TheChek News Flow

Les investigations du Parquet national financier portent «sur la rémunération d’intermédiaires lors d’investissements sur les actifs cotés et non cotés».

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- CrunchBase : The Week’s 10 Biggest Funding Rounds: AI Drives Another Spree Of Megadeals

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- The Information : Altman, Amodei and Why the Pragmatic Survive

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- The Information : Anthropic’s Mythos Spooked DeepSeek, Prompting Its $7.4 Billion Fundraising

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- The Information : How a Chinese Megabillionaire Became the Jensen Huang of Batteries

Robin Zeng, exacting and detail obsessed, keeps a stranglehold over a market that touches everything from AI data centers to electric cars. Even if Silicon Valley wanted to, it couldn’t live without him.

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- Barron's : Cheap Drones Are Upending the Defense Sector. These 4 Battle-Tested Stocks Are Leading the Charge.

The Iran war proves that America’s ability to spend heavily on elaborate weapon systems no longer cuts it in conflicts dominated by cheap drones

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- Saks Global Emerges From Bankruptcy as Exemplar Luxury Group

The company says it is coming out of the process with a 75% debt reduction and sufficient liquidity

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- FT : Apple seeks to buy memory chips from blacklisted Chinese company

iPhone maker wants Trump administration to sign off on purchases to ease pressure from rising semiconductor prices

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- FT : The Nazi files shedding new light on family secrets

Party membership records are now searchable online. But, as many Germans are finding out, the archive poses more questions than it answers

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- FT : Utility boss warns US faces blackouts due to power supply shortfall

Exelon chief executive says electricity bill increases are necessary to fund infrastructure to support AI boom

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- FT : The struggle over Wimbledon’s finances

The cost of running the prestigious tournament has risen significantly and players want a greater share of revenues

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- FT : Luxury may be in the doldrums, but perfume passes the smell test

Fragrances are among the faster-growing areas of the beauty industry — though investing in them isn’t straightforward

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- FT : EasyJet’s top shareholders hold out for £5.3bn bid from Castlelake

Many large investors agree that private credit group’s offer must reach £7 per share

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- FT : UK government split over new ‘golden visa’ scheme to woo super-rich

Anti-corruption campaigners sound the alarm after previous programme was scrapped owing to dirty money

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- Le Figaro : Carte carburant, sessions de méditation... Edenred, l’inventeur du ticket resto, s’en émancipe

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Les investigations du Parquet national financier portent «sur la rémunération d’intermédiaires lors d’investissements sur les actifs cotés et non cotés».

Soupçons de rétrocommissions pour prestations fictives. Malakoff Humanis, poids lourd de la complémentaire santé et de la prévoyance, est visé par une enquête préliminaire ouverte par le Parquet national financier (PNF). Ces investigations sont regroupées sous le chef de «corruption active et passive privée commise en bande organisée», comme révélé par Mediapart et confirmé vendredi par une source judiciaire. Le PNF s’intéresse notamment à «la rémunération d’intermédiaires lors d’investissements sur les actifs cotés et non cotés, pour des prestations suspectées d’êtres fictives ayant donné lieu à des rétrocommissions».

Au cœur du dossier, il y a notamment une somme de sept millions d’euros qui correspondrait aux commissions perçues pour ce rôle d’intermédiaire par Thomas Vendôme Investment (TVI), qui se présente comme une «société indépendante spécialisée dans la levée de fonds et le conseil stratégique en entreprise». Le groupe Malakoff Humanis récuse «fermement l’existence de toute rétrocommission» et afin «de préserver les intérêts du groupe, Malakoff Humanis a décidé de porter plainte», selon un communiqué. Malakoff Humanis décrit encore dans son communiqué une «enquête judiciaire» ouverte «concernant une société tierce, Thomas Vendôme Investment (TVI), avec laquelle travaillent certaines sociétés de gestion sélectionnées par Malakoff Humanis pour gérer ses actifs financiers».

Le directeur général de Malakoff Humanis, Thomas Saunier, et Jean-Pierre Thomas, président de TVI, ont été «auditionnés comme suspects libres», précise de son côté la source judiciaire. Les sièges de Malakoff Humanis, assureur paritaire cogéré par le patronat et les syndicats, et de TVI, ainsi que «les domiciles de personnes physiques», ont été perquisitionnés le 16 juin, apprend-on encore de même source.

Scandale politico-financier des années 1990

L’enquête préliminaire fait suite à des «signalements anonymes faisant état de pratiques internes ayant conduit à ces perquisitions», détaille la source judiciaire. Les investigations se poursuivent pour exploiter les éléments saisis aux sièges et aux domiciles. «Depuis 2016, année de l’arrivée de l’actuel directeur général de Malakoff Humanis, Thomas Saunier», Jean-Pierre Thomas s’est «imposé comme un acteur incontournable des relations du groupe mutualiste avec plusieurs fonds d’investissement et gestionnaires d’actifs», écrit Mediapart. TVI a été «embauchée comme intermédiaire par au moins cinq sociétés financières auxquelles Malakoff Humanis a confié la gestion de plusieurs milliards d’euros», avance encore Mediapart.

Avant TVI, Jean-Pierre Thomas a été associé-gérant de la Banque Lazard (1998-2013), selon le site de TVI. Précédemment, il a été député des Vosges, membre de la commission des finances et porte-parole sur le budget pour le groupe UDF. Son nom était aussi apparu dans un retentissant scandale politico-financier dans les années 1990. En 1995, le juge d’instruction Éric Halphen avait perquisitionné le siège du Parti républicain à Paris et entendu comme témoin le trésorier du PR, Jean-Pierre Thomas. Le patronyme de ce dernier figurait à plusieurs reprises dans l’agenda de Jean-Claude Méry, l’un des principaux protagonistes de l’affaire des fausses factures des HLM de Paris.

