based manufacturing, integration, and federal contracting infrastructure.

As part of its development strategy, Ondas integrates systems-of-systems, bringing together autonomous platforms, sensor payloads, communications, command-and-control, effectors, and operational services into a solution to deliver mission outcomes as a portfolio of capabilities. Ondas’ strategy is to deliver systems that are purpose-built for customers’ missions as a vertically integrated, unified platform, allowing Ondas to control the full lifecycle of deployment, planning, operational readiness, sustainment, and improvement. Ondas’ systems have been battlefield-tested with its drone technology deployed in Ukraine.

Ondas’ various business units include:

C-UAS: detect, track, and defeat small hostile drones for defense and homeland security.

Aerial ISR and Automated Data Collection: autonomous aerial ISR solutions for persistent situational awareness, inspection, monitoring, and security missions in urban areas, facilities, and remote field operations.

UGV & Ground-Doman Autonomy: integrated autonomy offering that compliments aerial systems on the ground for perimeter support, remote sensing, demining, and ground ISR.

Loitering Munition System: one-way drones for ISR defense and lethal strikes.

Ondas offers a number of different drones that are purpose-built for specific missions, creating a modern portfolio of deployable, autonomous drones for both urban and field defense.

Airobotics/American Robotics provided autonomous drone systems, the Optimus System. Optimus is a zero-touch autonomous system with the ability to operate 24/7 missions, leveraging a robotic arm capable of exchanging batteries and payloads in urban and harsh environments. American Robotics and Airobotics were acquired in 2021 and 2022, respectively.

Iron Drone is a fully autonomous C-UAS solution designed to defend against hostile drones in complex environments without the need for GPS or RF jamming. The Iron Drone is effectively an intercepting drone that can identify and target threats using machine vision and AI capabilities to drones using a ballistic net.

Sentrycs is a C-UAS solution supported by innovative protocol manipulation designed for homeland security. Sentrycs was acquired in November 2025.

Roboteam Hub is a unified orchestration software solution that integrates all robotics, drones, and sensors for complete mission control. Roboteam was acquired in December 2025.

Apeiro Motion develops advanced ground robotics and tethered UAV solutions for autonomous operations across air and land. These robotics leverage fiber-optic micro-spool tether technology, providing a secured solution to prevent jamming.

Rotron Aero develops advanced UASs for long-range missions. Rotron was acquired on March 16, 2026 to expand operations with the UK and NATO, potentially fast-tracking access to major programs with the UK Ministry of Defense.

World View is a leading high-altitude balloon system used for remote sensing and persistent observation with stratospheric capabilities. Ondas acquired World View in April 2026.

Ondas has made a number of bolt-on and large-scale acquisitions in the last year, including Apiero Motion, S.P.O. Smart Precision Options, Insight Intelligent Sensors, 4M Defense, BIRD Aerosystems, and INDO Earth to expand its manufacturing capabilities as well as advance its technological reach. Thematically, Ondas’ acquisitions are largely tied to creating a unified multi-domain autonomous intelligence platform to strategically compete with larger drone developers.

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Ondas recently partnered with Palantir (PLTR) to advance its multi-domain intelligence platform, providing enhanced AI capabilities to its World View solution. As part of the partnership, Ondas and World View will leverage the Palantir Artificial Intelligence Platform [AIP] for production, mission planning, and edge operations to help scale its capabilities. This is a critical partnership for the advancement of modern drone warfare as the software platform, SkyWeaver, will be designed to orchestrate a fleet of multi-domain autonomous vehicles to deliver mission results. The program will leverage adaptive agentic AI to capture intelligence and actively refine the mission based on new information gathered. The leading advantage of the program is that SkyWeaver will autonomously assign which domain can effectively undergo the task at hand, adjusting to changes in the threat landscape. Ondas is expecting to bring this integrated solution to market by eq4’26.

One major benefit to the agreement for developing SkyWeaver is that Ondas will both operate the orchestration platform across its drone fleet as well as license the functionality to 3^rd party drone developers, potentially expanding its market reach for advanced drone warfare.

