← back to rankingLDOS · Leidos Holdings, Inc.
Information Technology Services · mkt cap $16.0B · calls: Q1 FY2026 vs Q4 FY2025
45.0 conviction · conf-adj 42
conf 3/10 partial
enthusiasm:27.0 · trend:8 · quantifies:5 · impact:0 · under_radar:14 · credibility:-5 · business_impact:4 · disruption:-14 · commitment:6 · confirmation:0
Enthusiasm latest 9 / prev 7 (rising)
Leidos frames AI as a long-standing accelerant—not a disruptor—compressing routine digital work while moats (clearances, customer trust, privileged infrastructure access) grow more valuable as mission clock speed rises. Substance is rising call-over-call: named offerings (Skywire, My STR AI automation, predictive analytics on Military OneSource), cyber velocity post-Kudu, autonomy at sea (MUSV/Seahawk, LAVA), and a $100M tech venture sleeve. Credibility is moderate: management is specific on programs and internal deployment, but offers no audited AI revenue, savings, or margin attribution; dollar figures cited are contract wins, pipelines, or investment—not quantified AI P&L impact.
GROUNDED NEXT-FY IMPACT vs CONSENSUS
Grounded on actual base — revenue $17.2B · net income $1.5B · net margin 8.5% · diluted EPS 11.13
These are next-fiscal-year annual uplift estimates, not next-quarter numbers.
Aggregate next-FY est. rev uplift: 0.53% · next-FY EPS uplift: 0.53% · vs analysts: behind · priced in: low (model's call-read: high; verdict above is the hard-data one used for ranking) · confidence: 3/10
| Claim | Figure | Arithmetic | Next-FY Rev % | Next-FY EPS % |
|---|
Military OneSource $456M award (predictive analytics; not AI-labeled)
revenue | $456 million award | Award = TCV/bookings, not annual revenue; Military OneSource is multi-year. Assume 5-yr ratable -> $456M/5 = $91.2M next FY. rev_uplift_pct = 100 × $91.2M / $17,174M = 0.53%. @current net margin 8.478% (NI/rev): incr NI = $91.2M × 0.08478 = $7.73M; eps_uplift_pct = 100 × $7.73M / $1,456M = 0.53%. (Sensitivity: 3-yr -> 0.885%; 1-yr full -> 2.66%, not assumed per bookings rule.) 'Predictive analytics from MFLC', not labeled AI revenue -> weak AI attribution. | 0.53 | 0.53 |
Cyber pipeline $24B (+21% since Kudu; AI cited, not isolated)
engagement · soft | $24 billion pipeline; 21% increase | Pipeline = opportunities pursued, not bookings nor revenue. Disclosed increment: $24B − ($24B/1.21) = $4.165B pipeline. No AI-only share, win-rate, or next-FY conversion disclosed; AI cited in same breath as Kudu, not isolated -> cannot size next-FY rev/EPS without inventing assumptions. | | |
$100M multiyear venture/PE commitment (AI/cyber/autonomy access)
other · soft | $100 million multiyear | Cash OUTFLOW / capital commitment for early access to startups — a use of cash, not a quantified revenue, cost save, or return timing. No P&L phasing given -> no next-FY rev/EPS uplift calculable. | | |
Entrust refreshed order pipeline $10B (+230%; AI Skywire cited, not AI-attributed)
engagement · soft | $10 billion pipeline; 230% post-close growth | Order PIPELINE, not bookings/revenue. Disclosed pre-close base: $10B/(1+2.30) = $3.03B; increment = $6.97B pipeline. AI (Skywire) cited separately and NOT attributed as pipeline driver; bookings/pipeline ≠ next-FY revenue -> no AI-attributable recognizable next-FY figure. | | |
My Service Treatment Record AI pilot
productivity · soft | 'very small in a pilot phase' | Explicitly tiny; no dollar or % base, future stream unspecified. Vague/unanchored -> cannot size rev or EPS. | | |
Assumptions: Incremental net margin = current company net margin 8.478% ($1,456M/$17,174M; gov't services, no software-margin premium claimed). No tax adjustment on margin flow (already net); 21% rate n/a (no separate pretax cost-save claims). Phasing: Military OneSource $456M award treated as bookings recognized ratably over assumed 5-yr period -> $91.2M next FY. EPS sized vs current NI $1,456M / diluted EPS $11.13 (consensus FY26 NI $1,563M within 7%, base not distorted). Pipelines (cyber $24B, Entrust $10B), $100M PE commitment, and MSTR pilot carry no recognizable next-FY AI revenue. No supplier-side AI compute claims.