Éric Halphen avait en outre découvert 2,4 millions de francs (près de 554.000 euros) en coupures de 500 francs dans le coffre-fort de Jean-Pierre Thomas lors d’une perquisition. Dix ans plus tard, Jean-Pierre Thomas avait écopé de quinze mois avec sursis et 5000 euros d’amende dans cette affaire. Sollicitée, TVI n’avait pas répondu dans l’immédiat.

The Week’s 10 Biggest Funding Rounds: AI Drives Another Spree Of Megadeals

1. Baseten, $1.5B, AI inference technology: Baseten, a provider of systems software to run AI applications workloads, raised $1.5 billion in Series F funding, its fourth fundraise in 18 months. Altimeter Capital, Conviction Partners, Spark Capital, Sands Capital and Wellington Management co-led the round, which set a $13 billion valuation for the San Francisco-based company.

2. AppsFlyer, $1B, digital marketing: AppsFlyer, a San Francisco-based provider of data analytics with digital marketing as a core use case, reportedly secured more than $1 billion in a Series E funding round at a post-money valuation of $2.7 billion. Backers reportedly include Unity, Meta, Moloco and Google.

3. Groq, $650M, AI inference technology: San Francisco-based Groq closed on $650 million in new funding led by Infinitum and Disruptive that it says will be used to scale its AI inference cloud technology and infrastructure. The investment comes just over six months after an acquihire-type transaction in which Nvidia hired away its founder and key team members and licensed its technology.

4. Ollin Biosciences, $330M, ophthalmic therapies: Ollin Biosciences, a developer of therapies for vision-threatening diseases, picked up $330 million in Series B funding. TCG Crossover and Arch Venture Partners led the financing for the Austin-based company.

5. General Intuition, $320M, foundational AI: General Intuition, developer of a foundational AI model based on gameplay, secured $320 million in Series A funding at a $2.3 billion valuation. Khosla Ventures led the financing for the New York-based company, while backers including Jeff Bezos and General Catalyst participated.

6. Peregrine Technologies, $250M, government software: Peregrine Technologies, provider of a platform used by public safety agencies and other government entities, secured $250 million in Series D financing. Fifth Down Capital, Sequoia Capital, O.G. Venture Partners, Goldcrest Capital, XYZ Ventures and Godfrey Capital led the financing, which set a $6.8 billion valuation for the San Francisco-based company.

7. (tied) Quantifind, $200M, risk intelligence: Palo Alto, California-based Quantifind, developer of a risk intelligence platform for financial crime detection and national security operations, closed on $200 million in growth financing led by Summit Partners.

7. (tied) Mirendil, $200M, foundational AI: San Francisco-based Mirendil, a frontier lab building systems that excel at AI R&D, says it raised a seed round of $200 million led by Andreessen Horowitz and Kleiner Perkins. The startup also counts Nvidia as a backer.

9. (tied) Upscale AI, $190M, AI infrastructure: AI networking infrastructure startup Upscale AI raised $190 million in Series A extension funding, bringing total financing to $500 million. Premji Invest led the round, which set a $2 billion valuation for the Santa Clara, California-based company.

9. (tied) Osanni Bio, $190M, biotech: San Francisco-based Osanni Bio, a therapeutics platform focused on ophthalmic therapies and other treatments, secured $190 million in Series B funding led by Patient Square Capital.

When people ask me what I've learned about leadership from reporting on tech companies for 20 years, I always say the same thing: that the most successful CEOs are more pragmatic than zealous.

Tech CEOs are notorious for using visionary language and tying it to their personal beliefs about improving the world. They brandish mission statements about organizing all the world’s information and make us believe that their products are going to revolutionize the world for the benefit of humankind.

But, in truth, they make far more pragmatic choices than their rhetoric often suggests.

Meta CEO Mark Zuckerberg is a classic example of this. I’ve watched him up close as he has pivoted his company from connecting people to building the metaverse to creating superintelligence—based on the moment. His views on content moderation have evolved based on politics—for which he’s received a lot of criticism, that’s fair in my opinion.

Elon Musk is another pragmatist. SpaceX’s mission was sending people to Mars until that seemed, well, too far fetched. Now, I’m not sure I could explain the company’s mission coherently. But Musk will think of something else grand to talk about publicly— and behind the scenes, he will keep pivoting.

While some might see this pragmatism a weakness, I think it is the only way you can build one of the world’s most valuable companies.

Yesterday, when The Information broke a story that OpenAI’s CEO Sam Altman had agreed to a staggered release of his company’s latest model at the request of the federal government, my first reaction was that this was a sign of how Altman uses his pragmatism as a strength. (My second reaction was to ask what this meant for the future of tech regulation. But I will save that topic for another column.)

In Altman’s case, he has also been criticized for saying one thing and doing another. I’ve witnessed a little of that in my 20 years of knowing him.

But I think a more dominant aspect of his leadership style is his pragmatism. Altman is a leader who saw that a non-profit organization could never fund AI development and convinced his friend and investor Vinod Khosla to help him convert it into a for profit. Then he convinced Microsoft to do what was then one the world’s most advantageous compute deals, and so on and so on.

That’s textbook pragmatic leadership, and some may find it distasteful and opportunistic. It runs the risk of compromising trust. But if done well, it works and I understand why investors bet on it.

One of the biggest questions hanging over AI now is what kind of leader Anthropic CEO Dario Amodei will be.

He’s a brilliant technologist, who knows more about the power of AI than probably anyone else.

But will Amodei temper his principles to adjust to the reality of the moment? Will he set aside some of his beliefs about the power of AI and how it should be rolled out for building relationships with governments, customers and more?

