Financial Data and Key Metrics Changes - Revenues in Q3 2025 were $1.9 million, down from $2.4 million in Q3 2024, impacted by the expiration of the National Quantum Initiative [10] - Gross margins decreased to 21% in Q3 2025 from 51% in Q3 2024, attributed to the composition of revenue and pricing variability [10] - Total operating expenses increased to $21 million in Q3 2025 from $18.6 million in the same period of the prior year, due to salary increases, new hires, and higher stock-based compensation [11] - GAAP net loss for Q3 2025 was higher than in Q3 2024, primarily due to a non-cash change in the fair value of derivative warrant and earn-out liabilities [12] - As of September 30, 2025, the company had approximately $558.9 million in cash and equivalents, with no debt, and this increased to approximately $600 million by November 6, 2025 [12] Business Line Data and Key Metrics Changes - The company announced purchase orders totaling approximately $5.7 million for two 9-qubit Novera quantum computing systems, which are upgradable [5] - A three-year, $5.8 million contract from the Air Force Research Laboratory (AFRL) was secured to advance superconducting quantum networking [6] Market Data and Key Metrics Changes - The expiration of the National Quantum Initiative and its pending reauthorization in the U.S. Congress impacted revenue, with future sales dependent on its renewal [10] - The company is engaged with various academic and government sectors to enhance quantum computing capabilities, including collaborations with Montana State University and the Center for Development of Advanced Computing [7][8] Company Strategy and Development Direction - The company aims to deliver a 150-plus qubit system by the end of 2026 and a 1,000-plus qubit system by the end of 2027, with anticipated gate fidelity improvements [4][5] - The strategy includes deepening support for quantum computing capabilities in academic and government sectors and integrating with NVIDIA's NVLink for AI supercomputer quantum integration [8] - The company plans to open an Italian subsidiary to accelerate business opportunities in the region [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future sales from recent contracts and collaborations, which are expected to benefit revenue in Q4 2025 and into 2026 [10] - The management acknowledged challenges in achieving long-range coupling and error correction, which are critical for future milestones [17] - The company is optimistic about being selected for phase B of the DARPA Quantum Benchmarking Initiative project in the coming months [18] Other Important Information - The company is exploring options for potential M&A to accelerate its roadmap, although it believes it can execute its current plans organically [47][48] - The company is considering significant capital expenditures for upgrading its chip fabrication facility in the future [56][60] Q&A Session Summary Question: Can you talk about DARPA phase B and the feedback received? - Management noted that while they were not selected for phase B, constructive feedback was received regarding error correction and long-range coupling, which are important for future milestones [16][17] Question: What is the comfort level for achieving 99% fidelity by 2027? - Management expressed confidence in achieving 99.8% fidelity with 1,000 qubits by the end of 2027, emphasizing the importance of error correction [20][22] Question: Will the 150-qubit and 1,000-qubit systems use chiplet-based approaches? - The company plans to use 9-qubit chiplets for the 150-qubit system and 36-qubit chiplets for the 1,000-qubit system [27] Question: How will revenue recognition work for the Novera system sales? - Revenue for the two Novera systems will be recognized upon shipment, expected in Q1 and Q2 of 2026 [31] Question: What is the expected gross margin profile moving forward? - Management indicated that while gross margins were lower in Q3, future sales, particularly from Novera, are expected to have better margins [64] Question: How does the recent funding for the National Quantum Initiative affect the business? - Management noted that the reinstatement of funding to $625 million over five years is a positive step, although discussions for higher funding amounts are ongoing [81][82]

