Gene Inger's Daily Briefing - for February 27, 2026

No ambush occurred - aside to former cheerleaders who saw only glamor in the overworked expensive (former) magnificent seven types... and even those old-guard types recovered somewhat toward the end of the session.

I'm just surprised to hear the degree of frustration by some analysts / pundits, given that the fundamental backdrop for 'what's wrong' with data-center huge AI has been known for a year (in our writing anyway) and technically for a few months. We were early in fading the Nvidia's of the world; but the argument in fact was correct... the world would eventually gravitate to quantum computing.

While that is 'not exactly' a reality yet; some of it is available (D-Wave mostly), and while the Quantum Computers are expensive, the degree 'of compute' is so exponentially higher than 'classic compute' that it's more cost-effective. In a very candid way I was surprised it took some big CEO's so long to 'get this' aspect, and some still don't. That was my argument about META, as 'cousin' Zuck made such a huge deal with Jensen for Blackwell, that he was locked-in.

Anyway over the last two days of old-guard software etc. getting kicked, we did not join the crowd calling them dogs (such pundits think they discovered something and they didn't; they just got caught-up in the frenzy sort of like at least some did with crypto too); and we thought they might washout soon.

It's not pertinent to us directly, because we don't own them and won't buy just for a bounce; however, we care a bit because of the backdrop psychology that a satisfactory overall market provides for the 'new-guard' that we sure do hold resolutely. In fact the pundits generally say 'nothing' at all about Defense and drone stocks (or rarely) and when they do it's just big-caps and not small-caps that clearly offer more risk, but also more leveraged potential, if they work-out.

Speaking of that, in Quantum, D-Wave held basically all day (good results but a smidgen of what's possible going forward); SoundHound made numbers as I will summarize below; and pretty stable behavior from most others..I do note that Draganfly dropped because of an offering; but they're expanding so sure need funds to do that (internationally expanding for them means to the USA). I think dilution for the purpose of growth (in this case) in constructive. We'll see if the 7 million shares offered at 7 is taken swiftly; 'Ondas style' but this is of course not ONDS. Despite DPRO working with the US Air Force it seems relatively undiscovered. I'm presuming it's got more deals / advances ahead.

Market X-ray: Thursday was sort of an irresolute session generally speaking; and I think whether or not we go into a fight with Iran means more than all the constant lamenting by commentators about the pressure on 'old-guard' tech.

Late today I'm hearing the favorable Geneva talks of the morning (Swizz time) were not repeated in the afternoon, and there's 'no sign' of a deal being made. Again; we have never moved / deployed this much of the active US Air Force and US Navy without such forces eventually be used..hence I believe this isn't a bluff (regardless of whether Trump wanted that), so engagement risk is real.

While the media worries about data-center spending, overpriced mega-caps and energy efficiency; we focus on the next-generation of Quantum Compute and generative AI that altogether are less demanding of gargantuan CapEx.

We also focus on 'Global Defense' and while the major defense plays for any combat that immediately occurs (like Lockheed) are expensive (we're fond of but not chasing LMT in the 600's); many others are not; including 'drone plays and drone parts too'... which have advanced but because nobody knows with any degree of confidence who 'wins what' outside of the major contractors of course, the 'War Dept.' has made it clear they want smaller players beyond all the confines of previous presumptions about the big defense companies.

Well we don't know for sure; so we have a spread of industry participants. In that regard if there's any one that's 'for sure' it would appear to be Ondas of course; 'coincidentally' our 'pick of the year for 2026' since last August (own initial positions even before then, first mentioned here around $1 a share). I'll expect more acquisitions by CEO Eric Brock and think ONDS will double or a bit more this year 'if' he execute and of course desire contracts actually close. I suspect they have been busy as bees security manufacturing capacity too.

My morning pre-opening (8 am ET) X-post:

Market X-ray: up early listening-in on the D-Wave analyst Call. Optimistic and constructive especially relating to Gate & Annealing combined compute sold as Quantum as a Service (allows residual income streams). QBTS Shares were robust on news release; dipped and rising again. Targets can be 40’s or so or higher depending on progress and deals.