Right now many researchers celebrate him for not compromising. His standoff with the U.S. government, which began with a battle with the Department of War and has now extended to a conflict with other parts of the Trump administration over the release of its latest model Fable, has won him some big praise from many AI researchers and engineers.

Anthropic clawed back the release of Fable, after Amazon CEO Andy Jassy and others warned the administration of security vulnerabilities in the model, The Information was first to report. Anthropic downplayed the significance of the issues with the model, but the government effectively forced it to take Fable off the market.

I understand why Amodei doesn’t want to get in the habit of making changes to its models at the behest of the government. That could be a slippery slope.

But so is the alternative, a world where its more pragmatic competitors strike compromises and beat it out the door.

My gut tells me that even Amodei, who is directing a technology of never-before-seen power, will need to get in touch with his pragmatic side to win.

Up until two months ago, DeepSeek, the three-year-old Chinese AI lab, was an anomaly in the increasingly costly global AI battle. It had relied entirely on CEO Liang Wenfeng’s personal wealth and never raised outside money.

That changed in the middle of this month, when DeepSeek completed a $7.4 billion fundraising that valued the startup at more than $50 billion, the biggest ever first-time fundraising by a Chinese startup. The change of heart was prompted, say three people familiar with the CEO’s thinking, by Anthropic’s release in April of a preview of Mythos, a new model that the U.S. company said was so powerful that it can find and exploit software vulnerabilities, opening the door to potential chaos and misuse.

The Takeaway

Anthropic’s Mythos model prompted DeepSeek’s $7.4 billion fundraising.

DeepSeek plans to double its workforce and embrace Huawei chips.

DeepSeek V4 became third-largest model on Vercel due to low cost.

Powered by Deep Research

After seeing how Mythos achieved strong capabilities from training on enormous amounts of compute and data, Liang realized DeepSeek couldn’t compete without a massive war chest. Now the firm, which currently has a staff of around 300, is expanding both its workforce and its computing capacity.

In a rare public announcement, DeepSeek on Thursday said it is planning to “at least double” the headcount in all of its departments, including AI system development, infrastructure, product development and deep learning research. The DeepSeek Harness team, which works on transforming DeepSeek AI models into autonomous AI agents, is interviewing candidates every day, team leader Tianyi Cui, who joined the company from Jane Street in March, said on X earlier this month.

The company is also intensifying its efforts to adapt to Huawei chips, in light of U.S. export controls, while continuing to train its models on Nvidia chips stockpiled via the black market.

DeepSeek’s expansion could be a watershed moment for the global AI race. The Trump administration recently banned any foreigners, including those living in the U.S. and working for Anthropic, from accessing Mythos and a neutered version of the model, Fable 5. DeepSeek, along with another startup, Zhipu, represent China’s best hope for catching up to the U.S. in AI.

DeepSeek’s recent fundraising “marks its transition from a high-efficiency research outlier into a scaled national AI platform,” said Paul Triolo, a partner at Washington-based advisory firm DGA-Albright Stonebridge Group. “DeepSeek and Zhipu are now the top two Chinese AI labs and, along with Anthropic and OpenAI, are now part of the top four frontier model AI labs in the world. The emergence of a Mythos caliber model in China is most likely to come from either DeepSeek or Zhipu,” he said. (Beijing-based Zhipu, also known as Z.ai, recently released the open-weight GLM 5.2, which boasts capabilities similar to those of OpenAI’s GPT 5.5 and Anthropic’s Claud Opus 4.8.)

Liang believes the only way for China to lead global AI development, especially given U.S. export restrictions on advanced chips, is by having a research-focused lab free from commercial pressure.

With that in mind, he has told people close to him his strategy for DeepSeek isn’t changing. It will continue to offer open-source technology, maintain low prices for its models and maintain its focus on achieving artificial general intelligence. He defines AGI as machines having human-level capabilities in understanding, reasoning, learning, planning and adapting across a broad spectrum of tasks.

The 41-year-old Liang has told associates AI shouldn’t be controlled by a handful of people. While other tech CEOs would likely make the same point, DeepSeek is the only major AI lab to make the code underlying all of its models available to the public.

This account of DeepSeek’s fundraising is based on the accounts of multiple people close to Liang, DeepSeek’s investors and former and current employees. The company has not made any announcements on its fundraising, and didn’t respond to a request for comment.

Born in 1985 in a village in Zhanjiang, a small coastal town in the southern tip of China’s affluent Guangdong province, Liang attended Zhejiang University, where he studied electrical engineering—a discipline equivalent to computer science studies in China at the time. Zhejiang University, located in the eastern Chinese city of Hangzhou, had earlier spawned the first wave of Chinese tech giants, including e-commerce powerhouse Alibaba and gaming publisher NetEase Games.

In 2015, he co-founded a hedge fund, High-Flyer Capital Management, with some university classmates. The firm became a pioneer in quantitative trading in China’s stock market. It couldn’t be learned how much wealth Liang accumulated from his trading years, but he wrote the biggest check in DeepSeek’s funding round, 20 billion yuan (about $3 billion), or two-fifths of the total amount raised.

In 2023, after ChatGPT took off, Liang set up DeepSeek as an arm of High-Flyer. The hedge fund already had a large cluster of Nvidia chips, which it had stockpiled before the U.S. cracked down on export of the chips to China. That gave DeepSeek a leg up compared to other Chinese AI firms and helped with its early success.

Liang was not initially resistant to seeking venture capital, as he understood that AI development was an expensive game. But he turned off prospective investors in 2023 by telling them DeepSeek would be dedicated to deep research and scientific exploration with no commercial or product road map. Liang ended up funding DeepSeek himself.

In January 2025, DeepSeek’s R1 achieved capabilities on par with those of OpenAI’s latest models at significantly less computing power, sending shockwaves across Silicon Valley and Wall Street. The explosion put China-made AI on the world map and activated an open-source movement in China.