Top line: Only one anchored, sizeable next-FY item — the $456M Military OneSource award — and as bookings it converts to ~$91.2M/yr (+0.53% of $17.174B revenue). Everything else management quantified is a pipeline ($24B cyber, $10B Entrust) or a $100M outbound PE commitment; even disclosed pipeline increments ($4.17B cyber, $6.97B Entrust) are unconverted bookings, not AI-isolated. Adopter-side AI top-line lift is <1%, resting on loose 'predictive analytics' attribution.
Bottom line: At 8.478% net margin the $91.2M ratable award adds ~$7.73M NI (+0.53% of $1,456M), ~$0.06 EPS on 132.4M shares — immaterial vs $11.13 EPS. No quantified internal AI cost-save $ in the calls (only qualitative 'better, faster, cheaper' and beta-testing); $100M venture is investment, not a sized opex save. Net AI EPS impact is immaterial.
FY2026 consensus: rev $17.277B (+0.60% vs actual $17.174B), EPS $11.84 (+6.39% vs $11.13), NI $1.563B (+7.32%). Consensus YoY rev growth FY25->FY26 ≈ ($17.277B−$16.296B)/$16.296B = 5.16%. Quantified adopter AI-linked next-FY uplift ≈0.53% rev / 0.53% EPS — ~10× smaller than consensus rev growth and far short of the ~6.4% EPS step-up; it does not explain or support upside above street and sits within run-rate/consensus noise. The eye-catching figures ($24B, $10B, $100M) are pipelines/commitments, not revenue.
MODEL CONSENSUS (impact)
partial
Near-identical math; only verdict differed. Chose 'behind' as both better-justified and more conservative. Confidence held at 3.
Conflicts reconciled
- vs_analyst_expectations: X=inline vs Y=behind -> used behind because Y's math (AI 0.53% is ~10× below the 5.16% consensus rev growth and far short of the 6.4% EPS step-up) shows AI does not get to consensus, the more conservative and better-justified read
- est_rev_uplift_pct/est_eps_uplift_pct: X=0.53 vs Y=0.531 -> used 0.53 (rounded average, identical arithmetic)
| Field | Opus 4.8 | GPT-5.5 |
|---|
| Rev uplift % | 0.53 | – |
| EPS uplift % | 0.53 | – |
| Priced in | high | – |
| vs analysts | inline | – |
| Confidence | 3 | – |
| Top line | Only one anchored, sizeable item — the $456M Military OneSource award — and as bookings it converts to ~$91M/yr, ~0.53% of $17.17B revenue. Everything else management quantified is a pipeline ($24B cyber, $10B Entrust) or a $100M outbound PE commitment, none of which is recognizable AI revenue. Adopter-side AI top-line lift is therefore <1%, and even that rests on loose 'predictive analytics' attribution. | – |
| Bottom line | At the company's 8.48% net margin, the $91M ratable award adds ~$7.7M NI, ~0.53% of $1,456M net income (~$0.06 EPS). No cost/productivity figure was quantified (only qualitative 'better, faster, cheaper' and internal AI beta-testing), so there is no anchored bottom-line saving to size. Net AI EPS impact is immaterial. | – |
| Reasoning | Consensus FY26 already implies revenue $17,277M vs base $17,174M (+0.60%) and EPS $11.84 vs $11.13 (+6.4%). The quantifiable AI uplift (~0.53% revenue / ~0.53% EPS) is smaller than the revenue growth consensus already bakes in and a fraction of the EPS step-up — it sits inside, not above, the consensus trajectory. The math points to no AI-driven beat; the eye-catching figures ($24B, $10B, $100M) are pipelines/commitments, not revenue. | – |
Rows highlighted where the two models disagreed.
QUANTIFICATIONS
Military OneSource award (program using predictive analytics from MFLC; not labeled AI revenue): $456 million (recent award (Q1 FY2026 call), topline)
“a standout example here is our recent $456 million Military OneSource award.”
Cyber pipeline (cited in same breath as Kudu + accelerated AI for cyber ops; not isolated as AI-only): $24 billion pipeline; 21% increase since Kudu acquisition (current (Q1 FY2026 call), topline)
“We currently see a total cyber pipeline valued at $24 billion, a 21% increase since the acquisition of Kudu. The acquisition has also accelerated our use of AI technology to deliver cyber mission software and operations with unprecedented velocity.”