Elsewhere tiny XTIA firmed on ER or prospects and can be robust as (drone) relationships expand .. UMAC , UAVS (marketing) and others. Yes the Trump family's involved as investors in XTIA and UMAC.

Also DPRO popped yesterday.. dipping pre/open Thursday and ideally pops back up (after digesting news of an offering to support their big growth plans). Also OPTX looks higher with their (Sentrycs) Warrants ver under-priced if you believe common will reach double digits in the next year (note Sentrycs is an ONDS company). Also NVDA sounds like it's embracing the generative voice Ai approaches of SOUN. As both CEO’s are reportedly 'friends', I ponder if there’s a bigger deal there. Soundhound reports later today.

(SOUN did report .. solid; like others could go up then dip even if higher later.)

Bottom-line: an irregular session probably concerned more about failure of negotiations in Geneva; while media drones-on about data-center CapEx. I would like to offer a couple thoughts about China, which isn't in a position to do much for Iran; and hopefully their air-defense gear is the same used to no effect in Venezuela (with Cuban soldiers being the casualties as you know).

F-22 aircraft visible on commercial satellite imagery mostly shows taking for granted that Iran won't strike first. China publishing photos, U.S. positioning assets, Israel debating first-move strikes.. all of it is layered-on signaling and of course the U.S. isn't moving all this force without probably intending using it; unless there is a 'real' deal to essentially disarm the theocratic regime that hijacked Iran years ago.

So far it's posturing, and probing. We hear POTUS was briefed on this day; as well as scheduled additional talks next week. Iran however isn't budging much as far as we know. Will Trump preempt them? Is there concern about more of their dubious air defense gear arriving from China? Hard to say. Geopolitics isn’t a single script. It’s multiple facets and none are optimized at the moment. So perhaps that’s what makes it unstable and even Oil now tracks sideways.

Sorry this is a bit disorganized.. too much on my plate; and more that I just do not have time to delve into. Perhaps more for the weekend.

Enjoy the evening!

Prior highlights follow:

'Teetering' bellwethers notwithstanding - we got our market rebound and do see continued stability or firmness in our 'new-era' focus stocks. Not bad for a couple days surrounding the SOTU Address and ahead of Nvidia result.

Of course neither is heavily tied to our 'Global Defense' & Border (drone) security theme this year, and actually assists our remaining (mostly D-Wave Quantum) holdings in Quantum Computing, which (especially with D-Wave having annealing & gate solutions available as 'Quantum as a Service', which means residual income streams if they sign-up a few more major companies. It also solves several power / CapEx issues, given more computer per (dollar) or Kilowatt, and that whether customers buy compute 'time' or a computer.

Nevertheless our more speculative focus surrounds a few off-beat AI-related companies, or even 'parts' manufacturers (like Unusual Machines), aside of course the actual drone makers. Then there's the one company that aspires to be the leading new-era 'vertically & horizontally' integrated overseer of so many aspects (soft and hard kinetic; autonomous de-mining and robtics too); and of course that's Ondas Inc. We're less interested in their merchandising of caps and hoodies (wouldn't mind one but soon it will be too warm in Florida haha), which they just started, as more focused on securing needed capacity.

I think ONDS will achieve that, and a couple others are scrambling to move in that direction also: particularly Draganfly; so as DPRO rallies, that's evidently being recognized slowly by investors. Others are still pending, like Eagle NXT (but they moved their HQ from Kansas to Texas and seem inclined to focus at least someone more on Defense and Commercial, than primarily Agriculture).

I should have mentioned that DPRO has a couple deals going in Florida now; and we're proud that Florida has become the 14th largest economy globally; so California, which always proclaiming being the 6th, might see competition.. as they follow New York with egregious financing approaches that deter lots of companies (and even regular citizens) from investing or moving there. I lived in LA for over 20 years (flying everywhere for TV and seminars and so on); so it dawned on me long ago how much 'friendlier' a tax state Florida was.