But as DeepSeek’s fame has grown, its orbit has been pulled closer to Beijing. Liang has to notify authorities if he intends to travel overseas, and governments across the country provide security details as he travels domestically, according to a person close to him. The Information reported last year that some of DeepSeek’s key researchers were barred from freely traveling overseas and were asked to hand in their passports to the company.

Liang’s AGI aspiration will be complicated when DeepSeek’s models reach Mythos-like levels and the Chinese government considers how to control the release of frontier AI models with national security–related capabilities, said Triolo. “This ultimately could force DeepSeek into a much closer relationship with Chinese government authorities than Liang Wenfeng may be comfortable with, but this appears inevitable if DeepSeek’s driving mission remains AGI,” he added.

OpenAI and Anthropic have repeatedly accused Chinese AI labs including DeepSeek of “distilling” their models, or using answers from advanced models to train new models. It couldn’t be learned what Liang thinks of those allegations. People close to him said he seldom comments on competitors.

Liang has run DeepSeek as a research lab. The vast majority of its researchers, split between Beijing and Hangzhou, are graduates from top Chinese universities. Applicants without top-school credentials often struggle to get an interview, while many who do make it through describe the written tests as unusually difficult. Even interns are expected to have published influential research papers.

Bureaucracy is thin. DeepSeek has no dedicated human resources or public affairs departments, and every researcher reports to Liang himself. He remains hands-on and attends most meetings on research discussion. As part of the company’s current workforce expansion, it is hiring for human resources, finance, legal, procurement and administrative positions.

The company’s office signages in Beijing and Hangzhou are so subtle that if visitors are not familiar with DeepSeek’s blue whale logo, they can easily miss the entrance.

Researchers work together. They rarely go out to lunch. Instead, they order either takeout from KFC or Chinese meal boxes and eat together in the office.

That said, Liang, an outdoorsy man who enjoys cycling across nearby cities and country roads, encourages his staff to have a work-life balance—almost unheard of in China’s tech industry, where employees at the biggest companies have to endure long working hours. He believes any individual’s optimal productivity can only last six to eight hours a day, and there’s no point in toiling away beyond that.

Nonetheless, about two dozen DeepSeek researchers have left the company since the lab shot to global stardom in early 2025. Higher salaries and higher rewards from employee stock options lured most of them away to companies including Alibaba, ByteDance and Tencent. The most notable departure was Guo Daya, a key contributor to DeepSeek’s previous models who’s now leading ByteDance’s AI coding effort.

Some of DeepSeek’s former researchers see a tinge of hypocrisy in Liang’s AGI vision and not-for-profit drive, as the CEO has accumulated substantial wealth himself from his quant-trading years. Those who have stayed take comfort in the recent fundraising, as the company has set up an employee stock ownership plan, which distributes shares with an actual valuation.

Embrace Huawei

Liang believes that it’s only a matter of a few years before Huawei chips will become as good as Nvidia’s and that DeepSeek should move first by adapting to semiconductor hardware outside Nvidia’s dominance. Huawei only began working directly with DeepSeek last year after learning of the company’s experiments with Huawei’s chips. Huawei didn’t respond to a request for comment.

The attempt to adapt to Huawei chips prolonged DeepSeek’s model release last year. DeepSeek had built its training and deployment systems around Nvidia’s Cuda software, and engineers had to rework the software so the model could use the Huawei chips efficiently and run at a competitive speed and cost. As a result, the company didn’t release any new-generation model for 15 months, a conspicuously long gap in an era when other top-tier developers release new models every couple of months.

The gap also made DeepSeek late to the coding frenzy Anthropic’s Claude Code tools unleashed in the second half of last year. That didn’t faze Liang, who told investors during a road show that the coding tool was, like AI chatbots, just temporary products in the AI evolution. If DeepSeek were to bet heavily on these short-term products, that would divert it from the ultimate goal of attaining AGI, he argued.

In the U.S., DeepSeek is gaining popularity among developers. The company launched its latest flagship model, V4, in April. V4’s shares of token usage on AI Gateway, the model aggregator platform of U.S. startup Vercel, jumped in May from under 1% to 17% in a single month, making it the third-largest model provider after Anthropic and Google on that platform. The growth has continued into June, according to Vercel. DeepSeek V4 Flash, the affordable lightweight version of V4, is 20 to 50 times cheaper than Anthropic models.

“We’re seeing increasing pricing sensitivity among customers. Teams are routing inexpensive, capable models to lower-risk work while continuing to use frontier models for high-stakes tasks,” said Harpreet Arora, head of AI infrastructure at Vercel.

DeepSeek’s continued rise will inevitably draw more attention and scrutiny from Washington. “The U.S. government is likely considering restrictions on the use of Chinese open-weight models for specific applications in the U.S., such as critical infrastructure,” Triolo said. “But the company’s models will remain popular in markets sensitive to price where there are lower or no geopolitical or national security considerations.”

Robin Zeng, exacting and detail obsessed, keeps a stranglehold over a market that touches everything from AI data centers to electric cars. Even if Silicon Valley wanted to, it couldn’t live without him.

One after the other, four men jumped onto a stage at the front of a darkened, crowded hall one recent evening in central Beijing. Each of them was fired up. The subject: superadvanced batteries.

One of these batteries, a man said, was perfect to power ultra-cheap electric vehicles and another for ultraexpensive ones. A third could almost completely charge a car in 11 minutes, while a fourth could do so in just 6. There was even a battery that could power a big flying car. All of the batteries, the men suggested, were superior to anything available anywhere else.