In addition to this, Ondas is deploying Palantir Warp Speed to enhance manufacturing operations. The program was designed to streamline production, provide greater visibility in the supply chain, and create a more unified operation. Adoption of Palantir Warp Speed should also assist with Ondas’ acquisition strategy, streamlining platform integration into its drone programs.

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Ondas q1’26 Operational Update

Ondas delivered the initial IRON-WAVE systems for deployment in q1’26, operating under multiple military units in active combat environments. IRON-WAVE is an integrated C-UAS and mobile C-UAS designed to defend against drone swarms and other large-scale attacks. Accordingly, Airobotics delivered a 260% revenue gain in q1’26 driven by expanded Iron Drone and Optimus deliveries, inclusive of its border infrastructure program. Sentrycs grew nearly 4x in the quarter driven by Sentrycs cyber over RF solutions as a C-UAS solution. 4M also achieved substantial performance in q1’26, earning an $80mm tender award with $25.8mm in initial orders, well above the $8mm in revenue earned in all of FY25. In total, Ondas closed q1’26 with a backlog valued at $457mm driven by global demand across its multi-domain offerings.

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As for homeland security, Ondas is realizing growth in aerial security, stationing C-UAS systems at airport and critical infrastructure for C-UAS defense. In addition to this, Ondas is working towards gaining traction across multiple US and European drone programs, including the Low Altitude Stalking and Strike Ordnance [LASS] program valued at $1b and drone swarm defense opportunities on connection with NATO Eastern Flank. In total, Ondas has an opportunities pipeline valued at roughly $4.3b across 45 submissions globally for autonomous defense, security, ISR, and robotic technology.

Ondas is also gaining strong traction for its stratosphere balloons through World View, pulling forward demand. Accordingly, World View launched two successful demonstration missions in an effort to gain the attention of the Department of War, including UNITAS in 2025 and Dorado in 2026.

UNITAS demonstrated the program’s maritime operating capabilities for Smartronix and 4^th Fleet under the Marlins contract in efforts against narcotics trafficking and illegal fishing. Dorado was a 39-day mission in the Atlantic that gained traction with SOUTHCOM and CENTCOM AORs.

In 2026, Ondas was selected to provide C-UAS systems in North America as support infrastructure for the 2026 FIFA World Cup, as part of a $140mm contract. The contract includes World View. Accordingly, Ondas will be partnering with federal, state, and local public safety and security organizations to secure the airspace across 16 cities in the US, Canada, and Mexico during the event. These contracts could be a major catalyst for growth for domestic and international homeland security, particularly as geopolitical tensions heighten with the multi-front wars occurring in the Middle East, Eastern Europe, and growing tensions between China and Taiwan.

Ondas deconsolidated Ondas Networks effective January 26, 2026, decoupling the business unit’s assets, liabilities, and operations going forward.

Ondas Financial Position & Forecast

Dell Technologies (NYSE: DELL) q4’26 Earnings Update

Monte Investments — Thu, 14 May 2026 16:48:50 GMT

Dell Technologies (NYSE: DELL) is reaching an operational paradigm shift in which both AI-optimized and traditional servers are increasingly growing. With enterprises turning towards AI inferencing and agentic AI, demand for advanced general compute servers is set to grow over the coming years, delivering a robust refresh cycle to Dell’s benefit. While Dell may face some incremental margin compression resulting from the increased mix towards AI-optimized servers, margin compression should be modestly offset by the increase in shipments for traditional servers and storage, producing a balanced growth cycle.

For the first time, Dell disaggregates its server business into two separate categories, AI optimized and traditional servers & networking, providing a clearer picture on value drivers across the business segment. The disaggregation of these two server categories is critical for appropriately assessing Dell’s operational position for two key reasons:

AI-optimized servers is tied to Tier 2 data center growth and Dell’s ability to compete with HPE and SMCI.
The traditional server business is cyclical; breaking out this data point provides greater insights into enterprise IT spending and the server refresh cycle.

