TheChek News Flow

Trump’s Greenland threats inject urgency into region’s efforts to reduce its reliance on American technology

DAVOS, Switzerland—Rising tensions with the U.S. are spurring new plans in Europe to do something that has long seemed impossible: break with American technology in favor of homegrown alternatives.

President Trump this week dropped his threat to take control of Greenland by force if necessary. But even the possibility of armed conflict with allies has injected new urgency into long-simmering debates in Europe about how to reduce its reliance on U.S. tech infrastructure and tools that support swaths of the economy.

The worst-case scenario for European officials? A White House executive order that cuts off the region’s access to data centers or email software that businesses and governments need to function.

“When you start having these kinds of thoughts, even if they’re just thoughts, you have to start thinking: How would that work?” asked Bernard Liautaud, managing partner of Balderton Capital, a European venture-capital firm. “Can you imagine Europe functioning without American technology? It’s very hard to imagine.”

Trump’s approach to Greenland has pushed European officials and diplomats to toughen their views on the need for Europe to curb its dependence on the U.S., from tech to defense to trade.

The European Parliament on Thursday passed a “technological sovereignty” resolution that supports using public procurement criteria to favor European products where possible and proposes new legislation to promote European cloud providers.

The European Union’s executive arm is currently working on new legislation aimed at promoting tech sovereignty, according to officials familiar with the matter. Security risks posed by American technology have been openly discussed as part of that work, one of the officials said, adding that such talk would have been unthinkable just six months ago.

Officials and lawmakers said the bloc’s focus on tech sovereignty is about curbing dependencies and boosting European companies, not an attempt to ditch American tech entirely.

A potential “decoupling” of Europe and U.S. tech was a hot topic of discussion among business leaders and policymakers at the World Economic Forum in Davos, Switzerland, this week. Many said it would be a complex undertaking given the breadth of American tech used, from chips and cloud services to AI models and other software.

The scale of Europe’s dependence on U.S. tech has never been so large, particularly for cloud-computing services from companies including Amazon.com, Google and Microsoft. In 2024, European customers spent nearly $25 billion on infrastructure services from the top five U.S. cloud companies, or 83% of the total market in Europe, according to research firm IDC.

“Big European companies should use European software,” Nicolas Dufourcq, head of French state-owned investment bank Bpifrance, said in a television interview Thursday. “Choosing American digital technology by default is too easy and must stop.”

While Europe helped lead the mobile-phone revolution with companies including Nokia and Ericsson, the continent has lagged behind the U.S. and China in the internet age—failing to produce tech giants on the same scale. Over the years, European governments helped finance or promote multiple homegrown search engines but found little traction to rival Google.

Many European entrepreneurs blame Europe’s plight on a risk-averse culture, fragmented market and onerous regulations. That is in large part why the EU is now trying to relax some of its digital rules, though progress has so far been slow.

European efforts to escape U.S. tech dominance for privacy or commercial reasons have been a recurring theme for decades.

The issue heated up in 2013, after former U.S. National Security Agency contractor Edward Snowden leaked information about U.S. surveillance practices—purportedly including data at U.S. tech giants. The episode was cited when the EU’s top court struck down a trans-Atlantic data-sharing deal.

In 2018, under the first Trump administration, European companies and policymakers again expressed concern after the U.S. passed a law that explicitly granted law enforcement the authority to request data that American cloud providers have stored overseas.

In both cases, U.S. companies managed to keep and even increase their European market share by building more data centers to house clients’ data on European soil and pledging not to send it elsewhere. In recent years, the tech companies have gone further, adding options to store data with subsidiaries or partners under European control—something European executives in Davos said they are seeking.

Since Trump’s re-election, European officials have asked some American cloud providers to ensure that their customers in key sectors, such as energy, can easily move their data-center infrastructure to local providers if a U.S. action interrupts their service, people familiar with the matter said.

In Germany, Microsoft recently expanded a deal with Delos Cloud—a subsidiary of SAP—to deliver the U.S. company’s services under its own ownership and control.

Microsoft over the past year has restructured corporate subsidiaries, installed boards filled only with Europeans and taken other steps to establish outposts in the region that can meet customer demands for more localized cloud and AI services, the people added.

Amazon last week launched a “sovereign cloud” service in Europe, which is run by EU citizens and based in Germany.

