Chain of Command
In this edition of the Smart Investor newsletter, we spotlight the command logic behind modern warfare. With multiple Smart Portfolio companies reporting in the coming week, we are holding off on sell decisions until the next edition. But first, let’s review the latest news and developments.
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Portfolio News and Updates
❖❖ The Claude AI maker Anthropic continues to make headlines. After an internal draft on its new frontier model, Claude Mythos, was accidentally leaked in late March, the public learned of its “step change” capabilities. The draft highlighted strong performance in coding, reasoning, and cybersecurity tasks – particularly its ability to find and exploit software vulnerabilities – and warned that such AI cyber abilities could proliferate faster than defenses could keep up.
Following the leak, Anthropic officially announced Claude Mythos Preview and launched Project Glasswing. The company stated it would not release the model publicly due to the severe cybersecurity risks demonstrated in internal testing. Anthropic confirmed that Mythos Preview has identified and exploited thousands of high-severity vulnerabilities across every major operating system and every major web browser, as well as long-standing bugs in foundational libraries.
Project Glasswing is an industry coalition aimed at securing the world’s most critical software in the AI era. It brings together launch partners – Anthropic, Apple, the Linux Foundation, Amazon (AMZN) AWS, Broadcom (AVGO), Cisco (CSCO), Google (GOOGL), JPMorgan (JPM), Microsoft (MSFT), Nvidia (NVDA), CrowdStrike (CRWD), and Palo Alto Networks (PANW) – plus over 40 additional organizations responsible for critical software infrastructure.
The initiative grants these trusted organizations early, controlled access to Claude Mythos Preview exclusively for defensive cybersecurity work: finding, analyzing, and fixing high-severity vulnerabilities in operating systems, browsers, foundational libraries, cloud infrastructure, and open-source code – before similar AI capabilities spread to attackers. The goal is to give defenders a head start and help narrow the emerging offense-defense imbalance created by advanced AI.
Anthropic is committing up to $100 million in usage credits for Mythos Preview and $4 million in donations to open-source security efforts. It will also share aggregated learnings with the broader industry. Key partners will focus on hardening their respective domains: AWS on cloud infrastructure powering much of the internet; Google on Android, Chrome, and Google Cloud; Microsoft on Windows, Azure, and Edge; Apple on iOS and macOS; Nvidia on AI infrastructure, GPUs, and drivers; Broadcom and Cisco on semiconductors, networking, and communication infrastructure; the Linux Foundation on the open-source ecosystem; JPMorgan on financial systems; and CrowdStrike and Palo Alto Networks on enhancing defensive security tools.
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❖❖ TSMC (TSM) revealed blockbuster Q1 2026 sales data ahead of its full earnings report scheduled for April 16. Its quarterly revenue surged more than 35% year-over-year to a record of approximately $35.7 billion – well above the consensus – driven by surging AI chip demand, with 2nm and 3nm capacity reportedly sold out into 2027. In March alone, TSMC’s sales soared 45.2% year-over-year.
Bloomberg Intelligence said Taiwan Semiconductor is likely to exceed first-quarter guidance and analyst estimates, supported by the insatiable demand for advanced chips. Gross margin could reach about 65%, also aided by a stronger U.S. dollar.
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❖❖ ASE Technology (ASX) – the next link in the AI-chip supply chain after TSMC – provided additional evidence to the surging AI-driven demand. The company’s Q1 2026 revenues jumped 17.2% year-over-year – above the consensus – with March sales alone up 18.2% sequentially and 14.6% from a year ago. Meanwhile, ASE’s critical assembly and testing (ATM) segment surged 29.7% year-over-year in the first quarter. Earlier this month, ASE filed its 2025 annual report, revealing that its full-year 2025 net profits soared roughly 25% year-over-year. In parallel, the Taiwanese advanced packaging technologies leader has launched a large-scale capacity expansion plan, announcing an investment of roughly $3.4 billion in its new facility in Kaohsiung, which will focus on high-end semiconductor testing services, covering AI, HPC, 5G, and automotive electronics.