A defining difference between AI-optimized and traditional servers is the operating margin profile between the two. AI-optimized tends to sell at a more competitive price, resulting in tighter margins whereas traditional servers bolster operating leverage. While AI-optimized can drive growth and nominal growth in operating income, a cyclical growth trend for traditional servers is what will ultimately drive profitability. Management is expecting AI-optimized servers to continue their high-level of growth for eFY27, more than doubling to $50b in net revenue. While top-line growth can be a good thing given that it will deliver a known installed base for future refreshes, AI-optimized servers are sold at mid-single-digit margins, weighing down profitability for the total ISG segment margin.

There are currently two distinct AI-related growth trends emerging for Dell that should deliver strong top-line growth for the infrastructure solutions group [ISG] over the coming years:

Continued investments in AI-optimized servers for large model training.
Increased investments towards traditional CPU servers as enterprise AI adoption takes place as these servers facilitate a lower-power solution for AI inferencing and agentic AI.

From a macroeconomic perspective, JLL expects that the global data center footprint will more than double to 200GW by 2030, creating a major opportunity for Dell over the coming years to expand its customer reach beyond the server refresh cycle. McKinsey & Co. has a more ambitious outlook for AI data center growth, projecting 156GW of capacity demand delivered by an incremental 125GW added from 2025-2030, equating to $5.2t in AI-related investments as part of the the total global data center estimated spend of $7t by 2030, which includes gray and white-space infrastructure and supporting power infrastructure, amongst others.

While the market is keenly focused on AI-optimized servers, traditional servers will play a major role in supporting AI demand, which is expected to grow at an 11% CAGR from 2025 through 2030.

Traditional server sales are quickly becoming a more robust market for Dell as the refresh cycle takes shape. Two critical factors that Dell is benefiting from is the shift to dense, high-performance configurations and higher average selling prices [ASPs], delivering higher top-line growth and incremental improvements to the segment operating margin. Accordingly, demand for traditional servers outpaced Dell’s capacity, meaning that volume sales are increasing, supporting the long-tailed runway for the refresh cycle. As we assessed when updating our coverage of Intel Corp. (INTC), the mix-shift between CPUs and GPUs is in a transitional phase from training to inferencing, leading to more equivocal demand for CPUs to facilitate inferencing and agentic AI, shifting from a 1:8 CPU-to-GPU ratio to a 1:4 ratio.

While we don’t necessarily have a breakout of traditional servers exclusive of networking equipment, we can assess that pre-AI server margins were in the low-to-mid teens during the upcycle and the mid-single-digit range during the downcycle.

This level of growth is reflected in Dell’s operational performance. In all of FY26, Dell took in $64b in orders for AI-optimized servers alone, expecting the pipeline to continue to grow and capital spend across the Tier 1/2/3 data centers accelerates to facilitate compute capacity demand. Dell exited FY26 with $43b in AI backlog, up from $4.1b at the end of FY25.

What may be overlooked by the market is the greater transition to enterprise edge investments to facilitate AI inferencing and physical AI. Thematically, physical AI is expected to operate at the edge, meaning that servers, storage, and networking equipment, etc. is expected to be housed in-house to minimize cloud expenses while operating a production facility in real-time. This can be a major margin-accretive growth driver for Dell over the coming years as deeper adoption of AI-enabled industrial robotics takes shape. GlobalFoundries (GFS), a company under our coverage, expects the paradigm shift to occur sometime between 2028-2029 before accelerating in 2030, potentially acting as a long-tailed secondary catalyst beyond the cloud services provides for Dell. While each deal will be smaller in scale relative to CSP deployments, they can yield significantly higher margins and compound drastically given the growing trend for industrial reshoring in the US.