Google has in recent years also created partnerships with local companies in several European countries for its sovereign cloud service, including a joint venture in France that is fully operated by a local business—insulating clients from potential American requests to limit access or snoop.

But governments haven’t so far asked for completely domestic setups because they still want to benefit from the technology and scale of working with an array of partners, said Matt Brittin, who until last year ran Google’s operations in Europe, the Middle East and Africa. “What they’re really looking for is a degree of control and safety and security,” he said.

The stakes are high for American tech companies. They exported more than $360 billion in so-called digitally deliverable services—including advertising and artificial-intelligence tools—to Europe in 2024, according to U.S. government data.

Google parent Alphabet, for example, generated 29% of its nearly $30 billion in third-quarter revenue from Europe, the Middle East and Africa.

U.S. tech giants have also invested significantly in Europe, opening major offices, building infrastructure, acquiring businesses and operating research labs.

France and Germany have been particularly vocal about the need to foster tech independence since the new Trump administration began warning European leaders to fall in line behind the U.S. Germany’s digital ministry says it is testing an open-source alternative to Microsoft workplace and collaboration tools, called openDesk, both on workstations within the ministry and at some German federal agencies.

In November, German Chancellor Friedrich Merz hosted a digital-sovereignty summit with France to push for loosening EU tech rules, European preference in tech purchases, and new investments in data centers.

French President Emmanuel Macron has made promoting local companies and loosening EU regulations a core tenet of his second term. He has tried to help Mistral AI—one of Europe’s only leading artificial-intelligence developers—secure big corporate customers. He has also sought to attract tens of billions of dollars in AI data centers to France, touting cheap electricity from nuclear power.

“Our willingness is clearly to do everything we can to build European champions, ” Macron said at the German digital-sovereignty summit. “This is just a refusal of being a vassal.”

US unveils national defence strategy to counter China in Indo-Pacific

New plan prioritises security in the region and a renewed focus on the western hemisphere

The US will boost its military capabilities in the Indo-Pacific as part of a new defence strategy designed to ensure China cannot block American access to a region that is becoming the global centre of economic power.

In a national defence strategy released on Friday evening, the Pentagon said it would focus on defending the homeland — with a concentration on the western hemisphere — and on deterring China in the Indo-Pacific.

The NDS said the security and prosperity of the US were linked to America’s “ability to trade and engage from a position of strength in the Indo-Pacific”.

But the document also took a softer approach on China than President Donald Trump’s first NDS in 2018, which said Beijing wanted to shape the world in the image of its “authoritarian model”. It did not mention Taiwan, which is the most likely place where a conflict could break out between the US and China.

The document comes one month after Trump released his national security strategy, which prioritised the western hemisphere, which the NDS said would help counter narco-terrorism, in addition to securing access to Greenland, the Gulf of Mexico and the Panama Canal.

The NDS said that if China dominated the Indo-Pacific, it would be able “to effectively veto Americans’ access to the world’s economic centre of gravity”. The strategy document also urged allies to do more to boost collective defence in the region.

It said the US would “erect a strong denial defence along the first island chain”, referring to an area of the Indo-Pacific that stretches from Japan, past Taiwan and the Philippines, to Borneo and the Malay Peninsula.

The strategy said Trump sought “a stable peace, fair trade and respectful relations with China” but from a “position of strength”. It added the Pentagon would widen the range of communications with the Chinese military to support “strategic stability” with Beijing.

The NDS said the US was not trying to dominate, strangle or humiliate China. “Our goal is simple: To prevent anyone, including China, from being able to dominate us or our allies.”

It added Washington wanted to set the military conditions for “a balance of power in the Indo-Pacific that allows all of us to enjoy a decent peace”.

The NDS claimed the US would no longer be distracted by “interventionalism, endless wars, regime change and nation building”. But it comes after the Trump administration has bombed nuclear facilities in Iran, captured Venezuelan president Nicolás Maduro and sparked a crisis with Europe over Greenland.

The document said Russia would remain a “persistent but manageable threat to Nato’s eastern members for the foreseeable future”. On the Middle East, it said Iran remained the biggest threat and appeared “intent on reconstituting its conventional military forces” and could try again to build nuclear weapons.