Summary of Conference Call Notes Industry Overview - The technology sector, particularly focusing on AI supply chains, is expected to experience multi-year growth driven by increased capital expenditures (capex) from hyperscalers, sovereign AI projects, and enterprise AI adoption. [1][9] - Global cloud capex is projected to reach US$1.2 trillion by 2030, nearly tripling from the 2025 level, with the top five cloud service providers (CSPs) contributing 60-70% of this capex. [1][9] - OpenAI is anticipated to deploy up to 250GW of computing capacity by 2033, indicating a significant expansion in AI ecosystems. [1][9] Key Financial Projections - The top five CSPs' capex is estimated to grow by 60% and 22% year-over-year (YoY) in 2025 and 2026, respectively. [2][11] - The consensus for global cloud capex for 2025 and 2026 has increased by 26% and 47% since January 2025. [2][14] - Nvidia's investments in AI, including a partnership with OpenAI and Stargate, are expected to generate additional annual revenue of US$67-97 billion for original design manufacturers (ODMs) and US$1-2 billion for power and cooling suppliers. [2][12][15] Beneficiaries of AI Growth - Taiwanese companies are positioned to benefit significantly from the AI boom, supplying nearly all AI GPUs and over 90% of AI server and power supply components. [3][16] - Key players such as Hon Hai, Quanta, and Wistron are expected to see substantial growth due to their strong market positions and increasing demand for AI servers. [3][16] - Dell's AI server revenue is projected to grow at a compound annual growth rate (CAGR) of 33% from 2025 to 2030, indicating robust enterprise AI growth. [1][9] Investment Recommendations - Buy ratings are reiterated for several Taiwanese companies: - **Hon Hai**: Strong demand from CSPs and sovereigns, compelling valuation. [4][33] - **Quanta**: Benefiting from rising capex among top CSPs. [4][33] - **Wistron**: Strong demand for AI servers from Dell. [4][33] - **Delta**: Growth in AI power and cooling content. [4][33] - **AVC**: Increasing adoption of liquid cooling solutions. [4][33] - **King Slide**: Broad project base with Nvidia and ASICs. [4][33] Additional Insights - The report highlights the customization capabilities and proven track records of Taiwanese suppliers, which position them favorably in the AI platform migration. [3][16] - The financial health of these companies is underscored by their net cash positions and positive operating cash flows since 2010, indicating strong balance sheets. [16][17][19][21][25][27][29][31] Conclusion - The AI supply chain is poised for significant growth, with Taiwanese companies likely to be the primary beneficiaries due to their established market positions and the increasing demand for AI infrastructure. The investment outlook remains positive, with several companies recommended for purchase based on their growth potential and market dynamics. [4][33]

Summary of Conference Call Notes Industry Overview - **Industry**: Technology - Asia Pacific, specifically focusing on the AI server supply chain in Taiwan - **Key Observations**: - Taiwanese AI ODMs' sales bottomed out in August 2025, with a subsequent ramp-up in GB200/GB300 server shipments starting in September 2025 [1] - Quanta and Wistron reported month-over-month sales growth of 20% and 18% respectively in September, following declines in July and August [1] - Hon Hai's sales increased by 14% quarter-over-quarter and 11% year-over-year in Q3 2025, with a notable 38% month-over-month increase in September [1] Sales Growth and Projections - **Component Sales**: - Strong monthly sales growth recorded in Q3 2025, driven by component restocking for GB200/GB300 AI server shipments [2] - Delta's Q3 2025 sales reached a record high, increasing by 21% quarter-over-quarter and 34% year-over-year, with September sales up 19% month-over-month [2] - AVC and Auras also reported significant sales growth of 32% and 12% quarter-over-quarter in Q3 2025 [2] Potential Slowdown in ASIC AI Server Shipments - **Observations**: - A potential slowdown in ASIC AI server shipments was noted in September, contrasting with the ramp-up of GB200/GB300 servers [3] - EMC's sales declined by 9% month-over-month in September after four months of growth, while Wiwynn and Accton experienced declines of 10% and 5% respectively [3] - Despite the month-over-month declines, year-over-year sales growth remained high, with expectations for a resumption of growth momentum into 2026 [3] Future Sales Expectations - **Sales Projections**: - Anticipated peak sales for Taiwanese AI supply chain in Q4 2025 due to increased demand from top US CSPs [4] - Continued growth momentum expected into 2026, supported by solid demand from CSPs, enterprises, and sovereigns [4] - Buy ratings maintained for leading AI server companies including Hon Hai, Quanta, Wistron, Delta, AVC, and King Slide [4] Company-Specific Insights - **Delta**: - Q3 2025 preliminary sales reached NT$150 billion, with a 21% quarter-over-quarter and 34% year-over-year increase [15] - EPS estimates for 2025-2027 adjusted upwards by 7-9%, with a price objective raised to NT$1,130 [15][16] - Expected to see continued robust sales momentum into 2026, with a projected sales and earnings CAGR of 22% and 30% respectively [19] - **Quanta**: - Reported Q3 2025 preliminary sales of NT$495 billion, reflecting a 2% quarter-over-quarter decline but a 17% year-over-year increase [20] - Sales growth of 20% month-over-month in September indicates a ramp-up in GB300 AI server shipments [20] - EPS estimates for 2025-2027 trimmed by 1-6%, but price objective maintained at NT$360, with a projected sales and earnings CAGR of 24% and 15% respectively [20] Key Takeaways - The Taiwanese AI server supply chain is experiencing a significant recovery with strong sales growth in Q3 2025, driven by increased demand for AI servers from major cloud service providers. - While there are signs of a slowdown in ASIC server shipments, the overall outlook for the AI server market remains positive, with expectations for continued growth into 2026. - Companies like Delta and Quanta are well-positioned to benefit from this growth, with revised earnings projections reflecting their strong sales performance and market demand.