Looking to the client solutions group segment [CSG], Dell realized significant growth across commercial, growing by 16%, driven by catering to the lower end of the commercial market, emerging markets, consumer, and education. A major headwind Dell may face is the higher costs of memory and how they may impact PC prices. Accordingly, IT budgets are set at the beginning of the fiscal year and tend to be relatively sticky for non-critical infrastructure. With increasing costs for new PCs, Dell may realize some pricing power offset by a modest decline in volume sales. While this may be impactful throughout the year if memory prices continue to rise, we could potentially expect a robust year for total IT spend, particularly for advanced AI-enabled client devices.

Gartner estimates the global IT spend to reach $6.31t in 2026, a 13% year-over-year increase. As part of the budget, data center systems are expected to accelerate to a growth rate of 55.8%. Devices, which includes client, is expected to grow by 8.2% to $856b.

Dell Technologies Financial Position & Forecast

Monte Investments Research Roundup Vol. XXXVII

Monte Investments — Wed, 13 May 2026 12:00:51 GMT

Equity Updates

Fund Updates

The markets appear to be continuing their risk-on approach as the AI theme remains in play. With the US economy essentially dependent on investments in AI compute capacity, I suspect growth across the technology sector may remain prevalent over the coming quarters. Thematically, we’re seeing the continued saying that demand continues to outstrip supply, a positive sign for the hyperscalers, semiconductor developers, and infrastructure companies. In terms of positioning, we remain exposed to the broader industry theme, though are growing hesitant towards our exposure given the sharp rise in recent weeks, resulting in stocks treading new grounds in terms of trading premiums. We’ll monitor the market for any potential disruptions, but for the most part, we’ll participate in the momentum for the time being and gradually reduce risk exposure to stocks we see as too far extended. We see value in a few outlier sectors, mapping out our action play to rotate into these value-rich markets.

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Chevron is well positioned to benefit from tighter global oil and LNG markets thanks to its diversified production footprint and relatively limited exposure to the most disrupted areas.

A key theme is Chevron’s ability to capture upside from spot and oil-linked LNG sales, while its integrated operations and project mix help support resilience through commodity volatility.

Firefly is moving into a more scalable phase, with higher spacecraft production poised to support a faster cadence of missions and program execution.

A central theme is that expanding manufacturing throughput can strengthen Firefly’s position across launch, lunar, and national security programs by improving delivery capacity and deepening customer relevance.

We view Riot as entering a defining transition period in which its role as a bitcoin miner is increasingly being complemented by its emergence as a more capable data center operator.

Our core view is that the transition should accelerate through 2027 as Riot converts available power, land, and development capacity into a more recurring infrastructure platform tied to AI and high-performance compute demand.

If execution remains on track, we believe Riot’s site readiness and power access could increasingly distinguish the company from more narrowly exposed mining peers, giving the business a broader long-term role in the digital infrastructure buildout.

We view Exxon as one of the clearest relative beneficiaries of today’s global oil disruption, as its scale and portfolio diversity allow it to absorb regional volatility better than more concentrated peers.

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Our core view is that Exxon’s integrated model and broad upstream footprint create meaningful flexibility, allowing the company to capture stronger pricing where markets have tightened while limiting the impact of disruption in any single region.

If the current market environment persists, we believe Exxon remains well positioned to leverage its operational depth, logistics network, and disciplined asset mix to navigate an increasingly fragmented global energy backdrop.

We view Rockwell as increasingly aligned with a global manufacturing backdrop that is being retooled for smarter, more connected, and more automated production environments.

Our core view is that Industry 4.0 is becoming less of a future concept and more of a present capital allocation priority, which should support demand for Rockwell’s automation, software, and control solutions as customers modernize operations.

If this cycle continues to build, we believe Rockwell remains well positioned to benefit from the convergence of industrial digitization, reshoring, and operational efficiency initiatives across the global manufacturing base.

We view Emerson as increasingly leveraged to a long-tailed electrification cycle, where rising utility, industrial, and infrastructure investment is creating durable demand across power-related systems and automation.

Our core view is that Emerson’s mix is becoming more attractive as software, controls, and grid-facing technologies take on a larger role, allowing the company to participate more directly in the modernization of power infrastructure and industrial energy systems.