Presiding over the show from a front-row seat was billionaire Robin Zeng, co-founder and CEO of Chinese battery giant Contemporary Amperex Technology Ltd. Zeng is one of China’s richest people and perhaps the ultimate avatar of the country’s in-your-face confidence that this is its moment. Arguably more than any other single Chinese entrepreneur, 58-year-old Zeng powerfully reflects the stark threat that many in the West fear in China’s growing technological prowess.

The evening’s climax came when the spotlight went to Zeng, who spent the time depicting his company as a rare island of serious science in an industry filled with “concepts and buzz.” If some unnamed rivals weren’t keeping up with CATL—local or foreign, he didn’t specify—it was because they were wasting their time with “magic solutions to all problems.”

“We don’t blindly follow what’s new, big or what’s trending,” Zeng said. “Instead, we stay honest with problems, respect the laws of nature and verify results rigorously. Science is not hype.”

Though you may have only vaguely—or possibly never—heard of Zeng and CATL, he and his company are to batteries what Jensen Huang and Nvidia are to AI chips. CATL manufactures about 40% of the world’s lithium-ion batteries, which power electric vehicles, drones, robots, grid systems and AI data centers, including xAI’s gigantic Colossus complex in Memphis. It also owns stakes in much of the metals and component supply chain it uses in those batteries. The company’s closest competitor, China’s BYD, supplies roughly 14% of the world’s batteries. U.S. companies collectively have less than 2% of the global battery market.

CATL has managed to produce big profits in a cutthroat industry in which most of its Chinese rivals lose money. Last year, its profit rose 42% year on year to $10.5 billion, dwarfing every other major battery company in the world. Investors have piled into CATL shares, sending up its stock price 36% in the year to date. Since June 2020, they have risen nearly 350%. (Zeng, who owns 22.5% of the company, is worth $56.3 billion, according to Forbes, which makes him about as rich as SoftBank’s Masayoshi Son.)

With the U.S. and the rest of the West moving increasingly to battery-powered technology, CATL’s dominance has put it—and by extension Zeng—in a position of geostrategic significance. China worries about America’s stranglehold on the most advanced semiconductors. The U.S. would be smart to worry about China’s stranglehold on the world’s best batteries. CATL’s success is in fact a repudiation of the central U.S. policy for fighting Chinese technology, which is to effectively ban it. While CATL’s batteries face stiff tariffs, they have long been in the U.S., powering Tesla Megapacks and EVs made by both Ford and General Motors.

If CATL vanished tomorrow, it would be akin to the disappearance of OPEC from the oil market: There would be no immediate way to make up for the shortage of batteries.

“CATL truly is just really far ahead,” said Vivas Kumar, a Tesla veteran and the CEO of California battery startup Mitra Chem. “It sets the tempo that the rest of the industry has to follow.”

The company insists that most automakers commit to multiyear supply contracts at a premium price above that of rival batteries, multiple Chinese EV executives told me. Those that resist the premium pricing may face the threat of losing access to its batteries, these executives said. Usually that cudgel is sufficient to bring most carmakers to heel. They’re willing to cave to CATL because, simply, they view CATL’s batteries the most consistent performers in an industry in which batteries frequently don’t deliver as promised.

CATL did not provide an interview with Zeng for this story. However, judging by what he’s said publicly in recent years, Zeng truly seems to see no competition. He is dismissive of challenges from the West. In a 2024 interview, he said Western battery makers haven’t caught up with CATL because they start with a fundamental lack of understanding of electrochemistry. They fall short “because they have the wrong design. And second, they have the wrong process. And third, they have the wrong equipment,” Zeng said.

Western battery makers also lack a strong bench of scientific talent, Zeng has said, since its engineering graduates are usually drawn to high-paying jobs in Silicon Valley tech companies, spurning comparatively lower-paying positions in material science. CATL, meanwhile, has some 23,000 research and development workers—the source of those batteries the company announced in Beijing.

In Beijing, Zeng said CATL has an “adversarial team” of 500 engineers whose only job is to poke holes in everyone else’s work. If anyone has any beef with the team’s findings, they have to answer to Zeng himself. “They are the least popular people in the company,” he said, “but I am the leader of these people.”

For U.S. industry veterans, the question is whether you work with or around this immovable rival. Bob Galyen, a former GM executive who went on to become chief technology officer of CATL, is among those veterans pushing the U.S. to move faster to catch up.

As of now, “our society is behind, and it’s scary,” he told me. “Everybody accuses China of stealing our technology. Why don’t we either take it back or work with them, one of the two?”

Early Western help—American and German—played a key role in making CATL what it is today.

First, in 2004, Apple was looking for a local battery manufacturer to power its new iPod, and CATL’s predecessor company, ATL, won the contract.

That triumph proved pivotal because Apple helped hammer ATL into shape as a global-quality manufacturer. ATL soon had a reputation in the West for reliably producing the small, high-quality batteries required for portable electronic devices such as laptops and cellphones. “Apple kicked their ass: There would be no CATL without Apple,” said a former Western car executive who met with ATL around this time.

The second break came in 2012 with a contract to design even bigger batteries. The customer was BMW, which had plans to produce an EV in China. When I recently spent a day at CATL’s headquarters in southeastern China, a company official recounted how to get the Chinese company ready for the tougher requirements of EV batteries, the German carmaker supplied it with an approximately 800-page manual of technical specifications.

The Chinese executives and employees of the newly branded CATL absorbed that manual like it was the Talmud. The promise behind meeting the German company’s hyperstrict engineering standards was that “if you can do as they say, then you have this [engineering] capability. And if you can supply BMW, you can supply everybody,” the CATL official said.

About the same time, Zeng recruited Galyen, a long-time GM executive, as CTO. Galyen, who held the position for seven years, agreed that the Apple and BMW contracts were crucial, the second building on the first.