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❖❖ Amazon (AMZN) CEO Andy Jassy’s annual shareholder letter revealed that AWS AI revenue has already surpassed a $15 billion run rate in Q1 2026, growing extremely rapidly and pulling through demand for other AWS services. Customers choose AWS for its broad AI capabilities (SageMaker, Bedrock, AgentCore, etc.), data locality driving low latency, data security, and smooth integration with the rest of the cloud.
Amazon is aggressively investing to lead in what Jassy described as a “once-in-a-lifetime” technological shift driven by AI technology. The company expects roughly $200 billion in capex in 2026, with the vast majority tied to AI hardware and infrastructure. Much of this spending is already backed by customer commitments, including a deal with OpenAI worth over $100 billion. Separately, an OpenAI internal memo highlighted the alliance with Amazon as a key growth driver for its enterprise business, citing AWS’s dominance and strong demand for Bedrock’s fully managed generative AI service.
Another key highlight was the momentum in Amazon’s custom chips. In Jassy’s words, the company’s “chips business is on fire, changes the economics for AWS, and will be much larger than most think.” All three custom-silicon families – Graviton, Trainium, and Nitro – are currently monetized exclusively through AWS EC2 instances. Their combined annual revenue run rate already exceeds $20 billion and is growing at triple-digit percentages year-over-year. Jassy noted that this understates the business’s potential scale; if run as a stand-alone business selling to AWS and third parties, the run rate would approach $50 billion.
Trainium is expected to save Amazon tens of billions of dollars per year in capex by reducing reliance on more expensive third-party AI chips for inference, while delivering several hundred basis points of operating margin improvement through superior price-performance and full-stack optimization. These advantages help offset the massive AI-related capex. Given the surging demand, Jassy said it is “quite possible” AMZN will sell racks of these chips to third parties in the future. However, external sales remain a future consideration: current demand far outstrips supply – with Trainium generations largely sold out or nearly fully subscribed – and Amazon’s priority is to maintain and strengthen AWS’s AI leadership by keeping capacity dedicated to cloud customers first.
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❖❖ Alphabet’s (GOOGL) Google and Intel announced a multi-year deal to advance AI infrastructure. It includes continued deployment of Intel’s Xeon processors (across multiple generations) for AI training, inference, and general workloads in Google’s data centers, plus expanded co-development of custom Infrastructure Processing Units. The IPUs aim to improve efficiency, performance, utilization, and energy efficiency by offloading routine tasks from the CPUs. This should help enhance Google Cloud’s cost structure and support further operating margin expansion. Despite steady improvement, GCP margins still trail AWS and, to a lesser extent, Azure.
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❖❖ Northrop Grumman (NOC) successfully launched its second Cygnus XL cargo spacecraft – offering a 33% increase in payload capacity compared with earlier variants – on its Commercial Resupply Services-24 mission. The spacecraft lifted off aboard a SpaceX Falcon 9 rocket, delivering nearly 11,000 pounds of supplies, scientific experiments, and equipment to the International Space Station for Expedition 74. The Cygnus program continues to generate recurring, long-term contract revenue in the growing commercial and low-Earth-orbit logistics segment, while the larger XL variant positions NOC for higher-value future missions and demonstrates strong execution.
In parallel, Northrop Grumman and the U.S. Air Force announced continued strong progress on the LGM-35A Sentinel program – the next-generation intercontinental ballistic missile (ICBM) designed to replace the aging Minuteman III and modernize the ground-based leg of the U.S. nuclear triad. The program, which spans approximately 40,000 square miles across five states, targets a first flight in 2027 and initial operational capability in the early 2030s. On-time advancement on this multi-decade, high-value program reduces execution risks and solidifies NOC’s position as the prime U.S. defense contractor.