Core Insights - Honeywell International Inc. is identified as one of the most undervalued stocks in the Dow according to analysts, with strengths in aerospace, industrial automation, energy solutions, and emerging technologies like quantum computing [1] Financial Performance - In Q2 2025, Honeywell reported earnings of $2.75 per share on revenue of $10.35 billion, surpassing estimates, and updated its full-year EPS guidance to a range of $10.45–$10.65 [4] - The aerospace segment is experiencing growth due to strong defense demand and strategic supply chain investments [4] Strategic Developments - Honeywell raised $600 million in equity for its quantum computing subsidiary, Quantinuum, at a valuation of $10 billion, aimed at accelerating the launch of the Helios system and advancing fault-tolerant quantum computing [2] - The company is planning to spin off its Solstice Advanced Materials division and aims to spin off its aerospace business in the second half of 2026, focusing on value unlocking and innovation-led sectors [3] Technological Advancements - Recent acquisitions, including Li-ion Tamer and SparkMeter, enhance Honeywell's Building Automation and Smart Energy offerings [4] - The introduction of the HON1600 small-thrust-class aircraft engine is targeted at uncrewed military operations, utilizing additive manufacturing for improved production speed and supply resilience [4]

Core Insights - Honeywell International Inc. is focusing on high-growth sectors and has made significant developments in September 2025 [1] - The company raised $600 million for its quantum computing subsidiary, Quantinuum, which is valued at $10 billion pre-money [2] - Honeywell is also proceeding with the spin-off of its Solstice Advanced Materials business as part of a broader restructuring strategy [3] Financial Performance - Despite a modest stock dip over the past month, Honeywell has achieved a 47.4% gain over the past five years [4] - Analysts project an annual revenue growth of around 4.6%, driven by expansion into LNG, data centers, and industrial automation [4] - Operational efficiencies and share buybacks are expected to support long-term earnings growth [4]

Group 1 - Honeywell International Inc. announced a $600 million equity capital raise for its quantum subsidiary Quantinuum, valuing the company at $10 billion pre-money [2] - The proceeds from the capital raise are intended to accelerate the development of Quantinuum's next-generation Helio quantum computer and advance its pursuit of universal fault-tolerant computing [3] - Honeywell is expanding its partnerships with Nvidia, RIKEN, SoftBank, and others, while also extending its operations into Qatar, Singapore, and New Mexico to enhance infrastructure and AI integration [3] Group 2 - Honeywell International Inc. provides automation, aerospace, building, and energy solutions globally, focusing on innovation and advanced technologies to improve safety, efficiency, and sustainability [4]

Group 1: AST SpaceMobile - AST SpaceMobile is developing satellites that connect directly to unmodified smartphones, potentially disrupting the market dominated by SpaceX's Starlink [4] - The company projects revenue between $50 million to $75 million for the second half of 2025, with six satellites currently in orbit and plans for 45 to 60 by 2026 [5] - Wall Street maintains a "buy" consensus with a $49 average 12-month target, highlighting that AST's model partners with carriers rather than competing against them [6] - Despite significant risks such as capital requirements and regulatory hurdles, AST offers a direct play on connecting 2.5 billion unconnected people globally [7] - AST's stock has increased by 135% year to date, indicating strong market interest [5] Group 2: Rigetti Computing - Rigetti Computing focuses on quantum computing, aiming to solve complex problems that classical computers cannot address [9] - The company recently announced a significant technical milestone with the industry's largest demonstrated multichip quantum system, although second-quarter revenue fell 42% year over year to $1.8 million [10] - Rigetti faces challenges such as cash burn and competition from larger companies like IBM and Alphabet, but this creates an opportunity for investors willing to bet on long-term growth [11] - The potential for quantum computing to mature could lead to significant upside, with Rigetti's stock in the mid-teens seen as a bargain if the technology delivers [13] Group 3: Investment Considerations - Both AST and Rigetti are considered high-risk, high-reward investments that could reshape industries [12] - AST offers nearer-term catalysts with satellite deployments and revenue ramp-up, while Rigetti requires patience for potential long-term payoff [13] - Position sizing is crucial, as these companies represent portfolio accelerators rather than core holdings, appealing to investors willing to embrace risk [14]

Core Insights - Rigetti Computing (RGTI) is advancing its quantum systems with a chiplet-based design, targeting a 4×9-qubit chiplet system and over 100 qubits with high fidelities by year-end, aligning with DARPA's Quantum Benchmarking Initiative [1][6] - A $35 million investment from Quanta Computer will enhance Rigetti's operational capabilities, allowing the company to focus on chiplet design while Quanta handles non-QPU hardware production [2][6] - Key milestones for 2025 include the demonstration of the 4×9 chiplet, DARPA's Phase B decision, and progress in Quanta's production [2][6] Company Updates - Rigetti's shares have increased by 4.7% year-to-date, while the industry has grown by 21.7% [5] - The company has a price-to-book ratio of 22.41, which is above the industry average, and carries a Value Score of F [8] - The Zacks Consensus Estimate for Rigetti's 2025 earnings indicates an 86.1% rise from the previous year [10] Earnings Estimates - Current quarter EPS estimate is -0.06, with a year-over-year growth estimate of 14.29% [11] - Next quarter EPS estimate is -0.08, with a year-over-year growth estimate of 25.00% [11] - Current year EPS estimate is -0.05, with a significant year-over-year growth estimate of 86.11% [11]