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If electrification continues to broaden across utilities, data centers, and industrial end markets, we believe Emerson is well positioned to benefit from a multi-year upgrade cycle that increasingly values intelligence, control, and system reliability.

We view Sony’s hardware repositioning as a deliberate effort to move away from more commoditized manufacturing exposure and toward a business mix with stronger strategic value and better operating quality.

Our core view is that this shift should allow Sony to place greater emphasis on the parts of the portfolio where brand strength, content ownership, and ecosystem engagement create a more durable competitive position than hardware scale alone.

If management continues to execute on this repositioning, we believe Sony can emerge with a more productive operating structure that better supports long-duration growth across its broader entertainment and technology ecosystem.

Palantir is increasingly positioned at the center of America’s industrial renaissance, with its Warp Speed and AIP platforms standing to benefit as manufacturers reshore operations and modernize legacy production environments. The confluence of persistent inflationary pressure, geopolitical realignment, and the broader push toward US reindustrialization creates a structural tailwind that may extend the company’s commercial momentum well beyond its current trajectory. In my view, Palantir’s software stack is uniquely suited to serve as the operational backbone of Industry 4.0, and ongoing adoption across both government and commercial verticals reinforces the durability of the company’s role in this transition.

Monte Investments Market Brief Vol. CXI

Monte Investments — Tue, 12 May 2026 12:01:07 GMT

Our model performed exceptionally well last week minus some headwinds towards the tail-end of the week resulting from major pullbacks in TPC and CTRI. As discussed in last week’s report, we exited CTRI due to minimal-to-no upside potential based on our fundamental assessment while increasing our positions in META and TPC.

Biggest Gainers: RIOT (+30.16%); INTC (+25.40%); DELL (+23.93%)

Biggest Laggards: CTRI (-12.03%); TPC (-11.56%); AVAV (-9.02%)

One notable shoutout is our investment in WSC’s turnaround. While the strategy remains in the early stages, the company is showing signs of improvement, resulting in a 1-month return of +49.15%.

We’re navigating a challenging position within the portfolio, mostly due to performance. Our performance since inception is +53%.

While I’m not publishing this to be boastful, but rather, transparent, our concern is how extended some of our top holdings have become. For Intel Corp, the momentum is driven by blockbuster deals with the likes of Nvidia, Alphabet, and now Apple, driving shares to 44.31x EV/aEBITDA [TTM]. While these agreements may deliver higher-than-expected growth for Intel Foundry Services [IFS], we need to equate just how far IFS can grow over the next capital cycle. For now, we’re taking a prudent wait-and-see approach to shaving our position in INTC until more information is gathered as the shift towards new 3^rd party foundry services may deliver significant growth, turning what appears to be an overpriced stock into a value play as the premium normalizes.

A reader asked last week about our trading strategy and whether we will take action on CGNX, another large position in our portfolio, given the strong performance post-earnings and shares’ extended RSI and the potential shift towards technical chop. While we monitor the technicals, we primarily focus on the long-term goalpost, our ultimate fundamental price target. While shares may bounce around between our entrance and exit of a position, we have no intention of actively, or overtrading shares for the sake of short-term momentum. It’s not our style. If we see a fundamental shift in the business, we may trim or cut a position; otherwise, we will maintain our position until shares reach our target.

As part of the active management component of our portfolio management methodology, we evaluate any revaluation of a stock. For example, industrial automation technology is becoming a more critical component of the reindustrialization theme, particularly as manufacturing is reshored to the US. This may mean greater interest in the stock that may result in a higher trading premium. As y’all are very well aware, we take a broad approach to valuing a company’s stock, taking into account shares’ historical trading premiums, compiling the likelihood of shares landing on a specific multiple. Given that we assess the premium on a spectrum rather than on a specific target, we leverage the flexibility of the possibility of a revaluation based on investor sentiment rather than viewing the trading premium in black & white.