Calling Israel a “model ally”, the Pentagon said the US’s Middle Eastern allies and partners should shoulder most of the burden of combating Iran, but that Washington could take “focused, decisive action” in the region.

Trump on Thursday said Washington was building up military assets in the Middle East “just in case”. The region had been braced for US intervention as the Iranian government carried out a brutal crackdown on protesters this month, but the president softened his rhetoric after lobbying from Israeli and Arab officials.

According to the strategy, the Pentagon will create “credible options” to guarantee military and commercial access to Greenland, the Gulf of Mexico and the Panama Canal. It claimed the influence of adversaries had grown in those areas.

After repeatedly threatening to use military action to take Greenland, Trump on Wednesday backed down and ruled out the “use of force” to bring the Arctic island under US control, agreeing instead to pursue negotiations with Denmark and Nuuk.

The strategy noted the US would work in “good faith” with Canada and Latin American countries, but warned the Pentagon was “ready to take focused, decisive action” unilaterally if those countries did not “do their part to defend our shared interests” in the western hemisphere.

The Persian by David McCloskey — a vivid tale of spies, lies and the Iran-Israel shadow war

A masterful new thriller from the former CIA analyst is informed by a profound understanding of the Middle East and the forces that seek to reshape it

In The Thousand and One Nights, the dazzling collection of ancient fables, the narrator Scheherazade must tell her husband a new tale each night to stay alive. Her spouse, King Shahryar, was enraged by his former bride’s infidelity. He takes revenge by marrying a new virgin each night, then has her executed in the morning. Until he weds Scheherazade, who entrances him with her vivid storytelling and so escapes being put to death.

Like Scheherazade, Kamran Esfahani, the hero of David McCloskey’s outstanding new thriller, is also telling stories to stay alive — to an equally dangerous audience. Esfahani, a Persian Jewish dentist living in Stockholm, was recruited by Mossad officer Arik Glitzman to Caesarea, an elite unit operating in Tehran, killing high-value Iranian targets. But the mission goes wrong and Esfahani is now incarcerated in a Tehran prison, a captive of Iran’s brutal intelligence service.

Held for three years, he has been savagely tortured. Esfahani had dreamt of relocating to California — and fighting in Israel’s covert war seemed to offer a path to beaches and sunshine. Instead, his new life has brought him to a grim cell and a life of terror as he writes out, again and again, his account of the Mossad operation for his captor, the sinister General.

With his fourth book, McCloskey, a former CIA analyst who worked across the Middle East, once again deploys his insider knowledge with skill and verve. The framing of the narrative, told through Esfahani’s recollections, is an audacious approach but the story never flags. McCloskey brings every location alive, from Esfahani’s cell to Tehran’s pollution-racked suburbs and the villas of Tel Aviv. The terror of life under the ayatollahs runs through the book like silken threads in a fine carpet. But there is warmth and affection for Persian culture, from its literature to its subtle cuisine.

The notable strength of this book, like the rest of McCloskey’s oeuvre, is the depth and complexity of his characters, especially its female cast. Roya, a vulnerable Iranian widow who is Esfahani’s unwitting asset, moves between fear and hope, fury and desperation as she is drawn deeper into the operation. All the while she remains ferociously protective of her young daughter Alya, a child so vividly drawn she jumps off the pages.

McCloskey is sharp on the moral compromises and powers of deceit needed to make an effective intelligence agent. When Esfahani rescues Roya from an apparent kidnap attempt, where much fake blood is spent, she thanks him, sobbing on his shoulder as their fingers entwine, to his surprise and pleasure. In response he sees Glitzman in “some gloomy recess” of his brain, “stand, smile, and begin, very slowly, to clap”. The Iranians of course hit back against Caesarea. Their drone strikes inside Israel, using local agents, have deadly results. The traitors’ motives and backstories are briefly outlined but this plotline could have been developed in more depth. A fatal Iranian drone in Tel Aviv would cause a political earthquake, one that would immediately reverberate through the intelligence establishment.

In real life, the stories now coming out of Iran are a tableau not of fantasy but horror: thousands of protesters mown down by the regime. The savage rule of the ayatollahs may fall apart at any moment or endure. Eventually, it will surely collapse. When it does, Mossad’s shadow war will have played a key role. Read The Persian to understand more. The ending will bring a smile to your face. This is a masterful work of fiction — one deeply informed by a profound understanding of the Middle East and the forces that seek to reshape it, both light and dark. 

