Political Analysis - The opinion piece from WSJopinion suggests Trump's approach lacks coherence in achieving his stated goals [1] - These goals include U S reindustrialization and reshaping U S security for a multipolar world [1] Author's Perspective - Holman Jenkins is the author of the opinion piece [1]

Core Insights - Palantir Technologies Inc has executed an aggressive expansion strategy in 2025, forming 26 partnerships across 15 sectors, moving beyond its traditional defense-focused image [1][6] Partnership Expansion - Notable partnerships include collaborations with PwC UK, Deloitte, and Accenture Federal Services in consulting, as well as Lumen Technologies and Lear Corp in telecom and automotive sectors [2] - In healthcare, Palantir has established connections with OneMedNet, the Joint Commission, R1, and NHS-linked programs, significantly increasing its presence [3] - The company has also made strides in industrials and infrastructure through partnerships with Fedrigoni, Valoriza, SAUR, and others, enhancing its footprint in reindustrialization and environmental services [3][4] Market Positioning - The rapid expansion into 15 sectors within a year indicates a structural repositioning rather than a simple pipeline build-out, suggesting that the market will need to adjust its pricing of the company [5] - Despite the aggressive growth, Palantir's stock continues to be evaluated based on valuation debates, which may overlook the company's significant expansion and transformation [6]

Summary of Key Points from the Conference Call Industry Overview - Emerging Markets (EM) are expected to lead global equity returns over the next decade, with a projected Compound Annual Growth Rate (CAGR) of 11%, compared to approximately 7% for the US and developed markets [2][3] - Global equities are forecasted to deliver a 7.7% USD CAGR over the next 10 years, despite high valuations, which is positioned at the 35th percentile of historical 10-year rolling returns since 1985 [2][3] Core Themes in Asia - Positive outlook for Asia equities in the coming months, with notable earnings revisions: +70 basis points in September and +340 basis points in October [7][8] - Key themes influencing market trajectory through Q1 2026 include US reindustrialization and China's investment in industrial technology [7][8] - The concept of "Little Giants" in China is highlighted as a significant alpha theme across Asia, indicating numerous investment opportunities [7][8] Investment Opportunities in India - Continued interest in the overweight (OW) position on Indian stocks, despite concerns about competition from North Asia and India's positioning as an 'anti-AI' play [10][11] - The lagged impact of policy easing is beginning to reflect in macroeconomic data, supporting the bullish stance on Indian equities [10][11] - A list of top 14 buy ideas in India is provided, with particular emphasis on MakeMyTrip and Eternal (Zomato) [10][11] AI Investment Landscape - Current AI investment trends are compared to the pre-Tech Bubble of 2000, suggesting that the current surge resembles the 1997-98 period rather than the overexuberance of 1999-2000 [13][14] - Monitoring for signs of macroeconomic and market imbalances related to the AI investment boom, including debt financing and erosion of corporate financial surpluses [13][14] US Economic Indicators - US GDP for Q4 2025 has been raised by 10 basis points to 2.0%, with alternative data indicating stronger consumer spending, capital expenditure growth, and a narrowing trade deficit [18][19] - However, large-scale layoffs announced by major companies are raising concerns about potential weakening in the labor market, with a new layoffs tracker indicating an increase above pre-pandemic levels [19][20] Conclusion - The conference call highlights a positive outlook for emerging markets, particularly in Asia and India, while also addressing potential risks in the AI sector and the US economy. The emphasis on earnings revisions and macroeconomic indicators suggests a cautious yet optimistic investment environment.

The government has played a role in critical infrastructure builds. Our public submission (posted on our blog) shares our thinking and suggests ideas for how the US government can support domestic supply chain/manufacturing.This is very in line with everything we have heard from the government about their priorities. We think US reindustrialization across the entire stack--fabs, turbines, transformers, steel, and much more--will help everyone in our industry, and other industries (including us).To the degre ...