Venture investment for early access to AI/cyber/autonomy innovators: $100 million multiyear (multiyear commitment (Q1 FY2026 call), both)
“We have committed a multiyear $100 million investment in a marquee PE firm with a proven track record in the federal technology space. This partnership gives us early access to a vetted pipeline of high-growth disruptors with mission-ready capabilities in AI, advanced cyber and autonomy to name a few.”
Entrust combined order pipeline (AI Skywire deployment cited separately, not attributed as AI-driven pipeline): $10 billion refreshed order pipeline; 230% growth post close (post Entrust close (Q1 FY2026 call), topline)
“our team is focused on targeting a refreshed order pipeline of $10 billion. This represents growth of 230% post close, made possible by rapidly bringing our teams together to prosecute the market as one.”
My Service Treatment Record pilot scale (explicitly small today; AI tool): very small in a pilot phase (current pilot; potential future revenue/profit stream unspecified, both)
“My service treatment record were very small in a pilot phase. I mean that could turn into a very nice technology-oriented high revenue and profit stream for us over time as we prove out this capability.”
PAST (realized)
- Q1 FY2026 | Thomas Bell: The acquisition has also accelerated our use of AI technology to deliver cyber mission software and operations with unprecedented velocity.
- Q1 FY2026 | Thomas Bell: And on the operational side, we've deployed Leidos' AI tools, Skywire across the new organization.
- Q1 FY2026 | Thomas Bell: This is the U.S. Navy's first and only medium unmanned surface vehicle to reach this level of customer confidence, relevance and actual deployment.
- Q4 FY2025 | Chris Cage: increased use of AI to accelerate grid engineering execution within commercial energy.
- Q4 FY2025 | Thomas Bell: He has led the development of AI and machine learning capabilities for the Department of War, intelligence and civilian agencies.
CURRENT (now)
- Q1 FY2026 | Thomas Bell: we are scaling with AI.
- Q1 FY2026 | Thomas Bell: Teams are already seeing significant opportunity to deliver high-quality services and solutions to more customers faster and cheaper.
- Q1 FY2026 | Thomas Bell: Here, we've been selected to exclusively develop an AI-driven tool to automate the medical record transfer for service members from the Department of War to the Veterans Administration.
- Q1 FY2026 | Thomas Bell: By applying the predictive analytics from our Military and Family Life Counseling program, to this customer's Military OneSource needs, we are shifting the focus from reactive care to proactive force readiness.
- Q1 FY2026 | Thomas Bell: The deployment of AI tools into Entrust are a big bonus that those engineers are enjoying.
- Q4 FY2025 | Thomas Bell: Steve and his team are embracing our AI-first philosophy to exploit AI for a more efficient Leidos and for more effective solutions to our customers.
- Q4 FY2025 | Thomas Bell: I'm charging Will with driving significant outcomes in workplace efficiency through business process reengineering unlocked via the power of technology, particularly AI.
FORWARD (guidance)
- Q1 FY2026 | Thomas Bell: This partnership gives us early access to a vetted pipeline of high-growth disruptors with mission-ready capabilities in AI, advanced cyber and autonomy to name a few.
- Q1 FY2026 | Thomas Bell: this only further strengthens our position as the trusted mission AI experts, the sober, cerebral, experienced, relatable experts deploying AI for our customers' success in ways they know they can trust.
- Q1 FY2026 | Thomas Bell: that ecosystem is foundational to how our customers are and will adopt AI securely and effectively.
- Q1 FY2026 | Thomas Bell: Taken together, these product suites strengthen Leidos' position as the scaled, trusted integrator of AI-enabled mission systems in our customers' environments for their mission success.
- Q1 FY2026 | Chris Cage: My service treatment record were very small in a pilot phase. I mean that could turn into a very nice technology-oriented high revenue and profit stream for us over time as we prove out this capability.
- Q1 FY2026 | Thomas Bell: We're very focused on leveraging those 2 things, our digital infrastructure business and our cybersecurity chops with our AI philosophy of exploiting these tools to move up the value chain in our customer spend and continue to help them have scaled effects at speed in an AI-enabled world.
- Q4 FY2025 | Thomas Bell: And with the deal's clear cross-sell revenue opportunities and cost synergies along with the deployment of our powerful AI-enabled tools, we will increase our competitiveness in this high-growth market.
- Q4 FY2025 | Thomas Bell: Will's mission is to deliver measurable transformational cost reduction outcomes for us and then help transfer them into our customer solutions.