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❖❖ Vertiv Holdings (VRT) announced the acquisition of BMarko Structures, a U.S.-based provider of custom-engineered structural fabrication. The deal enables vertical integration of key supply chain components and strengthens VRT’s competitive moat in a supply-constrained environment, directly addressing the need for speed and control in delivering complete infrastructure solutions for data centers and AI deployments. Vertiv is already massively capitalizing on the soaring AI demand, with this acquisition complementing its efforts to enhance capacity amid the fast expansion of its backlog.
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❖❖ According to media reports, Microsoft (MSFT) is developing new agentic AI features for Microsoft 365 Copilot, inspired by the popular open-source tool OpenClaw.
OpenClaw enables autonomous, always-on agents that handle complex productivity tasks – such as managing emails, spreadsheets, and documents – proactively in the background, often via messaging apps. While OpenClaw has gained strong user traction among individual users, its open nature has raised security and reliability concerns in enterprise settings.
Microsoft aims to adapt this concept for business users by building proactive, 24/7 autonomous agents inside the secure Microsoft 365 ecosystem. The company plans to add enterprise-grade controls, governance, and compliance to reduce risks while driving greater productivity. This initiative is expected to strengthen Copilot’s competitive position in the fast-growing agentic AI market and support long-term adoption across Microsoft’s large enterprise base.
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❖❖ JPMorgan Chase (JPM) delivered a blowout Q1 2026 earnings report, posting record net income of $16.5 billion – or $5.94 per share versus $5.45 consensus, up more than 17% year-over-year. Managed revenue rose 10% to $50.5 billion, also meaningfully above expectations, driven by a 28% surge in investment banking fees, 20% jump in markets revenue – with stock-trading results particularly boosting the total – and a standout 23% ROTCE. However, the stock was under some pressure post-earnings, as the largest U.S. financial institution lowered its full-year net interest income (NII) guidance back to about $103 billion, where it stood before a raise to $104.5 billion in a February update. JPM cited “an increasingly complex set of risks” – such as geopolitical tensions, energy price volatility, trade uncertainty, and elevated asset prices – as the reasons for caution. However, management held its outlook for NII excluding the markets business steady at about $95 billion.
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❖❖ Citigroup (C) surged to a new 52-week high on Tuesday after delivering a blockbuster Q1 2026 report. The bank’s quarterly revenue of $24.63 billion topped estimates by over $1 billion on 14% year-over-year growth, while adjusted EPS of $3.06 surged 56%, vastly exceeding the $2.63 consensus. Broad-based strength across all five divisions drove the outperformance, with markets revenue and investment banking both expanding their revenue by 19%, services climbing 17%, banking up 13%, and wealth rising 11%. Net interest income (NII) of $15.7 billion was well above the consensus, increasing 12% year-over-year. Management reaffirmed full-year 2026 guidance, targeting ROTCE of 10-11%.
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Portfolio Stocks Under Review
❖ We are keeping Oracle (ORCL) under review as the stock undergoes a sharp re-rating, driven by a rapid shift in both fundamentals and investor perception.
Over the past week, ORCL has surged – including a roughly 25% two-session rally – as Wall Street increasingly reframes the company from a legacy enterprise software name into an emerging AI infrastructure “utility.” The move follows a prolonged selloff, with the stock down meaningfully year-to-date, and reflects a combination of improving sentiment, tangible AI monetization, and a heavy catalyst flow.
At the core of the shift is growing confidence that Oracle is already executing on AI demand. Recent updates showcased real-world applications across multiple verticals, including utilities, where the Opower platform delivered approximately $369 million in customer savings in 2025. At the same time, the company continues to expand its agentic AI ecosystem, rolling out applications across finance, supply chain, HR, customer experience, and corporate banking. These tools move beyond assistive AI toward workflow automation and decision execution, reinforcing ORCL’s positioning deeper into enterprise operations.