Q3 2025 Financial Performance - Revenues reached $11.1 billion, a 5% increase compared to Q3 2024[13] - Adjusted EBITDA increased by 10% to $2.7 billion[13] - Adjusted EBITDA Margin improved by 100bps to 24.3%[13] - Diluted EPS grew by 12% to $2.21[13] Segment Performance - Americas Materials Solutions revenues increased by 6% to $5.637 billion, with Adjusted EBITDA up 5% to $1.555 billion[19] - Americas Building Solutions revenues increased by 2% to $1.797 billion, with Adjusted EBITDA up 22% to $432 million[22] - International Solutions revenues increased by 5% to $3.635 billion, with Adjusted EBITDA up 15% to $708 million[25] Capital Allocation - Approximately $3.5 billion was invested in 27 acquisitions year-to-date[11, 33] - $1.1 billion was invested in Growth Capex year-to-date[33] - $0.7 billion was returned to shareholders through dividends year-to-date[33, 66] - $1.2 billion was returned to shareholders through share repurchases[33] 2025 Outlook - Adjusted EBITDA guidance midpoint raised to $7.6 billion - $7.7 billion[11, 57] - Net Income is projected to be $3.8 billion - $3.9 billion[57] - Diluted EPS is expected to be $5.49 - $5.72[57]

Core Viewpoint - The Supreme Court is hearing a case regarding the constitutionality of President Trump's tariffs, which are deemed critical for the U.S. economy and national security [1] Tariffs and Economic Impact - The tariffs have significantly reduced imports from China and raised hundreds of billions of dollars for the U.S. government [2][3] - The administration has alternative measures available if the Supreme Court rules against the tariffs, ensuring continued revenue generation and support for reindustrialization [3] Economic Weakness and Monetary Policy - There are acknowledged weaknesses in the economy, particularly in the housing sector, attributed to high mortgage rates and low affordability [5][6] - The Federal Reserve's restrictive monetary policy is seen as a barrier to economic growth, particularly in manufacturing [7][8] Inflation and Energy Prices - The tariffs have not led to the expected inflationary pressures, which has affected the credibility of the Federal Reserve [10][11] - Energy prices have decreased under the current administration, contributing to lower inflation expectations and potentially aiding affordability [12][13] Wage Growth and Tax Benefits - The economy is projected to experience a "blue-collar boom," with wages rising faster than inflation, contrasting with previous administrations [14] - Significant tax refunds are anticipated due to changes in tax policy, which will benefit American workers, particularly in the blue-collar sector [15]