“Robin and I sat down, and he said, ‘Let’s work with BMW. I wanna be the best of the best. And the only way to get to be the best of the best is work with the best,’” Galyen recalled. “I think his experience with Apple kind of drove him to this.”

When Galyen arrived in 2012, the company had around 300 engineers. Zeng began a hiring spree in the thousands to manage the BMW deal and other new contracts with local Chinese carmakers, said Galyen, who set out to train them.

Galyen said he trained the new employees to take an ultrafussy approach to producing a battery. He made them take a new look at each of the raw materials and fundamental components they were working with in the batteries they were making. On each, he said, “I looked at the spec, and I said, ‘This is not good enough.’ I went through it with a fine-tooth comb.”

That exhaustiveness eventually resulted in thousands of individual quality checks before completion of each battery. CATL imposed such exactitude believing it would help differentiate its products in a market then dominated by Japan’s Panasonic and South Korean battery makers. After a few years, Galyen’s trainees were checking more than 3,600 aspects of the battery before it went out the door, he said.

Chris Burns was one of the Westerners who made their way to the remote city of Ningde, where CATL is headquartered, in the middle to late 2010s. His Canadian startup, Novonix, made equipment that delivered ultrahigh-precision measurements of battery quality during manufacturing, and CATL was in the throes of buying a 33% equity stake in that business. Back in the West, Burns was seeing battery industry startups spring up with aspirations for levels of production that seemed big but were infinitesimal compared with what he saw Zeng was building.

Meeting Zeng over tea, Burns could see that the CATL leader had “wild growth aspirations,” which included building high-rise towers to house its workers. “It was crazy to see the difference in the amount of investment they made, the amount of people,” Burns said. “His vision was clear. They were going to become No. 1 globally in battery production.”

In the battery industry, the key to such growth and profitability is production yield—how many batteries you can make without wasteful defects. In the West, one measure of success is achieving just a few defects per million battery cells, or parts per million, a rate akin to the acceptable defect rate in consumer electronics. At CATL, the measure is defects per billion cells, or parts per billion, Zeng and other CATL executives have said—the life-and-death rates demanded in the pharmaceutical industry.

Today, Western battery and component startups want to grow into gigantic companies, but no one can match CATL’s production yield. “To achieve PPB-level quality for these prismatic cells is crazy impressive,” said Peter Attia, CTO of Glimpse AI, a Massachusetts startup that uses CT scanning equipment to detect battery defects. “No one else I know of is at the level where we can even quantify parts per billion.”

In April, I attended the Beijing Auto Show, a sprawling event that has become the global car industry’s premier annual gathering. CATL had a substantial presence at the show, with a gigantic booth that included a prototype flying car made by its AutoFlight subsidiary. One evening, CATL hosted an invitation-only cocktail party at the swank Mandarin Oriental Hotel, where guests could rub shoulders with its AI and battery researchers, a demonstration of soft power not often associated with the battery industry.

Participants dispersed to other social gatherings as well. At one dinner I attended, current and former executives of Chinese car companies groused about CATL. Their complaint wasn’t about quality—but rather about the contractual arm-twisting that went along with CATL’s knowledge of its superiority.

In 2022, for instance, XPeng, an EV startup based in the Chinese city of Guangzhou, rejected CATL’s demands and gave its business to smaller competitors such as Sunwoda and Eve Energy, according to people familiar with the episode. An XPeng spokesperson confirmed that the carmaker had stopped buying batteries from CATL, but said the two companies were speaking about resuming their relationship. Such is the nature of doing business with CATL—it’s hard to ever entirely walk away from the company.

Along with the griping about CATL’s domineering nature, another thing that especially caught my attention in Beijing was the company’s fast-charging battery: the one that can juice up a vehicle in as little as 6 minutes. It is CATL’s response to one of the key consumer misgivings about buying EVs—that they take too long to recharge. A company that could successfully mainstream a fast-charging battery would be looking at a jackpot commercial opportunity, which might further accelerate the world’s long-awaited mass transition to electric automobiles.

In May, Chinese carmaker Geely became the first CATL client to deploy the battery, installing it in its $65,000 Zeekr 009 minivan, according to Phate Zhang, founder and editor in chief of CnEVPost, a China-based auto industry news site. Zeekr said the vehicle could go 300 miles on a charge, the driving range sought by most mainstream motorists.

In the 15 or so years I have been watching batteries, Western experts have consistently said such a fast charging rate wasn’t possible without burning out the battery. Fast charging equates to lithium moving rapidly within the battery from the cathode to the anode, where it is stored. The Western consensus was that graphite anodes simply could not absorb lithium at such high speeds. Rather than entering the anode, the lithium would simply pile up on its surface, potentially ruining the battery.

I asked CATL researchers how they pulled it off. They described tinkering with the battery’s capacity to withstand the intense heat that built up with fast charging, including making changes to the cathode and electrolyte. They said they also engineered the anode into multiple layers to open up space and allow the lithium to move more freely. The lithium no longer piled up on the outside of the anode, allowing the battery to charge quickly.

Back at home, I asked Western companies whether they were now working on such a fast-charging battery. How did they get it wrong all along and where was their version? Mostly I got the same silence as when I asked about defect rates. Ford didn’t respond, and South Korea’s LG Energy Solution declined to comment.

Kurt Kelty, GM’s vice president of battery and sustainability, said making such batteries was possible but would entail losing other important capabilities, such as long driving range. The electric Chevy Equinox and Cadillac Optiq both deliver a little over 300 miles of range and take around 35 minutes to charge from 10% to 80% of capacity.

“In all of our studies,” Kelty said, “the biggest thing customers want is range. And the second biggest thing they want is…lower cost. Fast charge is what customers also want, but that’s not in the top two.”