On the infrastructure side, Oracle is addressing one of the key bottlenecks in AI – power and capacity. The expanded partnership with Bloom Energy, securing up to 2.8 GW of fuel-cell power, alongside ongoing data center buildouts, highlights the company’s effort to lock in critical inputs for scaling AI infrastructure. Importantly, this comes on top of its customer-backed financing model and previously disclosed large-scale projects tied to OpenAI workloads, which together help mitigate balance sheet pressure while supporting growth.
Recent product updates extend beyond AI into execution and infrastructure software, with enhancements to Aconex and Primavera Unifier improving project governance, inspection workflows, and data integration. These additions strengthen ORCL’s positioning in capital-intensive industries where compliance, traceability, and operational control are critical.
The broader narrative is supported by Oracle’s massive ~$553 billion RPO, which continues to anchor the bull case around visibility and contracted demand. Combined with strong recent cloud growth and continued contract wins, this reinforces the view that the company is building against committed demand rather than speculative capacity.
Street sentiment has turned more constructive, with multiple analysts reiterating bullish views and investor commentary increasingly framing ORCL as a “picks and shovels” AI infrastructure play. The recent CFO appointment further supports this shift, signaling a greater focus on capital discipline as Oracle scales its AI buildout.
That said, risks remain. The pace of investment, margin pressure from ongoing data center expansion, and sensitivity to macro and geopolitical developments continue to weigh on the near-term outlook. The stock’s sharp move also introduces the question of sustainability, particularly given lingering concerns around AI spending cycles and broader market volatility.
All in all, while the fundamental story is clearly improving and the narrative is shifting in Oracle’s favor, the magnitude and speed of the recent rally suggest that expectations are being reset at a very fast pace. We therefore prefer to keep ORCL under review for a while longer to assess whether the current uptrend can hold.
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Portfolio Earnings and Dividend Calendar
❖ The Q1 2026 earnings season has begun in earnest, and many Smart Investor Portfolio holdings are scheduled to reveal their results in the coming week. Morgan Stanley (MS) will report today, while TSMC (TSM), Bank of New York Mellon (BK), and Citizens Financial (CFG) are scheduled for April 16. Afterwards, on April 21, we’ll receive the quarterly results of GE Aerospace (GE), Interactive Brokers (IBKR), RTX (RTX), and Northrop Grumman (NOC), while IBM (IBM), Vertiv Holdings (VRT), and Philip Morris (PM) are expected to report on April 22.
❖ The ex-dividend date for EMCOR Group (EME) is April 16.
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New Buy: CACI International (CACI)
CACI International Inc. operates at the intersection of technology, intelligence, and national security, serving as a trusted provider of mission-critical solutions to U.S. government agencies, primarily across defense and intelligence. The company delivers advanced capabilities in cybersecurity, data analytics, C5ISR,1 communications, and electronic warfare, supporting operations where precision, reliability, and speed are essential. Its offerings are deeply embedded in complex government programs, helping customers gather, process, and act on critical information to drive informed decisions. As security challenges evolve across digital and physical domains, CACI translates technological innovation into operational advantage by combining specialized engineering expertise with long-standing government partnerships.
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1 – C5ISR stands for Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance.
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Intelligent Design
CACI’s origins trace back to 1962, when it was founded as California Analysis Center, Inc., with a focus on simulation and technical consulting for the U.S. government. Over the following decades, the company expanded alongside the growing complexity of federal missions, building expertise in information systems, logistics, and defense support. By the early 2000s, CACI had evolved into a recognized government contractor, but still largely operated as a diversified services provider rather than a focused technology platform.
That identity began to shift more decisively in the late 2010s, with 2019 marking a pivotal inflection point. CACI moved away from lower-margin, commoditized services and toward higher-value, technology-driven capabilities aligned with modern defense priorities – cyber, electronic warfare, and data-centric intelligence. This repositioning was built through a series of targeted acquisitions and portfolio decisions designed to deepen technical differentiation.
A defining step came with the paired acquisitions of LGS Innovations and Mastodon Design, which strengthened CACI’s position in signals intelligence, communications, and electronic warfare. That foundation was expanded further through deals such as SA Photonics, bringing advanced optical communications and space-based capabilities, and Ascent Vision Technologies, adding expertise in autonomous systems and ISR payloads.