Financial Data and Key Metrics Changes - The company generated $302 million of Funds From Operations (FFO) during Q3 2025, or $0.46 per unit, representing a 10% year-over-year increase [3][21] - The hydroelectric segment delivered FFO of $119 million, up over 20% from the prior year, driven by solid generation and higher pricing [21] - The wind and solar segments generated a combined FFO of $177 million, supported by acquisitions, although offset by the sale of wind assets in various regions [21] Business Line Data and Key Metrics Changes - The hydroelectric segment's strong performance reflects growing demand for scale base load power and improved pricing [21] - The distributed energy, storage, and sustainable solutions segments generated FFO of $127 million, up from the prior year, supported by growth from acquisitions and strong performance at Westinghouse [21] - The company signed contracts to deliver approximately 4,000 gigawatt-hours per year, including a significant 20-year contract with Microsoft [24] Market Data and Key Metrics Changes - The company is witnessing accelerating demand for power across nearly all markets, driven by electrification, reindustrialization, and the demand from hyperscalers [4][10] - The demand for hydro capacity is increasing as hyperscalers seek reliable and sustainable energy sources [8] - The company is well-positioned to capture increasing demand for hydro generation, with approximately five terawatt-hours of generation coming up for recontracting [9] Company Strategy and Development Direction - The company is focusing on strategic investments in critical technologies to support energy demand and grid reliability [3] - A strategic partnership with the U.S. government aims to reinvigorate the nuclear power industrial base, with an investment value of at least $80 billion [5][13] - The company is committed to leveraging a diverse energy mix, including solar, wind, hydro, gas, and nuclear, to meet surging electricity demand [4][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth prospects of the business, driven by strong demand for clean, dispatchable baseload power [12][70] - The company anticipates significant earnings growth from the Westinghouse partnership and expects to see contributions from this agreement relatively quickly [38][39] - Management highlighted the importance of maintaining high levels of liquidity and access to capital to capitalize on compelling opportunities [26] Other Important Information - The company executed $7.7 billion in financings during the quarter, bringing total financings over the last 12 months to $38 billion [23] - The company is actively pursuing capital recycling opportunities, having closed sales and signed agreements expected to generate $2.8 billion [25] - The company has safe-harbored its entire U.S. development pipeline out to 2029, positioning itself well for federal tax credits [61] Q&A Session Summary Question: Improvements in permitting pace in the U.S. - Management noted that while there is intent to accelerate permitting, progress has been incremental rather than dramatic [30] Question: Timeline for U.S. buildout associated with the Westinghouse agreement - Management expects the first reactors to begin development in the next quarter or two, with revenues starting relatively quickly [36][39] Question: Potential for Brookfield to be a source of capital for nuclear projects - Management indicated that Brookfield is well-positioned to play a significant role in nuclear power growth, contingent on appropriate protections against risks [42][45] Question: Changes in perspective regarding federal tax credits for U.S. projects - Management confirmed greater clarity around safe harboring and expressed confidence in their position regarding federal tax credits [61] Question: Valuations in private markets versus public markets - Management stated that demand and valuations for high-quality operating cash-generative renewables assets are significantly higher in private markets than in public markets [62]

Financial Data and Key Metrics Changes - The company reported $6.6 billion in orders for the quarter, resulting in a Book-to-bill ratio of 1.2 [14] - Revenue was $5.7 billion, reflecting strong organic growth of 10% [14] - Segment operating margin was 15.9%, up 20 basis points, marking the eighth consecutive quarter of sequential margin expansion [14] - Non-GAAP EPS was $2.70, up 10% year over year, with a pension-adjusted EPS increase of 15% [15] - Free cash flow was approximately $450 million, with expectations for strong cash performance in Q4 [15][24] Business Line Data and Key Metrics Changes - Communication Systems (CS) revenue was $1.5 billion, up 6%, with an operating margin of 26.1% [15] - Integrated Mission Systems (IMS) revenue was $1.7 billion, up 17% organically, with an operating margin of 12% [16] - Space and Airborne Systems (SAS) revenue was $1.8 billion, up 7%, with an operating margin of 12.1% [16] - Aerojet Rocketdyne achieved organic growth of 15%, with record revenue and an operating margin of 12.7% [16][17] Market Data and Key Metrics Changes - The company is fully aligned with U.S. administration priorities for missile defense architecture, with a focus on expanding capacity across its space portfolio [6][8] - Aerojet Rocketdyne reached a record financial backlog of $8.3 billion, primarily to support increased demand for solid rocket motors [9] - The company is positioned to accelerate production and integration as new contracts are awarded [8] Company Strategy and Development Direction - The company is transforming to respond with speed and agility to the evolving defense landscape, emphasizing innovation and collaboration [5] - Investments are being made in domestic manufacturing to meet national defense demand, with a focus on expanding capacity in various states [10][11] - The company is committed to delivering software-defined, resilient capabilities and is actively partnering with emerging technology companies [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving increased 2025 guidance and exceeding the original 2026 financial framework [6][24] - The ongoing government shutdown and budget challenges are acknowledged as potential risks, but the company remains focused on execution and readiness [10][82] - Management highlighted the importance of converting demand signals into multi-year contracts to support future growth [11][91] Other Important Information - The company secured a $2.2 billion award from South Korea for next-generation airborne early warning business jets [18] - A partnership with Joby Aviation was announced to explore new aircraft classes for defense applications [19] - The company is actively involved in NASA projects, particularly with the RS-25 engines for the SLS system [96] Q&A Session Summary Question: Outlook for ISR segment and recent wins - Management noted significant improvements in the ISR segment, with a backlog doubling in 12 months and positive outlook due to increased international interest [30][31] Question: Managing agility in a large organization - Management emphasized empowering leadership and reducing bureaucracy to maintain agility and responsiveness in partnerships with smaller companies [35][38] Question: Outlook for Golden Dome space-based competitions - Management expressed confidence in capabilities for missile defense architecture and readiness for upcoming awards once the government reopens [41][42] Question: Growth outlook for Aerojet Rocketdyne - Management indicated significant growth potential for Aerojet Rocketdyne, with expectations for double-digit growth driven by solid rocket motors and space propulsion [66][67] Question: International business expansion and teaming operations - Management highlighted increased international budgets and partnerships, with a goal to expand international share to 25% of the base [72][73] Question: Multi-year contracts and their impact - Management discussed the need for multi-year contracts to support capacity expansion and align investments with customer needs [91][93]