Dell Technologies (NYSE: DELL) q4’26 Earnings Update

Centuri Holdings (NYSE: CTRI) q1'26 Earnings Update

Monte Investments — Fri, 08 May 2026 17:01:50 GMT

Centuri Holdings (NYSE: CTRI) reported a robust outlook for the coming years driven by increased bid-based opportunities encompassing data center electrification infrastructure and power transmission & distribution. With a growing power market in the US, Centuri is aiming to grow by two factors, organic reinvestment and small tuck-in acquisitions to expand its footprint across high-growth markets within its domain. While Centuri tends to take a conservative approach with the majority of contracts under MSA agreements, the organization is aiming to transition to more bid-based work, taking on projects that can be value-accretive in these high-growth markets.

Shares took a -20% dive following the q1’26 earnings release, repositioning shares to deliver on the growth opportunity going forward. We had initiated coverage of Centuri Holdings on September 19, 2025, yielding a return of 53%. You can review our coverage initiation here.

Centuri Holdings Operational Update

Centuri kicked off FY26 with strong 31% top-line growth paired with a 273bps operating margin expansion, setting the tone for operational excellence for the remainder of the fiscal year. Despite the strong operational performance, Centuri experienced a larger-than-anticipated cash outflow in q1’26 with a use of cash of $14.8mm, up from $7.7mm in the previous year’s quarter; this cash outflow was largely due to the timing of working capital with days receivables growing to 40 days, up from 28 days in the previous year’s quarter. While Centuri faced this minor setback in the quarter, free cash flow is expected to turn positive for eFY26, expecting to generate $60mm.

Centuri brought in $1.3b in bookings for a book-to-bill ratio of 1.8x, a strong improvement when compared to the previous two quarters. Bookings in the quarter included $900mm of MSA renewals, $180mm of new or growth MSAs, and $250mm in bid work. A major value driver of Centuri’s MSA work is that the company exhibits a 100% renewal rate, meaning that both the quality and customer relationships are there to provide long-term, durable income while adding new customers. Centuri started off q2’26 strong with $2b in pending bids outstanding, which includes $200mm of data center work that is currently undergoing negotiations. Since the start of 2025, Centuri has secured $170mm of data center-related work, a turning point for a broader market reach. Centuri currently has a project pipeline of $13b and a total backlog of $6.5b, up from $5.9b in the previous quarter and 1.44x from q1’25.

The data center market could be a major growth driver for Centuri over the coming years. Given the organization’s long-term approach to MSA work, Centuri may be a strong partner for data centers that seek to utilize dedicated power sources or are seeking support for power distribution infrastructure. In total, there is $1.5b in data center-related opportunities available for bidding that suit Centuri’s scope of work. Given that many of the data centers being constructed will have dedicated power sources, we can consider the entire closed-loop system as a microgrid that includes power generation, power transmission, distribution, switchgear, interconnects, and battery storage systems, presenting a dynamic opportunity for Centuri to take on over the coming years.

As for power transmission & distribution, there is currently $150b of utility spend that Centuri is qualified to bid on over the next 4 years, presenting an appealing ramp-up opportunity in which Centuri has the bandwidth to grow more heavily into. Centuri’s target market will be relatively smaller, focusing on $200mm projects in low-, mid-, and high-voltage lines, transmission line tower construction, substation work, interconnects, and battery storage, which all encompasses data center opportunities as well.

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Operationally, Centuri realized significant growth across all market verticals, most notably US gas and Canadian gas, growing by 44% and 51%, respectively, when compared to the previous year’s quarter, resulting in total revenue growing by 31% to $723mm in q1’26. Centuri did have some minor setbacks in the quarter due to adverse weather, specifically Winter Storm Fern in the Northeast. The gross loss in US gas in q1’26 narrowed to -2.23%, an improvement from -7.51% in the previous year’s quarter. For reference, q1’26 tends to report a gross loss in the segment due to winter weather effects, largely driven by less MRO work during peak gas utilization periods.