More recently, the acquisition of ARKA Group has extended these capabilities into geospatial intelligence, space-based sensing, and emerging AI-driven applications. These transactions not only expanded scale but also pushed CACI into more specialized, mission-critical domains where barriers to entry are higher and contract visibility tends to be longer.
In parallel, acquisitions such as Applied Insight have reinforced capabilities in cloud engineering, DevSecOps, and software-defined infrastructure – areas increasingly central to government modernization efforts. At the same time, CACI has integrated AI and advanced analytics across its offerings, embedding these technologies into intelligence workflows, cyber operations, and battlefield decision-making systems.
Partnerships and contract wins have also reflected this shift. CACI has positioned itself within large, multi-year government programs tied to modernization, space, and digital transformation – aligning with sustained federal spending priorities and evolving threat environments.
To summarize, CACI has deliberately reshaped itself from a broad services contractor into a more differentiated, technology-enabled solutions provider. While the business remains rooted in services, integration, and engineering support, its growing exposure to higher-end, product-like capabilities has meaningfully improved its strategic positioning. Through disciplined acquisitions, portfolio refinement, and alignment with long-term government priorities, CACI has built a foundation designed to support both durable growth and deeper relevance in the national security landscape.
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Code of Arms
CACI operates at the core of U.S. national security missions, delivering integrated technology solutions across defense, intelligence, and federal civilian agencies. Approximately 90% of revenue is derived from national security customers, with the business increasingly anchored in higher-value technology offerings that now account for roughly 60% of total revenue. The company focuses on high-priority, mission-critical programs with narrow, deeply funded budgets, supporting long-term visibility and resilience across funding cycles.
The business spans multiple mission domains, with Electronic Warfare (EW) as a primary growth engine, generating roughly $2 billion in revenue. Demand is accelerating across the Army, Navy, and Air Force, particularly in RF spectrum dominance and counter-UAS systems, where adversary tactics evolve rapidly and require continuous adaptation. CACI’s systems, including Merlin and the Remote Modular Terminal, demonstrate the company’s ability to develop, field, and scale operational technologies, supporting a repeatable model that moves from development into deployment and production.
Enterprise and software-driven programs form a second pillar. CACI is embedded in large-scale federal modernization initiatives, delivering Agile software development, DevSecOps, cloud transformation, and enterprise IT systems across agencies such as Customs and Border Protection and the Department of Defense. These programs have driven measurable outcomes, including significantly higher software release cadence and cost efficiencies. The company’s work also extends to enterprise systems such as human capital and financial platforms, reflecting a broader role across government operations beyond warfighting missions.
A defining feature of CACI’s model is its embedded operating structure, with substantial personnel co-located with combatant commands. This creates a continuous feedback loop between operational environments and development teams, enabling rapid iteration and targeted investment. The company consistently invests ahead of customer need, developing capabilities using its own capital and deploying them through both traditional contracts and faster acquisition pathways. This approach supports co-developed, mission-integrated solutions that align closely with evolving requirements.
AI and advanced analytics are increasingly embedded across mission workflows, from intelligence analysis to cyber operations and cross-domain applications that extend into civilian agencies. External validation from industry analysts places CACI among the best-positioned federal contractors in cybersecurity, reflecting depth in cyber intelligence and AI-enabled capabilities.
Growth is further bolstered by expanding exposure to space and advanced sensing systems. The acquisition of ARKA adds geospatial intelligence, electro-optical and hyperspectral sensing, and AI-driven analytics tied to long-duration programs with visibility extending into the next decade. Participation in NASA’s Artemis II mission highlights real-world deployment of optical communications and sensing technologies, reinforcing capabilities across communications, sensing, and data systems within the space domain.