Of course, CATL was showing that fast charging didn’t necessarily require the sacrifice of long range. Yet again, it had eclipsed the competition. Ultrafast charging was now another of the multiple ways in which CATL was playing in the major league, with everyone else more or less in the minors. And it is still building on that lead.

CATL has been pushing aggressively abroad, launching production in Germany and building plants in Hungary and Spain. But tensions between the U.S. and China appear to preclude any chance that CATL itself will start production in the U.S. anytime soon. Last year, the Pentagon added CATL to its procurement black list, claiming that it had links to the Chinese military, a designation that doesn’t prevent private companies from using its batteries but is something of a scarlet letter. It is true that Zeng is a member of the Communist Party’s top political advisory body, but he has denied selling batteries to the military or having any links to it.

CATL is a major player in stationary storage batteries for AI data centers, the grid and businesses, and Zeng expects such batteries to make up half of its business in the future. In Memphis, xAI has installed 2.3 gigawatt-hours of CATL batteries at its Colossus AI data center, the equivalent of the power used by 480,000 homes for four hours. U.S. humanoid robot makers are secretive about their batteries, but CATL’s batteries power humanoids made by China’s AgiBot.

Ford has become the most prominent proxy for CATL in the U.S. auto industry, licensing its technology to make both EV and stationary storage batteries in Michigan and Kentucky. At CATL’s headquarters in China, maps on display identify those as CATL locations. Ford says it’s in control of those factories, though as recently as last week it boasted in a blog post of “the success of Ford’s work with CATL, the world’s leading battery manufacturer.”

Increasingly, there is recognition in the West of CATL’s triumph. Halle Cheeseman, who recently retired as a manager at the Department of Energy’s Advanced Research Projects Agency–Energy division, which funds research into new forms of energy, is among those hoping someone in the West invents and scales up a next-generation battery that eclipses what CATL does today.

“Hats off to them, really,” Cheeseman said.

China’s market includes ways to play AI and other megatrends—without paying exorbitant prices. How to invest.

Chinese stocks are being overlooked as investors flock to South Korea and Taiwan for an AI fix. The MSCI China Index is down more than 10% this year, a far cry from the emerging market superstars: South Korea is up more than 100% and Taiwan is ahead 70%, both surging on the AI chip boom, despite a recent selloff.

Yet there’s a compelling case for China, and it’s not about owning internet giants Alibaba Group Holding and Tencent Holding s—companies that dominate the MSCI China Index. Many China experts sense opportunity in the country’s lesser known companies that trade on mainland exchanges, along with some larger companies. These stocks benefit from the country’s push for self-reliance. AI is also in the mix through hardware and other “picks and shovels” stocks.

Weakness in the MSCI China Index, combined with the surge in South Korea and Taiwan, have taken a toll on China’s spot in emerging market indexes. In 2020, China occupied the highest country allocation, at 40% of the MSCI Emerging Markets index. Today, it’s 20% and down to No. 3, pushed back by Korea and Taiwan as the top two countries.

Apathy toward China is understandable. Consumers remain averse to spending. Retail sales turned negative in May for the first time since December, 2022. And bank loan growth fell to 5.5% in May, year-over-year, its lowest point since December, 2022.

The U.S. and China are rolling out more trade restrictions on each other. And China’s growth rests largely on its ability to sell more products abroad while countries begin to retaliate with tariffs and other measures to protect their own producers.

But China is attractive in other respects. Beijing’s bid for self-reliance remains a domestic growth driver. The country is becoming a leader in emerging technologies as its research and development outpaces the U.S. It’s also becoming an advanced manufacturing powerhouse for everything from large-scale industrial batteries to robotics—leading to its $2 trillion global trade surplus last year, despite U.S. tariffs.

“China is catching up—and fast—in areas like large language models and GPU designs,” says Vivian Lin Thurston, manager of the William Blair Emerging Markets Growth fund, referring to AI computing models and a type of chip called a graphics processing unit.

Thurston, recently back from a visit to China and meetings with companies, was energized by what she saw. “It’s the only country in the world that has the entire AI ecosystem from beginning to end,” she says.

Beijing is also moving to accelerate spending in the second-half of the year on its “Six Networks,” according to Goldman Sachs. Those areas include water infrastructure, power grids, data centers, communications networks, pipelines, and logistics. The data center investment alone may be worth two trillion renminbi ($295 billion), which Goldman analysts estimate accounts for only 0.8% of China’s fixed asset investment through 2030.

At about 12 times forward earnings, the MSCI China Index trades for about half its valuation from 2020. But that’s not necessarily the best value—it’s in companies trading on local exchanges and more attuned to the country’s growth drivers, along with some multinational technology companies. “There’s value. It’s probably a good time to think about it,” says Alison Shimada, head of Total Emerging Markets Equity at Allspring Global Investments.

Investors need to be selective—and agile. Domestic competition is fierce, hurting global companies operating in China but also making profitability harder for local players. Regulatory measures remain a risk; Beijing has moved to restrict mainland Chinese investors’ paths to invest abroad, including in SpaceX and other U.S. IPOs. In June, Beijing also increased scrutiny of its private-fund industry to rein in hype around its red-hot IPO slate in Hong Kong.

But analysts see these moves as an effort to keep capital at home, rather than another 2020-style crackdown on the tech industry. Plus, China has been encouraging investment in its stock market rather than real estate, which is still reeling from speculative excesses and Beijing’s crackdown.

One more word of caution: geopolitics. The U.S. Defense Department recently blacklisted dozens of Chinese companies, including Alibaba, Baidu and BYD, barring them from doing business with the U.S. military. The move was largely symbolic, but Beijing retaliated with actual trade restrictions on some U.S. companies, including rare earth producers MP Materials and USA Rare Earth.

