WillItSurvive
IT services and system integrators · United States

Leidos Holdings

leidos.com ↗

Leidos runs IT, cyber, and engineering systems for the US government and military.

Hard to displace
Assessed 20 July 2026 · Evidence as of 20 July 2026
Strong structural protection; the business model survives ai pressure.
On the recordSince 20 July 2026 · Checkable from August 4, 2026 · Every call on the record Checkpoint: Q2 FY2026 earnings report
The call

Leidos keeps winning big government awards on clearance and history, but softening bookings and margin pressure in Health and Defense show where the slow bleed is.

Leidos is a big contractor that builds software, manages data, and runs computer systems for the military, intelligence agencies, and other government departments. It is very hard for rivals to replace because the government requires security clearances and special facility certifications that take years to get; big AI companies like OpenAI and Google cannot do this work directly, so they have to work through companies like Leidos instead. The real worry is not that someone will put Leidos out of business, but that artificial intelligence will let the company do the same work with fewer people, which would cut the money Leidos makes on each project, and the company's recent contracts look a bit weaker than they used to, so the next few quarters will show whether Leidos is staying strong or slowly shrinking.

Why
01
AI pressure: None apparent. Frontier labs like OpenAI and Anthropic can't touch classified DoD work directly, so they route through Leidos instead of replacing it. Could AI do the core job? Unlikely.
02
Bigger players: Palantir, Booz Allen Hamilton. Palantir and Booz Allen compete for AI-flagged recompetes like Defense Enclave Services, but haven't taken a marquee vehicle from Leidos yet. Could a giant copy it? No, they are blocked.
03
What protects it. Security clearances, facility certifications, and years of contract incumbency that no AI lab or new entrant can buy or route around.
What would change this call
Book-to-bill ratio for Q2 and Q3 FY2026 (reported after August 4, 2026). Sustained sub-1.0x bookings would show contracts and revenue pipeline shrinking.
Outcome of major recompetes like Defense Enclave Services or State Evolve IDIQ. A loss to Booz Allen, Palantir, SAIC, or CACI would show structural share loss to rivals.
Entrust integration progress and margin trends in Q2/Q3 FY2026 earnings. Margin misses would show acquisition strain rather than successful AI-embedded repositioning.
Key numbers
  • FY2025 revenue $17.17B, up 3.07% YoY (2026-02-17)
  • Q1 2026 book-to-bill fell to 0.8x vs 1.1x TTM (2026-05-11)
  • ~87% of revenue comes from US government contracts (2026-06-27)
Named risks
  • ~87% of revenue tied to U.S. government funding, exposed to shutdown and budget cycles. Severity: high
  • Q1 2026 book-to-bill fell to 0.8x, signaling weaker future bookings. Severity: medium
  • DHS terminated a $2.4B cybersecurity contract for convenience in May 2025. Severity: medium
  • Health segment growth flattening with margin pressure in Defense/Homeland segments. Severity: medium
  • Ongoing DOJ antitrust/FCPA subpoenas and employment litigation (2022-2026). Severity: low
Rivals, as read in July 2026
RivalDirectionEvidence
Booz Allen HamiltoncontestingRecruited Anthropic's former public-sector lead for AI push; BAH stock -23% trailing year to Mar 2026
SAICgaining onLDOS stock +35% vs SAIC -5% trailing year to March 2026
CACI Internationallosing toCACI stock +72% vs LDOS +35% trailing year to March 2026
Northrop Grummanlosing toNorthrop stock +62% vs LDOS +35% trailing year to March 2026
General Dynamicslosing toGeneral Dynamics stock +40% vs LDOS +35% trailing year to March 2026
Questions people ask
Is Leidos profitable in 2026?
Yes. Leidos reported FY2025 (ended Jan 2, 2026) revenue of $17.17 billion, up 3.07% YoY, with net income of $1.45 billion, per its Feb 17, 2026 earnings release. Q1 FY2026 revenue was $4.40 billion, beating consensus with non-GAAP EPS of $3.13 versus $2.88 expected.
Could AI replace Leidos's government contracts?
Unlikely soon. Frontier AI labs cannot serve classified DoD workflows directly due to clearance barriers, so they route through cleared primes like Leidos. Leidos instead embeds AI into deliverables, such as its $869 million Army MACRO II decision-advantage contract awarded April 30, 2026.
Who owns Leidos Holdings?
Leidos is a standalone public company trading as NYSE: LDOS with no controlling parent, and market capitalization of approximately $13.4 billion as of July 20, 2026, per gurufocus.com. It has been an active acquirer, not an acquisition target, closing a $2.4 billion Entrust deal on March 30, 2026.
Who is Leidos's biggest competitor?
Its closest peers are Booz Allen Hamilton, SAIC, CACI International, and Peraton. Over the trailing year to March 2026, CACI (+72%), General Dynamics (+40%), and Northrop Grumman (+62%) outperformed Leidos's stock (+35%), while Booz Allen (-23%) and SAIC (-5%) lagged, per Trefis data dated 2026-03-07.
Why is Leidos stock down in 2026?
Leidos stock had fallen roughly 37% from its 52-week high of $205.77 as of July 10, 2026, trading near $98.86 to $127.87, amid multiple analyst price-target cuts citing Health segment weakness, soft Q1 2026 book-to-bill of 0.8x, and Defense/Homeland margin pressure.
Did Leidos lose any major government contracts recently?
Yes. The Department of Homeland Security terminated a $2.4 billion cybersecurity services contract with Leidos 'for convenience' in May 2025, per Wikipedia's June 16, 2026 entry. Leidos has since won large new awards like the $10 billion-ceiling State Department Evolve IDIQ (May 21, 2026).
Timeline
  • 2026-07-17Leidos wins $65M Navy ONI Hopper Center support contract
  • 2026-05-21Leidos awarded up to $10B ceiling State Dept Evolve IT modernization IDIQ
  • 2026-05-20Leidos secures $626M DISA cybersecurity and cyberspace support tasks
  • 2026-05-12Leidos awarded $2.7B Army/Navy hypersonic weapons production contract
  • 2026-05-11Leidos raises FY2026 guidance to $18.0-18.4B revenue
  • 2026-05-05Leidos reports Q1 FY2026 revenue $4.40B, beats consensus EPS
  • 2026-04-30Leidos wins $869M Army MACRO II AI decision-advantage contract
  • 2026-03-30Leidos closes $2.4B acquisition of Entrust
  • 2026-02-17Leidos posts FY2025 revenue $17.17B, net income $1.45B
  • 2025-05-28Leidos acquires Kudu Dynamics for ~$300M for AI cyber capabilities
  • 2025-05DHS terminates $2.4B cybersecurity contract with Leidos for convenience
Revision history
20 July 2026
First assessed. Hard to displace. The text above is fixed as of this date and is not edited afterwards.
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