The Persian by David McCloskey Swift Press £20/WW Norton $29.99, 400 pages

Catholic Church often has a presence in remote communities impacted by resources projects

Pope Leo XIV will meet key executives in the mining and energy sector at the Vatican on Saturday, including the heads of BHP and Vale, for a discussion about ethical approaches to the resource sector. 

The private audience with the Pontiff, scheduled for 11am, will bring together more than a dozen titans of industry such as Mike Henry, chief executive of BHP, Gustavo Pimenta, chief executive of Vale and Ivanhoe executive chair Robert Friedland. 

With an estimated 1.4bn followers globally, the Catholic Church often has a presence in the remote communities impacted by resources projects, amid mounting competition to extract metals such as copper, gold and silver.

The meeting will be an early indication of how Pope Leo, the first US born leader of the Catholic Church, plans to approach the industry. 

Leo’s Argentine predecessor, Pope Francis, at times took a combative line with the extractives industry. In 2018 he told the heads of BP and ExxonMobil that they should stop exploring for new fossil fuels, and that “energy use must not destroy civilisation”. 

Pope Leo is expected to be less confrontational in tone. Analysts say the Pontiff shares his predecessor’s concerns about the impact of extractive industries on the world’s most vulnerable people, particularly as a result of his years spent in Peru, but is likely to take a more pragmatic approach.

“For the church, the basic message is always the protection of human dignity and the human good,” said Severine Deneulin, co-author of last year’s Vatican report, Catholic Approaches to Mining, and an associate fellow at Oxford university’s Institute for Overseas Development. 

The impact of the extractive industries on nearby communities is particularly salient for Catholic clerics in Latin America, where Leo, then known as Robert Prevost, spent nearly 20 years until 2023, when Francis summoned him to Rome. He remained closely involved with the Latin American Catholic Church as president of the Pontifical Commission for Latin America — the group that organised Saturday’s meeting.   

The mining industry has been working with faith groups including the Catholic Church for more than a decade to try to improve relations. 

“Part of the dialogue is to help the industry recognise our obligations, through the lens of the church. It can make us better at being more responsible,” said Rohitesh Dhawan, head of the International Council on Mining and Metals, which represents major mining companies. “And part of it is to better the understanding of faith leaders, of what mining is and isn’t.” 

Saturday’s meeting is not expected to include any public remarks. BHP, Vale, Ivanhoe Mines and the Vatican all declined to comment.

In previous speeches Leo has acknowledged that the development of new technologies depends on mining and minerals, but expressed dismay at the conditions under which they are often extracted. 

“Without coltan from the Democratic Republic of Congo, for example, many of the technological devices we use today would not exist. Still, its extraction depends on paramilitary violence, child labour and the displacement of populations,” he said in October. 

“The dynamisms of progress should always be managed through an ethic of responsibility,” he added in the same speech.

Google AI boss tells FT that despite unsustainable exuberance in the tech sector, ‘if the bubble bursts we will be fine’

Google DeepMind chief Sir Demis Hassabis has warned that exuberance in parts of the AI industry looks increasingly “bubble-like”, while arguing that its scale and technology leave the Big Tech group well placed for any potential reckoning.

The British Nobel laureate told the FT that the level of investment in some parts of the tech industry had become detached from commercial realities.

“Multibillion-dollar seed rounds in new start-ups that don’t have a product or technology or anything yet do seem a little bit unsustainable,” he said at the World Economic Forum in Davos this week, adding this may lead to “corrections in some parts of the market”.

The comment comes as other tech leaders in Davos, such as Nvidia’s Jensen Huang and Microsoft’s Satya Nadella, batted off concerns of over-investment in the sector.

Venture capitalists have rushed to buy into groups such as former OpenAI executive Mira Murati’s Thinking Machine Lab, which was valued at $10bn just six months after it was founded and despite giving few details on what it is building.

The start-up recently lost a number of key staff, raising doubts about its long-term prospects. There have also been investor concerns over the multibillion-dollar race to build AI infrastructure, including a series of debt-fuelled deals that rely on usage of the technology to keep growing.

Hassabis said demand for AI across Google’s products, such as its latest Gemini 3 model, was stronger than ever, insisting it would prove to be “the most transformative technology probably ever invented”.