Also it's hard to put a number on XTIA, because they parked VTOL for now; basically distanced from Chinese DGI drones with 'Drone Nerds' purchase, made them cheap enough to attract the deal, and hence you got investment from a group including Unusual Machines and Eric Trump. So we have some involvement indirectly by owning UMAC, but decided XTIA was worth a bet as is new and pending outcomes... pondering if they get absorbed eventually.

Market X-ray: sure, there are lots of variables and geopolitical concerns that can provide relief or angina to the markets; and might not be negative for our new-era tickers; but that's hard to say. We are on the cusp of what should be a series of 'contract' awards; such as in Germany today to a couple start-up kinetic drone defense companies which got a couple of their early contracts.

I have no idea if any of our plays will expand in Germany; but I think so and in airports especially, and of course that would be Ondas. Also aside the efforts to get drone contracts, there's an 'aura' of the staffing at Ondas which strongly suggests ONDS as almost the 'robotic arm' of the Israeli Defense Forces, that they want to be just sufficiently distanced from not to impede foreign sales. So far I think they appear to be doing a superb job at balancing all such concern.

As to the market; it's a marathon of swimming truth and mega-cap falsehoods, whether from analysts, Government or the customers 'married' to Nvidia. We'll have to give all that some time, but we are 'not' invested in the core of all that, aside limited remaining investments in AMD and some for years in Apple.

Macro overwatch: as you know, I called for this respite, but also don't dispute comments (such as from JPM or UBS) suggesting a 'spike in private defaults could ripple across public markets', widening spreads and impairing liquidity. Sure, that was last week's story; we thought a rebound was coming (got that); and who knows when that resurfaces. Shorter-term fears of a 'war' with Iran spilling-over from the Middle East region might be paramount. And amid all of this the compelling demand for drones-in-quantity drive our new-era optimism (we sort of just want the old-guard to stay out of the way and let these run up; or for that matter get engaged in M&A activity with those and also Quantum.. I would think D-Wave gets pretty attractive given 'Quantum Cloud' availability).

The debt and liquidity issues are probably longer-term; hard or impossible to pin-down, and actually can be avoided 'if' growth is actually as strong as our Government suggest, and problematic if as weak as other politicians and/or a few economists suggests. We'll reflect on that as needed, but glad to say we avoided the pressure (could actually have shorted and profited) by warning of the excess in CapEx, mega-caps and the Bitcoin / crypto insanity for months.

For now with (sometime great patience) we await to see the winners, losers, or partial achievements, by a handful of new-era tickers looking for contracts or 'awards' this Spring; and knew with shutdowns and so on; including military tests that are just now concluding and pending evaluation, it would take time. Of course we hope many investors did not buy any of them and will chase the prices much higher of the winners, because that's how it usually works for the 'what works now' crowd that gets dour in weakness and euphoric in strength.

Meanwhile...the general take on LightPath's 'Investor Day' was a maturing or 'delivering' company, rather than simply updates on their 'new direction' vision.

LightPath spoke to hard demand and near-term conversion of orders; also of updated systems (such as non-germanium for G5 camera lenses). Of more interest, management spoke to higher backlog of around 103m vs 97m as of year-end, so that's better. Plus roughly 70% of backlog is scheduled to ship in this calendar year. Of course the majority tied to defense and surveillance (as includes drones for military and public safety, plus pending missile business a lot of folks are waiting to hear more aobut), gives improved revenue visibility.

I view LPTH as a continuing hold; have tended to fade a bit on spike; and still hold some shares from around 1.69; the day I pointedly said was just prior to a meeting with CEO Rubin. Sam has done a commendable job transforming a company saddle with local issues, becoming commoditized at the time; plus he cleaned-up former corruption at their Chinese facility (China now minimal). As a smaller hold these days than 'say' an Ondas, we're not chasing (there's not a reason to); but holding...and they're involved with ONDS for that matter.