Growth in the Canadian gas segment was largely underpinned by the addition of Connected Atlantic Utility Services, which was acquired towards the end of FY25. The Union Electric segment growth was supported by strong activity for industrial end customers, particularly for substation infrastructure and data center-related work. Non-Union Electric also experienced strong growth in the quarter, up 25%, driven by an expansion in MSA activity.

While MSA works have historically accounted for the lion’s share at 78% of revenue, Centuri is positioning itself to gradually transition to bid work over the coming years, targeting a 50/50 split between MSA and bid by 2029. While this shifting approach changes the conservative value of Centuri, I believe it can deliver incremental improvements to margins and growth, particularly when considering the significant investments going into power infrastructure and data centers.

The long-term growth story remains robust for Centuri with $2t in cumulative spend from 2026-2029 across gas and electrical transmission & distribution, presenting a long-tailed outlay. Centuri’s corner of this market amounts to $625b during this period, a substantial opportunity to achieve a high level of growth.

Monte Independent Investment Research

Research & Analysis: Vistance Networks (NASDAQ: VISN)

Vistance Networks Operational Update

Thesis for a Merger

Vistance Networks Financial Position & Forecast

Risks Related to Vistance Networks

Bull Case

Bear Case

Valuation & Shareholder Value

Xtract One Technologies Inc. (XTRA:CA) q3’26 Earnings Update

Top-Line Performance

Xtract One Technologies Operational Shift

Xtract One Technologies Financial Forecast

Risks Related to Xtract One Technologies

Bull Case

Bear Case

Valuation & Shareholder Value

Research Roundup Vol. XLI

Equity Updates

Fund Updates

Monte Investments Market Brief Vol. CXV

Monte Investments Model Update

Xtract One Technologies Inc. (XTRA:CA) q3’26 Earnings Update

Top-Line Performance

Xtract One Technologies Operational Shift

Xtract One Technologies Financial Forecast

Risks Related to Xtract One Technologies

Bull Case

Bear Case

Valuation & Shareholder Value

Monte Independent Investment Research Model Portfolio

Research & Analysis: Applied Aerospace & Defense, Inc (NYSE: AADX)

TL;DR — Applied Aerospace & Defense, Inc (NYSE: AADX) | Q1 2026 Initiation

About Applied Aerospace & Defense, Inc

Applied Aerospace & Defense, Inc Operations

AADX Financial Position & Forecast

Risks Related to Applied Aerospace & Defense, Inc

Bull Case

Bear Case

Valuation & Shareholder Value

Research Roundup Vol. XL

Equity Updates

Fund Updates

Monte Investments Market Brief VOL. CXIV

Model Portfolio Update

Research & Analysis: Iridium Communications (NASDAQ: IRDM)

About Iridium Communications

Iridium Communications Operational Update

Iridium Communications Financial Position & Forecast

Risks Related to Iridium Communications

Bull Case

Bear Case

Valuation & Shareholder Value

V2X q1’26 Update

V2X Financial Position

Valuation & Shareholder Value

Research Roundup Vol. XXXIX

Equity Updates

Fund Updates

Monte Investment Brief Vol. CXIII

V2X Quarterly Update

V2X Financial Position

Valuation & Shareholder Value

Research & Analysis: SpaceX (NASDAQ: SPCX)

About SpaceX (NASDAQ: SPCX)

SpaceX Edge

Nvidia Corporation (NASDAQ: NVDA) q1’27 Outlook

Monte Investments Research Roundup Vol. XXXVIII

Equity Updates

Fund Updates

Monte Investments Market Brief Vol. CXII

Nvidia Corporation (NASDAQ: NVDA) q1’27 Earnings Preview

Research & Analysis: Ondas (NASDAQ: ONDS)

About Ondas

Ondas’ various business units include:

Ondas q1’26 Operational Update

Ondas Financial Position & Forecast

Dell Technologies (NYSE: DELL) q4’26 Earnings Update

Dell Technologies Financial Position & Forecast

Monte Investments Research Roundup Vol. XXXVII