“If the bubble bursts we will be fine,” he said. “We’ve got an amazing business that we can add AI features to and get more productivity out of.”

Last year, Google rebounded from a difficult period since the release of OpenAI’s ChatGPT in 2022. Its AI models now surpass the performance of its smaller rival and the search giant is closing the gap in chatbot users.

The momentum has driven parent company Alphabet’s valuation past $4tn, making it the second-largest company in the world after chipmaker Nvidia.

Hassabis also argued western companies still have a lead against China on AI development.

About a year ago Chinese group DeepSeek surprised Silicon Valley by developing a powerful and free-to-access AI model for a fraction of the price of its American competitors. The release also shook US public markets, where there is a heavy concentration of capital in Big Tech stocks.

Hassabis said there had been “overreaction in the west” to DeepSeek, arguing “the Chinese labs haven’t proven they can innovate beyond the frontier yet”. He said US tech companies still had a lead of “six months or so”.

However, in the past year, China has invested heavily in developing leading models that can be freely used by developers in applications, leapfrogging American rivals in “open” AI development.  

Hassabis admitted Chinese companies were “more focused on the near-term applications”, in the hunt for immediate revenues “rather than maybe these more research-heavy frontier capabilities” required to achieve artificial general intelligence — or machines that can surpass human abilities. That remains the lofty goal of US-backed groups such as DeepMind, OpenAI and Anthropic.

Debate at Davos also centred on the growing risks and harms around AI.

In recent months, OpenAI was hit by lawsuits over claims its chatbot had encouraged young people to commit suicide. Elon Musk’s xAI was heavily criticised after it emerged its Grok chatbot had been used to generate sexualised images of women and children.

Hassabis said it was imperative to focus on safe and responsible AI development, and for the AI industry to show the general public what AI’s benefits are.

“For us, that’s doubling down on our AI for science and AI for medicine work and things like that, which are kind of unequivocal goods in the world,” he said.

The DeepMind co-founder also said Google’s AI models could help the Big Tech group realise its long-held vision of smart glasses. The company first introduced smart glasses over a decade ago, but the devices were widely derided and failed to catch on with consumers.

Last year, Google announced partnerships with fashion groups such as Warby Parker seeking to introduce new AI-infused spectacles for consumers. 

“Maybe we were a bit too ahead of our time when we first started this 10-plus years ago at Google with the devices,” Hassabis admitted. “What was missing was a killer app for that. I think a universal digital assistant that helps you in your everyday life could well be that killer app.”

Hassabis is widely seen as central to Google’s future plans, having gained more control and responsibility over its AI operations in recent years. However, he dismissed speculation that he would, in future, step up to succeed Alphabet chief Sundar Pichai.

“No, I’m very happy with what I’m doing. I love being close to the science and the research,” he said, adding, “there’s only so much one can do in the day and still leave enough time for serious thinking”.

2026 M&A Landscape: High-Conviction "Whale" Targets & Strategic Bolt-ons

Thesis: With MRK and BMY needing to fill $10B–$20B revenue holes, 2026 is a "seller's market" for de-risked Phase 3 assets. Below are the targets ranked by strategic leverage.

I. The Strategic Whales (Highest Leverage)

II. The Tactical & Specialty Assets

2026 M&A Catalyst Calendar

• The "Viking Premium": Viking is the only "Kingmaker" asset left. Because it sits at the intersection of Obesity and NASH/MASH, a bidding war between Merck and Pfizer could push the premium toward 100% ($24B+).
• The "Inventiva Multiplier": IVA trades at a massive discount because of past funding fears. If NATiV3 results in H2 2026 are positive, the $1.7B takeout estimate is actually conservative—it could easily scale to $3B+ if it shows "best-in-class" fibrosis reversal.
• The "Abivax Floor": The 72% premium is based on the current Eli Lilly bid rumors ($17.5B). If Merck enters the fray to protect its immunology turf, this becomes a 2026 "Mega-Deal."

THE ABBVIE 2.0 PLAYBOOK: MERCK & BMS 2026 OUTLOOK

Thesis: We are repeating the AbbVie maneuver. Between 2025 and 2030, the industry faces a $236 billion patent cliff. However, 2026 is the year the market stops fearing the loss and starts pricing the replacement. We are shifting exposure to the "Catchers"—firms with massive cash flow and a mandate to buy their way across the bridge.