Financial Data and Key Metrics Changes - The company reported $6.6 billion in orders for the quarter, resulting in a book-to-bill ratio of 1.2, with revenue of $5.7 billion reflecting strong organic growth of 10% [11][12] - Segment operating margin was 15.9%, up 20 basis points, marking the eighth consecutive quarter of sequential margin expansion [11][12] - Non-GAAP EPS was $2.70, up 10% year over year, with pension-adjusted EPS up 15% [12] - Free cash flow was approximately $450 million, with expectations for strong cash performance in the fourth quarter [12][21] Business Line Data and Key Metrics Changes - Communication Systems (CS) delivered revenue of $1.5 billion, up 6%, with an operating margin of 26.1% [12][13] - Integrated Mission Systems (IMS) revenue was $1.7 billion, up 17% organically, with an operating margin of 12% [12][13] - Space and Airborne Systems (SAS) revenue reached $1.8 billion, up 7%, with an operating margin of 12.1% [12][13] - Aerojet Rocketdyne achieved organic growth of 15%, marking its second consecutive quarter of double-digit growth, with record revenue and an operating margin of 12.7% [12][14] Market Data and Key Metrics Changes - The company is experiencing increased international demand, particularly in the defense sector, with significant contracts awarded, including a $2.2 billion deal from South Korea [15][16] - The international business is expected to grow from 22% to 25% of the company's base, reflecting strong NATO support and increased budgets in key countries [74] Company Strategy and Development Direction - The company is focused on transforming its acquisition processes to enable a fast-moving industrial base, aligning with the Department of Defense's priorities [3][4] - Investments are being made in expanding manufacturing capacity across various states to meet national defense demand [8][9] - The company is committed to delivering innovative solutions and maintaining a balanced approach to capital allocation, focusing on both growth and responsible returns [10][21] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving increased 2025 guidance, with expectations for durable, profitable growth beyond 2026 [4][21] - The ongoing government shutdown and budget challenges are seen as temporary hurdles, with management prepared to execute swiftly once funding is released [8][81] - The company is optimistic about the future, citing strong demand signals and a robust backlog, particularly in missile production and space propulsion [64][93] Other Important Information - The company is actively engaging with emerging technology firms to co-develop AI-enabled mission systems and enhance its capabilities [10][20] - A strategic partnership with Palantir is expected to improve program execution through the Digital Cockpit platform, which aggregates data for real-time decision-making [19][20] Q&A Session Summary Question: Update on ISR segment and recent wins - Management noted significant improvements in the ISR segment, with a backlog that has doubled in 12 months and positive outlook due to increased international interest and new awards [27][29] Question: Managing collaboration with smaller companies - The company has focused on empowering leadership and streamlining processes to maintain agility while collaborating with smaller, nimble firms [34][35] Question: Outlook for space-based competitions - Management expressed confidence in capabilities for missile defense architecture and readiness to compete for upcoming contracts once the government reopens [37][39] Question: Aerojet Rocketdyne's growth and backlog - The company anticipates significant growth at Aerojet Rocketdyne, with a focus on increasing production capacity and formalizing demand signals into multi-year contracts [63][64] Question: International business expansion and teaming operations - The company is actively partnering globally to support indigenous capabilities while expanding its international market share, with a focus on resilience and interoperability [73][74] Question: Multi-year contracts and their impact on margins - Management emphasized the need for multi-year contracts to support significant production ramp-ups, with optimism about the government's receptiveness to this approach [86][87]