The opportunity set remains massive, with an estimated $300 billion addressable market and a pipeline heavily weighted toward new business. Consistent multi-year contract awards across defense, cyber, space, and enterprise modernization reinforce demand across all core domains. As defense priorities shift toward software-defined, multi-domain operations, CACI’s position within sensing, decision-making, and mission execution systems supports continued growth and deeper integration across national security programs.
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Trigger Discipline
CACI’s financial profile reflects a company compounding through execution, supported by a shift toward higher-value technology work embedded in long-duration government programs. The second quarter of fiscal 2026 continued that pattern. Revenue reached $2.2 billion, up 5.7% year-over-year, with 4.5% organic growth, reflecting consistent demand across defense, intelligence, and federal civilian programs. Growth has remained stable over recent quarters, supported by a mix of program expansion and new awards, with acquisitions contributing incremental upside.
Profitability also continues to trend higher. EBITDA margin expanded to 11.8%, up 70 basis points year-over-year, driven by a greater share of technology work and tighter cost discipline. That mix shift is structural – technology now represents nearly 60% of revenue – and is gradually lifting both margins and contract quality. Adjusted EPS reached $6.81, up 14.5% year-over-year, extending a strong track record of execution, with the company beating consensus on adjusted EPS in eight consecutive quarters and on revenue in seven of the last eight.
Cash generation has become a defining strength. Free cash flow totaled $138 million in the quarter, more than doubling year-over-year, reflecting improved earnings and working capital efficiency. Management continues to prioritize free cash flow as a core metric, guiding to at least $725 million for fiscal 2026, implying meaningful year-over-year expansion at the full-year level.
The underlying model is built on visibility and durability. Backlog stands at $32.8 billion, up 3% year-over-year, with funded backlog increasing 7% and an average contract duration exceeding six years. About 95% of revenue is derived from existing programs, reinforcing stability, while the contract mix – roughly 59% cost-plus, 27% fixed-price, and 14% time-and-materials – balances predictability with margin opportunity. Customer exposure remains concentrated in national security, with approximately 52% from the DoD, 24-25% from the Intelligence Community, and 19% from federal civilian agencies.
Bookings can fluctuate quarter to quarter, and that was visible in FQ2, with a 0.65x book-to-bill ratio due to timing effects tied to the government shutdown and award cadence. The broader trend remains intact, with 1.4x book-to-bill for the first half and 1.3x over the trailing 12 months, supported by a large and active pipeline.
Looking ahead, management raised full-year guidance, calling for $9.3-9.5 billion in revenue, up 7.8-10.1% year-over-year, with 6-8% organic growth. EBITDA margin is expected at 11.7-11.8%, implying an increase of approximately 55 basis points at the midpoint, while adjusted EPS is seen at $28.25-28.92, representing an approximate 8% increase year-over-year. Free cash flow is expected to reach at least $725 million. Third-quarter revenue is expected to track broadly in line with consensus, with margins holding steady.
The balance sheet reflects active investment. Net leverage stood at 2.4x at quarter-end and is expected to rise to approximately 4.3x following the ARKA acquisition, before returning to the low-3x range within roughly six quarters. The deal is expected to be immediately accretive to revenue and margins, and EPS accretive by year two, consistent with CACI’s track record of disciplined, growth-oriented M&A.
Risks remain tied primarily to timing – procurement delays, contract protests, and funding cycles can affect quarterly cadence. Higher interest expense and tax rates also create modest headwinds. However, CACI’s business model – backed by backlog durability, improving mix, and technology focus – supports steady growth, expanding profitability, and rising cash generation.