Summary of Key Points from the Conference Call Industry Overview - The analysis focuses on the **Asia Tech Hardware** sector, particularly the **AI server** and **Apple supply chain** industries, over a 15-year horizon, examining business models, profitability, solvency, and operational efficiency [1] Core Insights Profitability Metrics - **Return on Equity (ROE)** for ODMs and equipment suppliers is projected to be between **20-30%** in 2024, with **Chroma** and **Delta** expected to show significant increases [2] - **Chroma's ROE** has improved from **12% in 2010 to 25% in 2024**, with expectations to reach **31% in 1H25** due to its focus on niche markets and divestment from low-margin segments [15] - **Largan** and **Sunny Optical** have shown fluctuating ROE due to market conditions, with signs of recovery noted since last year [15] Operational Efficiency - **Chroma** has the longest cash conversion cycle at **209 days** due to its industry characteristics, yet maintains a strong free cash flow margin [77] - **Luxshare** has achieved an almost zero cash conversion cycle, indicating high operational efficiency [78] - **Quanta's** cash conversion cycle is longer due to logistical complexities in its supply chain [78] Debt and Solvency - Most companies maintain healthy debt levels, with **Quanta's** net debt-to-equity ratio expected to rise significantly from **15% in 2024 to over 60% in 2025-26** due to AI server business expansion [4][69] - **Largan** has a notably low net debt-to-equity ratio, reflecting its strong cash position [69] Capital Expenditure and Free Cash Flow - **Unimicron** is identified as the most capex-intensive company with a capex-to-revenue ratio averaging **21%** over the past five years [5] - **Chroma** and **Largan** exhibit free cash flow margins between **20-40%**, indicating strong cash generation capabilities [5] Investment Ratings and Price Targets - **Delta Electronics**: Rated Outperform, Price Target (PT) of **NT$630** [8] - **Chroma ATE**: Rated Outperform, PT of **NT$570** [9] - **Quanta Computer**: Rated Underperform, PT of **NT$240** [10] - **Unimicron Technology**: Rated Outperform, PT of **NT$170** [11] - **Luxshare Precision**: Rated Outperform, PT of **RMB47** [12] - **Sunny Optical**: Rated Outperform, PT of **HK$97** [13] - **Largan Precision**: Rated Market-Perform, PT of **NT$2,400** [14] Additional Observations - The **camera and PCB sectors** show that CIS and lens suppliers achieve higher ROIC compared to module players, with higher technological barriers enhancing supplier concentration [3] - **Quanta's** financial performance is heavily reliant on the PC market, which has seen fluctuations impacting its ROE [15] - The **PCB market** is characterized by cyclical demand, with companies needing substantial capital investments to expand capacities [54] This comprehensive analysis highlights the competitive landscape and financial health of key players in the Asia Tech Hardware sector, providing insights into potential investment opportunities and risks.

Core Insights - Quantum Computing Inc. (QUBT) and Rigetti Computing (RGTI) are emerging players in the quantum computing sector, with QUBT focusing on enterprise software and AI integration, while RGTI has reported significantly higher revenues and is advancing its technical roadmap [2][3][4] QUBT Highlights - QUBT raised $93.6 million in Q1 2025, increasing cash and cash equivalents to $166.4 million, followed by a $200 million private placement, bringing total cash to over $350 million [5][8] - The company launched a quantum photonic chip foundry in Tempe, AZ, producing thin-film lithium niobate chips, fulfilling commercial orders for corporate clients and academic institutions [6][7] - QUBT has secured early-stage commercial deployments, including a quantum vibrometer for Delft University and a $406,000 subcontract with NASA for LiDAR system accuracy improvement [7][8] RGTI Highlights - Rigetti reported $237.7 million in cash and equivalents at the end of April 2025, up from $209 million, following a $35 million strategic equity investment from Quanta Computer [9][10] - The company is advancing through government collaborations, securing a $5.48 million U.S. Air Force grant and leading a £3.5 million Innovate U.K. project [10] - Rigetti demonstrated optical control of superconducting qubits and is upgrading its Novera QPU platform to support multi-chip scaling [11] Stock Performance - Over the past year, QUBT shares surged 2336%, significantly outperforming the S&P 500's 19.4% rise, while RGTI shares increased by 1116% [12] - Despite both companies showing explosive stock gains, RGTI is viewed as a stronger near-term investment due to higher revenues and a clearer technical roadmap [16]