Financial Data and Key Metrics Changes - Reported revenues for Q3 2025 were $2.1 billion, a 14.2% increase compared to $1.83 billion in the prior year period, with organic growth of approximately 10% [13] - Adjusted gross margin for Q3 2025 was 31.5%, representing a 50 basis point increase compared to the prior year period [13] - Adjusted EBITDA increased by 14.7% for Q3 2025, with an adjusted EBITDA margin of 13.5%, a 10 basis point increase compared to the prior year [13] - Adjusted diluted earnings per share for Q3 2025 was $0.41, a 20.6% increase compared to the prior year [14] Business Line Data and Key Metrics Changes - In the Safety Services segment, revenues for Q3 2025 were $1.4 billion, a 15.4% increase compared to $1.2 billion in the prior year, with organic growth of 8.7% [15] - Adjusted gross margin for Safety Services was 37.3%, an 80 basis point increase compared to the prior year [16] - Specialty Services reported organic revenues of $683 million, an increase of 11.6% compared to $612 million in the prior year [16] - Adjusted gross margin for Specialty Services was 19.3%, a 60 basis point decrease compared to the prior year [17] Market Data and Key Metrics Changes - Strong growth in inspection, service, and monitoring revenues, with double-digit inspection growth in North America for the 21st consecutive quarter [9] - The company continues to see robust activity in various sectors, including data centers, semiconductor manufacturing, aviation, and healthcare [26] Company Strategy and Development Direction - The company aims to achieve $10 billion in net revenues by 2028, with consistent mid-single-digit organic growth and a 16% plus adjusted EBITDA margin [8] - Investments in technology, including AI and market-leading systems, are intended to empower field leaders and improve operational efficiency [5][6] - The company is focused on disciplined customer and project selection, pricing, and selective business pruning to enhance margins and growth [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to execute its strategy and deliver on its financial targets despite evolving macroeconomic conditions [21] - The company anticipates continued strong free cash flow generation and a robust pipeline for M&A activity [11][12] Other Important Information - The company completed four bolt-on acquisitions in Q3 2025, bringing the total for the year to 11, with plans to deploy approximately $250 million in M&A at attractive multiples [11] - The net debt to adjusted EBITDA ratio was approximately 2.0 times, below the long-term target, providing flexibility for capital deployment [18] Q&A Session Summary Question: Can you provide more detail on the organic growth in Safety Services? - Management noted robust activity in the data center space, with expectations for data centers to account for 9-10% of total revenue, alongside strong growth in semiconductor and healthcare sectors [26] Question: How is the M&A pipeline progressing? - Management confirmed they are on track with M&A activity, with a focus on North America in fire protection and electronic security, while also exploring international opportunities [28] Question: What is the current status of the elevator and escalator segment? - The elevator segment is experiencing high single-digit organic growth, with positive cross-selling opportunities developing [66] Question: How do you balance growth with margin expansion? - Management emphasized the importance of project size and complexity in driving margins, stating that they are confident in achieving their margin expansion goals while pursuing growth [41][42] Question: What is the expected contribution from M&A to revenue next year? - Management indicated that approximately $1 of purchase price typically translates to about $1 in revenue over a 12-month period, with expectations for deals to be accretive to margins [77]