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    Is Leidos Holdings (LDOS) Undervalued As New AI And Cyber Contracts Draw Interest?

    Simply Wall St·10/23/2026 10:24:32
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    Leidos Holdings (LDOS) just landed two fresh multi year defense contracts worth a combined US$255 million, tying its artificial intelligence and cyber expertise even more tightly to core U.S. military systems.

    Those contract wins have arrived alongside a sharp short term rebound in Leidos Holdings, with the 1 day share price return of 4.26% and 7 day gain of 8.65% feeding into a 90 day share price return of 20.14%. However, the share price is still down 26.57% year to date, and the 1 year total shareholder return has fallen 28.79%, while the 3 year and 5 year total shareholder returns of 51.33% and 45.80% respectively point to a story where recent weakness contrasts with earlier compounding gains.

    Scan how Leidos Holdings compares with other defense focused AI contractors by reviewing our curated list of 55 AI infrastructure stocks in the sector.

    Leidos Holdings has just bounced hard on fresh contract news, yet the share price is still well below where it started the year. Does it make more sense to commit capital now, or to wait for a cleaner entry after this spike?

    Most Popular Narrative: 11% Undervalued

    Leidos Holdings closed at $134.73, while the most widely followed narrative pegs fair value around $151.73. This frames the recent contract wins inside a broader story about cash generation, capital returns, and a large contracted backlog.

    The current valuation implies the market is not fully crediting Leidos for its cash generation, low capital intensity near 1 to 1.5% of revenue, and large awarded and visible pipelines in munitions, air defense, AI enabled platforms, and energy infrastructure. This narrative interprets those factors as indicating a potentially undervalued, bullish setup for the share price.

    See why 59 investors see Leidos Holdings as 11% undervalued.

    Result: Fair Value of $151.73 (UNDERVALUED)

    Still, if U.S. federal budgets shift away from defense and homeland priorities or Health margins stay under pressure, the Leidos Holdings undervaluation story could easily unravel.

    Find out about the key risks to this Leidos Holdings narrative.

    Next Steps

    If you are uncertain whether the mixed sentiment around Leidos Holdings should make you cautious or constructive, and you want to move quickly from headline to hard data, review the full balance of 3 key rewards and 2 important warning signs

    Looking for more investment ideas beyond Leidos Holdings?

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