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Orders of Magnitude
CACI operates within a focused group of U.S.-listed government technology and national security services companies, where positioning is defined by depth of mission integration, exposure to intelligence and defense programs, and the balance between services and higher-value technology capabilities. Booz Allen provides the closest comparison in terms of business quality, with strong alignment in cyber, AI, and intelligence work, and often serves as the benchmark for margins and technical sophistication. Science Applications International represents the most direct legacy model, with similar customer exposure and contract structures, offering a baseline for evaluating CACI’s ongoing shift toward higher-margin, technology-driven work. Leidos adds a larger-scale perspective, with broader diversification across defense, intelligence, and civilian agencies, providing a reference point for how the model performs at greater size. Parsons reflects a similar push toward cyber, space, and sensing capabilities, though its recent growth trajectory has been weaker, highlighting the gap between strategic exposure and execution. Within this group, CACI has delivered comparatively stronger and more consistent revenue and EBITDA growth, placing it toward the upper end of the spectrum in both execution and strategic alignment.
The growth angle – past results along with expectations for the next 12 months – helps explain the divergence in stock performance across the group over the past year, with CACI delivering the strongest return with a gain of over 27%. Leidos came in a distant second with about a 10% increase, as it was the only one in the group apart from CACI to deliver revenue and earnings expansion over the past year. The remaining peers lagged on both fronts, which was reflected in their stocks’ double-digit declines over the same period. While CACI’s past rally was strong, analysts see an additional upside of over 32% for the Strong Buy-rated stock.
Despite clear leadership across peers in terms of past and expected growth, along with stronger stock performance and meaningful expected upside, CACI trades moderately above peers across most forward metrics, reflecting a balance between quality and growth. At roughly 19x forward non-GAAP earnings and ~13x EV/EBITDA, CACI’s modest premium is supported by stronger and more consistent growth and generally stronger profitability than most peers – though Leidos remains competitive on several margin metrics – alongside a rising mix of higher-margin technology work that supports further margin expansion. While the premium is not pronounced, it reflects a company executing more consistently, shifting its mix faster, and compounding more reliably – characteristics that tend to sustain valuation support even in a contract-driven sector.
Alongside stock price appreciation potential, CACI returns capital to shareholders through active, albeit opportunistic, share repurchases that complement its broader capital allocation strategy, focused on M&A and internal investments. In 2023, the board authorized a $750 million repurchase program with no expiration date, and the company has continued to deploy capital under this authorization. About $187 million in buyback capacity remained available at the end of fiscal Q2 2026. CACI repurchased $150 million of its stock in fiscal 2025, with an additional ~$9 million in the first half of fiscal 2026. The company has reduced its total outstanding share count by about 15% since FY2021. Although the strong stock rally, coupled with the need for deleveraging following the ARKA acquisition, may lead to a slowdown in repurchases, the remaining authorization provides flexibility should management choose to act.
Overall, CACI’s setup reflects a company that has already begun to differentiate itself within its peer group, yet still offers room for upside if current growth and margin trends hold. With disciplined capital allocation and a clear shift toward higher-value technology work, the setup supports continued multiple stability alongside earnings-driven returns.
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Investing Takeaway
CACI is evolving into a more differentiated national security technology platform, increasingly embedded in the systems that enable modern, data-driven defense operations. Its strength lies in the ability to translate deep mission access into deployable solutions, combining engineering, software, and operational insight into capabilities that are difficult to replicate. As the mix continues to shift toward higher-value technology work, the business is becoming more scalable, more resilient, and better aligned with long-term defense priorities. Growth is no longer driven solely by contract volume, but by deeper integration into mission-critical programs. With consistent execution, disciplined capital allocation, and expanding exposure to cyber, electronic warfare, and space, CACI is positioning itself as a steady compounder within a structurally supported sector.
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Smart Investor’s Winners Club
The Winners Club represents stocks from the Smart Investor Portfolio that have risen at least 30% since their purchase dates.
Markets staged a strong rally, and our Club has expanded despite losing CRWD again, as STRL and C joined the ranks. Now, the Winners count 23 stocks: AVGO, GE, ANET, TSM, EME, HWM, APH, VRT, IBKR, PH, MTZ, ORCL, GOOGL, KEYS, ASX, ATI, BK, RTX, JBL, STRL, MS, CSCO, and C.
The first runner-up is still JPM with a 27.19% gain since purchase. Will it return to the ranks, or will another stock outrun it to the finish line?
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