I. Merck (MRK): oncology Backbone to Metabolic Powerhouse

II. Bristol Myers Squibb (BMY): The Value Floor

A decade ago, AbbVie shareholders were hurtling toward a patent cliff—what the drug industry calls the sudden loss of sales exclusivity on a blockbuster. Since then, the stock has returned 460%, beating the market by well over 100 points. Let’s look at how that happened, and size up a pair of soon-to-be patent cliff divers, Merck and Bristol Myers Squibb.

The AbbVie drug is called Humira, and it was revolutionary when it was launched by Abbott Laboratories ABT in 2002. It helped validate the use of monoclonal antibodies, which are engineered to target specific molecules. Humira blocks a key driver of inflammation triggered by the immune system. It can treat a wide range of autoimmune diseases, including rheumatoid arthritis, plaque psoriasis, Crohn’s disease, and ulcerative colitis.

U.S. drug patents typically last 20 years, but that’s from the time of filing, not commercial launch. Sales exclusivity is usually shorter—eight to 14 years. When Abbott spun off AbbVie at the beginning of 2013, the business rationale was to let drug discovery stand on its own apart from medical devices and diagnostics, but a side benefit was containing the expected fallout from Humira’s main patent expiring in December 2016. By then, the drug was 63% of revenue.

But Humira demonstrated that some patent cliffs play out more like cliffhangers. What expired in 2016 is called a composition of matter patent. AbbVie secured a web of related patents covering manufacturing methods, formulations, and more—what is sometimes known as a patent thicket. And since Humira is made in living cells (from the ovaries of a rodent called the Chinese hamster), copying it is finicky work. So competition didn’t actually arrive until two years ago. Humira sales peaked in 2022 at $21.2 billion, $5 billion more than in the supposed patent cliff year of 2016.

All that surplus cash flow helped fund the development of a pair of next-generation drugs for autoimmune diseases, called Skyrizi and Rinvoq. Those two are expected to combine for $31 billion in sales this year, rising to $50 billion by 2030. Humira sales finally collapsed, but investors barely noticed. The stock’s forward price/earnings ratio has swelled from a fearful 11 a decade ago to a confident 21 recently.

The Humira example is an extreme one. Not all drug companies get years of extra growth from top sellers after their patents expire, and not all replace them with even bigger hits. But drug companies facing key patent expirations often trade cheaply and generate plenty of cash to put to work offsetting future revenue shortfalls. Merck and Bristol Myers come to mind.

Merck makes Keytruda, which is the world’s best-selling medicine, sort of. Technically, if you combine Eli Lilly’s Mounjaro for diabetes and Zepbound for obesity into a single medicine called tirzepatide, the active ingredient in both, then it probably became the biggest seller last year. Still, Keytruda is a huge moneymaker. It’s another monoclonal antibody, like Humira, only it blocks a pathway that’s used by tumors to hide from the body’s immune system. That makes it useful for fighting a long list of cancers—skin, lung, kidney, and colorectal, to name a handful. Last year, Keytruda brought in an estimated $31.7 billion, or 49% of Merck’s total sales.

That’s a potential problem for investors because Keytruda’s main patent expires in December 2028. Separately, Merck’s No. 2 earner, Gardasil, a vaccine for human papillomavirus, or HPV, has suffered steep sales declines in China. An economic downturn there has hurt demand for privately paid vaccines, and domestic drug companies have come up with cheaper alternatives. Over the past three years, Merck stock returned just 11%, or 70 points less than the S&P 500 index, and nearly all of it came from the stock’s dividend yield, recently 3.1%.

At a glance, Merck stock doesn’t look especially cheap at 20 times this year’s projected earnings, but those earnings are expected to temporarily tank on costs related to a flurry of dealmaking and the ramping up of late-state clinical trials. Shares trade at a humbler 11 times the earnings forecast for next year, when margins are expected to bounce back to normal levels.

Merck now has about 80 treatments in Phase 3 clinical trials, the last step before seeking approval for new product launches. This year, the company will get Phase 3 readouts on drugs for HIV, diabetic macular edema, and ulcerative colitis, and next year, for influenza and various cancers. Management reckons that its revenue opportunity from new drugs works out to more than $70 billion by the mid-2030s, or about double Keytruda’s projected 2028 sales. Merck has also prepared a dense patent thicket for Keytruda, and a new subcutaneous injection called Keytruda Qlex offers not only much faster delivery than the intravenous version, but also newer patents.