- Q4 FY2025 | Thomas Bell: We expect that beta testing AI internally to Leidos will not only deliver bottom line results for us but also help us prototype and then deliver top line benefits for our customers as they seek to exploit AI to make their operations more efficient.
- Q4 FY2025 | Chris Cage: enhanced automation to deliver better, faster and cheaper solutions for our veterans.
TRACK RECORD — PROMISE vs DELIVERY
22/100 track record over-promises 6 calls reviewed
Across six calls Leidos cites many backward-looking AI/automation wins but almost never sets dated numeric AI targets; the sole forward commitment (>0.5M labor hours by FY2025-end) was dropped without an update after Q2 FY2025, while most other quantified AI figures are case-study results rather than promises tracked to delivery.
>500,000 internal labor hours saved from AI/automation by end of FY2025 — promised Q2 FY2025
quietly-dropped Flagged as 'on track' on the Q2 FY2025 call but never quantified again in Q3–Q4 FY2025 or Q1 FY2026 after FY2025 closed; later calls cite generic AI-driven efficiencies/margins only.
~30% routine project-cost reduction from Skywire (Trusted Mission AI) as use expands across the grid value chain — promised Q3 FY2025
too-early Presented as current/routine capability (18k projects/25 utilities in prior 12 months) with no dated target or later scorecard on adoption or savings.
20% proposal-task efficiency, ~40% faster invoicing, 30%+ faster ready-to-test code for 1,000+ devs, 60% FAA-tool dev productivity lift — promised Q2 FY2025
delivered Disclosed as already achieved operational metrics, not forward guidance; not re-audited with numbers in subsequent calls.
PRICED-IN (REFINED)
LOW (room left)Est. revisions falling · Fwd P/E 38.1 · EV/Sales 1.3x
AI claim maps to National Security Solutions, Civil Segment, Defense Solution Segment
Sell-side price targets have stepped down (lastMonthAvg 152.5 < lastQuarterAvg 163.33 < lastYearAvg 201.13), while rating counts are largely flat with only a marginal rise in strong buys and more holds—revision momentum is not rising. On operating multiples, EV/Sales ~1.3x and TTM P/E ~11x are not stretched for a mature gov/IT services name, so rich “AI premium” is not evident in the multiple despite an inflated computed forward P/E driven by a stale low next-FY EPS (~$3.21 vs ~$11.8 in later consensus rows). AI efficiency and contract-win upside would most plausibly surface in National Security Solutions and Civil (with Defense Solutions as a secondary channel), and with falling targets on a non-rich valuation, that upside does not look fully baked in.
COVERAGE — ENTHUSIASM TRAJECTORY + CATALYSTS
6Q4 FY20245Q1 FY20259Q2 FY20258Q3 FY20256Q4 FY20258Q1 FY2026
AI enthusiasm across 6 calls — trend ↗ rising
AI shifted from pillar talk to labor-hour savings, Skywire, and named customer tools like MSTR.
RECENT AI CATALYSTS & NEWS
BUSINESS IMPACT - QUALITATIVE MATERIALITY
5/10 qualitative impact moderate medium-term · mixed evidence
Where AI matters: mission AI/cyber integration and internal delivery (Skywire, digmod)
Leidos has real named deployments (Skywire, VA medical-record AI, MFLC predictive analytics, Kudu cyber) and sizable contract wins, but disclosed adopter uplift is ~0.5% of revenue/EPS with weak AI attribution and no audited AI P&L or margin savings.
Caveats: No isolated AI revenue, savings, or margin attribution in filings/calls; Large pipeline ($24B cyber, $10B Entrust) is not AI-attributable or next-FY revenue; DigMod/digital modernization exposed to AI-driven price and hour compression; Outcome-based contracting shift may reallocate value away from incumbent labor models
AI DISRUPTION / CANNIBALIZATION RISK headwind · 6/10
GenAI and outcome-based contracting threaten T&M and labor-heavy digital modernization—the core of how much of ~$17B IT/services revenue is earned—even as classified mission integration, cyber, and autonomy moats stay durable; near-term quantified AI upside is too small to offset billable-hour and pricing pressure.
OPTIONS / MARKET STRUCTURE
option liquidity: fair
proxy inputs — dollar-ADV $143M · beta 0.57 · px $122.50
source: proxy (no options chain on FMP)
FMP /stable/ exposes no options-chain endpoint on this key, so ATM IV, bid-ask spread and open interest are unavailable. Liquidity below is a PROXY from dollar-ADV, beta and price level (a stand-in for option depth), not measured option-market data.