We are not privy to details; but there seems to be intertwined dealings which work to the betterment of customers, products and shareholders, perhaps of all of these, to wit: LPTH, ONDS, UMAC, KOPN, XTIA.. perhaps even more. And I do not know the answer as to whether others like DPRO buy from them.

Also.. Salesforce made numbers; solid guidance but like others, not exactly good enough in the mode of hyperscalers just now. Again we're not in them, having warned for months that they were due for correction or just exhausted.

While rebounds help the overall psychology at times; we're not focused on the huge mega-caps, and do appreciate when our 'new-era' tickers respond well. I also note Snowflake made numbers and rallied; again we're not playing but that one did rally. Service now reported and moved strongly by up 16 initially; then it went flat. I'm not going to sit here and watch post-market trading in the hours ahead. (Salesforce did make a commitment for 'buybacks', and that's a key area the Administration discourages because they want actual growth.) Another we don't follow is Synopsys...mediocre guidance and little price shift.

So the 'Midas Touch' was anticipated for Nvidia... and again only psychology as impacts the list matters to us, as we're not going to trade such high levels. (I might correct as occasionally I will trade 'Calls' in them like Apple recently; but very short-duration and in the AAPL case I took a quick gain and that's all; separate and apart from old long-term split-adjusted positions from about 57.) NVDA made numbers and gave stronger margin guidance; shares up a few. Good enough for easing nerves over the issue; and allows stability for now in a lot of stocks I suppose, with some of this day's late faders likely recovering.

If anything was solid today it was our D-Wave, now above 20 again; and we'd pointed-out the significance of 'Quantum as a Service' (Cloud) offering, given the potential for residual income streams rather than merely selling computers to companies which is basically a one-time shot... also let's companies try the Service and later buy full units if they decide that's best for their operations. At this point holdig long-term in QBTS (believe it or not new members; since 2).

And two more.. Redwire... (RDW and BBAI are both AE Industrial Partners holdings and both have been controversial and rocky at times). The ER was in general ok; but shares sold off. Perhaps as to how inefficiently they used the ATM offering. They used about half under $7 average, essentially diluting by twice what might be essential. Their financial runway is secure for 10 or so months, with half their remaining ATM available.

Overall very good ER and they can avoid tapping shareholders more, if they do get more contracts with up-front payments such as for rockets or drones. As long as they keep projections reasonable in a talk tomorrow, it could be a year of decent growth. They were resilient during the recent shutdown; a plus. Oh shares were up about .20 during the day; and .50 after the Close.. there's no change in anticipating it moves higher as the year 'and contracts' evolve.

Lastly... recently emphasized XTI Aerospace dipped for a couple days after I wrote XTIA up more; it stabilized and now moves up on the 'first ever' forward guidance and it's positive. I continue to anticipate higher prices over time. And speaking of time, I can't allocate more tonight; so that's about all I can cover.

Bottom-line: we see much narrower markets in the expected broad rebound, which can be a healthy indication, while also reflecting very understandable trepidation's about so much. Not just AI / liquidity / debt; but also of 'wars'. Speaking of; I got email from a resort in Puerto Vallarta assuring government 'safety of tourists as priority', while they mourn the 25 lost Mexican troops in the battle against the Cartel. The hotel says there were no civilian injuries.

The market faded in 'some' tickers late in the day; presumably just sort of the 'baited breadth' (pun on breath) ahead of the varying earnings reports stream. Ondas got clipped late (volatility is not unusual), and LightPath peaked more or less around the time of their Presentation; and that's not unusual for any of the stocks, which were bid up ahead of supposed news; then profit-taking. So it's more pertinent what they do after whatever opening is seen Thursday, as far as traders are concerned. We're not trading these particular tickers often (just investing), but of course monitoring action.

The tickers (new-era) that held best into the finale: OPTX, QBTS and DPRO; not that such action (one way or the other) has much predictive value if any.

~

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Stay safe,

Gene

Gene Inger

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