The bull case for Merck, then, involves an AbbVie-like outcome by the end of the decade, with minimal earnings declines, a de-risked outlook, and a less pessimistic stock valuation.

Bristol Myers faces an even steeper patent cliff and has further to go to offset it. Drugs representing more than three-quarters of last year’s sales will lose exclusivity by 2031. Shares lost 16% over the past three years, or 27% not counting the dividend yield, now 4.6%. That makes Bristol Myers the cheapest name in Big Pharma, at less than nine times this year’s projected earnings.

Management hasn’t said when or where earnings might hit bottom, only that it plans to return to growth by the end of the decade. BofA Securities reckons $5 a share is a good ballpark number for trough earnings, down from an estimated $6.30 this year. Shares sell for 11 times the lower figure. The company has been busy with dealmaking, and has Phase 3 trials spanning cancer, heart disease, immunology, and mental health. It points to a half-dozen pipeline drugs with blockbuster potential, and more than 10 launches expected through 2030. BofA upgraded the stock to Buy from Neutral last month, citing the low price and this year’s possibilities for good pipeline news.

Greenland, NATO, Venezuela, Iran —not a day goes by that global security doesn’t seem to be fraying. Yet geopolitical uncertainty, a hallmark of President Donald Trump’s second term, looks here to stay. It should be more fuel for defense stocks.

The sector, up 55% over the past year, is benefiting from a global armaments push. Global military spending exceeded $2.5 trillion in 2025. It’s expected to top $3 trillion by 2027, according to Global X ETFs, implying double-digit growth for the foreseeable future.

Increased military activity is positive for defense stocks. The U.S. becoming an “unreliable ally” is also good for the European defense sector, though that will take time to play out, says Rob Stallard, a veteran defense analyst at Vertical Research Partners in the United Kingdom.

In the U.S., two of his picks are submarine and tank maker General Dynamics and defense electronics leader L3Harris Technologies.

General Dynamics benefits from the push for more boats, munitions, and cyberwarfare technologies.

L3Harris is spinning out its missile business as a separately traded public company, aiming to complete it by the end of the year. The U.S. Department of War plans to invest $1 billion in the spinoff. That capital, and the money raised in the initial public offering, will be used to expand capacity.

Jefferies analyst Sheila Kahyaoglu believes the deal could unlock combined gains of 30% in L3 and the spinoff stock, noting that missile businesses trade at higher multiples than diversified prime contractors.

In Europe, Stallard likes Italy’s helicopter maker Leonardo and Britain’s submarine and munitions maker BAE Systems ; both benefit from higher European military spending, expected to grow at a double-digit rate.

The drone business is “red hot,” notes William Blair analyst Louie DiPalma, pointing out that backlogs are surging amid initiatives such as the U.S. Golden Dome. Two of Wall Street’s favorites are AeroVironment and Kratos Defense & Security Solutions.

AeroVironment has surged 28% this year, to $312, and trades at 90 times estimated 2026 earnings. Wall Street still has a consensus Buy and price target of $384 on it. Kratos, up 50% this year to $114, has already exceeded Wall Street’s average forecast of $112. At 106 times estimated 2027 earnings, it’s now pricier than Nvidia and other artificial-intelligence stocks.

The rest of the sector is hardly cheap. Large diversified U.S. defense contractors trade for 24 times estimated earnings, up from an average of 16 times a year ago. Yet they’re expected to boost earnings 15% this year, faster than their 6% average annual growth in recent years.

Other risks: Defense companies falling behind on technology development and production could be forced to cut dividends and suspend share repurchases, per a new executive order from Trump. While that may be more of a negotiating position, the main message to contractors is to increase investment and prepare for growth, says RBC Capital analyst Ken Herbert.

One of Herbert’s top picks is Northrop Grumman; steady business execution and exposure to higher growth areas such as space and nuclear weapons should be tailwinds, he notes.

Owning defense stocks today assumes that geopolitical tensions stay elevated. Steep multiples and a breakout of global harmony are the risks. Assuming that doesn’t happen, the sector should be a winner.