CONFIRMATION — INSIDERS · 13F · LANGUAGE
Mixed — insiders selling, institutions flat, management language 8/10 committed.
INSIDERS selling 3 open-market sell(s) vs 0 buy(s) — net distribution
INSTITUTIONS (13F) flat as of 2026-03-31: 99 new / 157 closed positions; 417 increased / 340 reduced; institutional ownership -0.87pp; -55 net 13F holders
MGMT LANGUAGE 8/10 committed Firm present-tense scaling and deployed Skywire; concrete AI wins; only soft optionality hedges.
commit “We are scaling with AI. AI is not a threat to our business model, it's an accelerant of our business model.”
commit “on the operational side, we've deployed Leidos' AI tools, Skywire across the new organization.”
commit “we've been selected to exclusively develop an AI-driven tool to automate the medical record transfer”
VERBATIM AI QUOTES
“Our scale, our unparalleled customer understanding, our ongoing corporate investments in our [ Golden Bolts ], our market-leading exploitation of AI, they are all allowing us to quickly adapt to this changing market dynamics and rapidly deploy learnings to all of our customers and all of our businesses.”
— Thomas Bell, Q1 FY2026
“By applying the predictive analytics from our Military and Family Life Counseling program, to this customer's Military OneSource needs, we are shifting the focus from reactive care to proactive force readiness.”
— Thomas Bell, Q1 FY2026
“Here, we've been selected to exclusively develop an AI-driven tool to automate the medical record transfer for service members from the Department of War to the Veterans Administration.”
— Thomas Bell, Q1 FY2026
“With the ability to automate everything from record retrieval to claim submission we are directly advancing both the Department of War and the VA's digital-first initiatives.”
— Thomas Bell, Q1 FY2026
“The acquisition has also accelerated our use of AI technology to deliver cyber mission software and operations with unprecedented velocity.”
— Thomas Bell, Q1 FY2026
“And on the operational side, we've deployed Leidos' AI tools, Skywire across the new organization. Teams are already seeing significant opportunity to deliver high-quality services and solutions to more customers faster and cheaper.”
— Thomas Bell, Q1 FY2026
“We have committed a multiyear $100 million investment in a marquee PE firm with a proven track record in the federal technology space. This partnership gives us early access to a vetted pipeline of high-growth disruptors with mission-ready capabilities in AI, advanced cyber and autonomy to name a few.”
— Thomas Bell, Q1 FY2026
“As I have said on past calls, we are not reacting to AI. AI is nothing new to Leidos. We are scaling with AI. AI is not a threat to our business model, it's an accelerant of our business model because at our core, Leidos exists to make customers' outcomes smarter and more efficient.”
— Thomas Bell, Q1 FY2026
“What AI is doing in very practical terms is simply compressing the bottom of the solution value chain. It's making it easier to do things that were historically hard to do but it does not obsolete things that are hard to get. So things like routine development, basic analytics, data integration, AI is compressing the time to deliver these results.”
— Thomas Bell, Q1 FY2026
“AI makes us faster and AI makes us more efficient. And all these shifts reinforce they don't erode the digital advantages that Leidos enjoys.”
— Thomas Bell, Q1 FY2026
“And as AI increases the clock speed of our customers' mission execution, that risk only grows. So in turn, this only further strengthens our position as the trusted mission AI experts, the sober, cerebral, experienced, relatable experts deploying AI for our customers' success in ways they know they can trust.”
— Thomas Bell, Q1 FY2026
“Our digital infrastructure business, the very large privileged position we enjoy today in our customers' digital ecosystem is not a vulnerability in an AI world, it's a strength because that ecosystem is foundational to how our customers are and will adopt AI securely and effectively.”
— Thomas Bell, Q1 FY2026
“Taken together, these product suites strengthen Leidos' position as the scaled, trusted integrator of AI-enabled mission systems in our customers' environments for their mission success.”
— Thomas Bell, Q1 FY2026
“Our offering combines Leidos' Gibbs & Cox expertise, commercial boat yard capability, Leidos' proven LAVA software, integrated command and control, our exquisite C5ISR and counter C5ISRT to deliver real-world scale effects for the U.S. Navy.”
— Thomas Bell, Q1 FY2026
“This is the U.S. Navy's first and only medium unmanned surface vehicle to reach this level of customer confidence, relevance and actual deployment.”
— Thomas Bell, Q1 FY2026
“building autonomous boats fast that have real mission effects and real mission payloads, that's the secret sauce.”
— Thomas Bell, Q1 FY2026
“My service treatment record were very small in a pilot phase. I mean that could turn into a very nice technology-oriented high revenue and profit stream for us over time as we prove out this capability.”
— Chris Cage, Q1 FY2026
“And that's why in my prepared remarks, I spent so much time talking about the fact that AI isn't a disruptor to us it's a propellant to our progress in this business. And that's why our digital infrastructure business isn't a wait -- waiting to be obsoleted by AI, but rather, it is our entry point and our foundation from which our customers are going to embrace AI and upgrade their capability.”
— Thomas Bell, Q1 FY2026
“We're very focused on leveraging those 2 things, our digital infrastructure business and our cybersecurity chops with our AI philosophy of exploiting these tools to move up the value chain in our customer spend and continue to help them have scaled effects at speed in an AI-enabled world.”
— Thomas Bell, Q1 FY2026
“The deployment of AI tools into Entrust are a big bonus that those engineers are enjoying, and we are enjoying having learned some technology tools that Entrust had that we're going to benefit from our electric services business on our side.”
— Thomas Bell, Q1 FY2026
“And with the deal's clear cross-sell revenue opportunities and cost synergies along with the deployment of our powerful AI-enabled tools, we will increase our competitiveness in this high-growth market.”
— Thomas Bell, Q4 FY2025
“Steve and his team are embracing our AI-first philosophy to exploit AI for a more efficient Leidos and for more effective solutions to our customers.”
— Thomas Bell, Q4 FY2025
“He has led the development of AI and machine learning capabilities for the Department of War, intelligence and civilian agencies.”
— Thomas Bell, Q4 FY2025
“I'm charging Will with driving significant outcomes in workplace efficiency through business process reengineering unlocked via the power of technology, particularly AI.”
— Thomas Bell, Q4 FY2025
“Will's mission is to deliver measurable transformational cost reduction outcomes for us and then help transfer them into our customer solutions.”
— Thomas Bell, Q4 FY2025
“increased use of AI to accelerate grid engineering execution within commercial energy.”
— Chris Cage, Q4 FY2025
“enhanced automation to deliver better, faster and cheaper solutions for our veterans.”
— Chris Cage, Q4 FY2025
“For us, the proliferation of AI isn't a threat, it's a force multiplier for everything we've always wanted to do.”
— Thomas Bell, Q4 FY2025
“That is why Will Johnson and our DigMod business embrace AI internally. We are very keen to make sure that we are the beta tester of how AI makes organizations faster and more efficient.”
— Thomas Bell, Q4 FY2025
“And we expect that beta testing AI internally to Leidos will not only deliver bottom line results for us but also help us prototype and then deliver top line benefits for our customers as they seek to exploit AI to make their operations more efficient.”
— Thomas Bell, Q4 FY2025
“So ultimately, we see AI as an opportunity to help our customers shift budgets away from maintenance and into high-value mission outcomes which is, of course, the business we're in, making their outcomes smarter and more efficient.”
— Thomas Bell, Q4 FY2025
ANALYST QUESTIONS ON AI
Q (Q4 FY2025, Scott Mikus (Melius Research)): Tom, we've seen a lot of software stocks come under pressure year-to-date because of concerns that AI could drive down the cost for companies to develop software internally. We also hear from defense companies that AI will accelerate the shift towards outcome-based contracting. But are you concerned that AI could cause a race to the bottom on price, particularly for digital modernization programs?
A: Thanks. Yes, Scott, I see and hear and certainly see the stock market effect of the fear of AI overtaking the world and understand why some people might say that. But for us, the proliferation of AI isn't a threat, it's a force multiplier for everything we've always wanted to do. So we continue to lean into all commercial technologies. It is part of the business model that has made Leidos successful, and we don't see AI as being any different. We want to look at it, understand it, exploit it, and be able to serve our customers with it no matter which model of AI, they want to embrace. That is why Will Johnson and our DigMod business embrace AI internally. We are very keen to make sure that we are the beta tester of how AI makes organizations faster and more efficient. And we expect that beta testing AI internally to Leidos will not only deliver bottom line results for us but also help us prototype and then deliver top line benefits for our customers as they seek to exploit AI to make their operations more efficient. So ultimately, we see AI as an opportunity to help our customers shift budgets away from maintenance and into high-value mission outcomes which is, of course, the business we're in, making their outcomes smarter and more efficient.