Beyond the Internet Giants

Alibaba, Baidu, and Tencent benefit from using AI across their mass of users, but their core businesses face pressure from weak consumer spending and intense price wars.

Fund managers are more excited about other areas of tech, including products for the AI buildout and broader electrification trend. Examples include optical networking company Zhongji Innolight, battery giant Contemporary Amperex Technology, known as CATL, and electric vehicle maker BYD—the latter two also playing a role in China’s push for energy security.

China’s success in diversifying into renewables, nuclear and coal, and building its strategic petroleum reserve helped it weather the Iran war better than South Korea and other countries more dependent on Middle East oil. The push for energy security should drive demand for CATL and BYD, says Lazard Emerging Markets Equity fund manager Rohit Chopra who owns both stocks.

BYD stock has been struggling. It’s down 36% since May 2025 as its domestic business felt the sting of price wars. But BYD’s lower-cost, high-range models have made it the best-selling global EV brand. Roughly half of sales are now overseas, according to analysts. And BYD is starting to manufacture outside China, including a factory under way in Hungary to sell cars tariff-free in Europe.

Chopra says investors may not be giving BYD enough credit for its industrial-scale battery systems, which are generating strong demand with the AI buildout. That segment could eventually be a third of the overall business, he adds. Analysts estimate it’s now around 5%. At 13 times estimated 2027 profits, the stock is a bargain among auto makers.

While U.S. investors have access to stocks listed in Hong Kong through many brokerages, owning those listed on mainland China are more difficult.

Exchange-traded funds and mutual funds can provide exposure.

The Xtrackers Harvest CSI 300 China A-Shares ETF holds a quarter of its assets in technology companies and 20% in industrials, including CATL and Zhongji Innolight. Rayliant-ChinaAMC Transformative China Tech ETF holds 16% of its assets in Alibaba and Tencent, compared to a 23% weighting in the MSCI China Index. Other top holdings in the ETF tap into the AI infrastructure and industrialization themes that fund managers favor.

Recent active ETF launches have made some veteran managers cheaper to access. Matthews China Innovators Active is run by Asia investor Tiffany Hsiao, who returned to Matthews last year after a period of investing in private companies in Asia for Artisan Partners.

Baillie Gifford also just launched the Baillie Gifford Emerging Markets ETF, which has almost a quarter allocated to China across sectors.

Ben Durrant, a manager of the fund, favors companies like chip designer Montage Technology, which sells to Samsung Electronics and SK Hynix. Montage is less vulnerable to intense competition among domestically-oriented chip companies, he says, and investors don’t fully appreciate its global positioning. He sees Montage growing into a company as large as Broadcom, which has a $1.9 trillion market value, over the next decade.

Durrant also owns Midea, a company known for its home appliances. But a quarter of sales now come from robotics and factory automation, data-center cooling, commercial heat pumps, and other in-demand industrials. At 12 times earnings, Durrant says investors are missing that business’s value. He sees the stock as a cheap rarity, delivering free cash flow compounding annually at 10% with a 4% dividend yield.

Even those ambivalent about China’s economy see positive signs on the ground for investors.

Nicholas Borst, director of China research at Seafarer Funds, said companies he met with on a recent trip were the most relaxed he has ever seen about government policy. “Market regulators are doing some things on competition and there are policies where national security is an imperative, like AI and financial stability. But in general the feel was for a loosening and more relaxed policy environment,” says Borst.

That may be a greenlight for investors to take a closer look at well-positioned companies, even if China’s economy merely muddles along.

The Iran war proves that America’s ability to spend heavily on elaborate weapon systems no longer cuts it in conflicts dominated by cheap drones

Cheap drones have tilted the battlefield against America’s high-cost military.

For decades, the U.S.’s ability to spend the most on the best, most exquisite weapon systems led to American military hegemony. In the air, the F-22 Raptor fighter jet, costing some $150 million, can knock threats to a billion-dollar B2 Stealth Bomber jet out of the sky before the enemy sees either plane, while Patriot missiles, costing $4 million a pop, destroy enemy cruise missiles aimed at U.S. bases or allies.

At sea, the U.S.S. Gerald R. Ford aircraft carrier, costing $13 billion and powered by two nuclear reactors, can launch hundreds of missions a day, while multibillion-dollar nuclear submarines carry cruise missiles 1,000 feet beneath the waves. And on land, M1 Abrams tanks, costing millions, can fire three-foot-long shells at the enemy while rolling 40 miles an hour, protected by multiple layers of armor including ultradense depleted uranium.

But if the wars in Iran and in Ukraine have taught the U.S. anything, it’s that all this military firepower doesn’t assure battlefield domination. Cheap drones, often costing as little as $10,000, now make it possible to hold superpowers at bay for years or drive them to the negotiating table to end an unpopular war.

In Ukraine, homegrown drones have destroyed thousands of Russian tanks and military vehicles, killed tens of thousands of troops, and turned the Russian invasion into a multiyear stalemate. In Iran, Shahed drones managed to shut the Hormuz Strait—the world’s most important transit point for oil—by making the risk of crossing too high for tankers. And the U.S. has been unable to destroy all the decentralized manufacturing for the Shahed—it’s like trying to swat 100% of the flies at a summer picnic.

Iran’s victory, and it should be considered a victory given the regime’s survival, ability to control the strait and world energy prices despite being pummeled by the U.S. and Israeli militaries, shows that the Pentagon needs to adapt—and adapt fast.

A host of new companies are going to help the U.S. fill the gap, gunning for business that traditional defense companies can’t—or don’t want to—fill. Drone-focused start-ups will compete with old-guard defense companies to provide the weapons of postmodern war, upending what was once a straightforward sector for investors. Companies with the ability to move quickly, adapt and keep costs low should thrive, while those that can’t could struggle in the years ahead. Suppliers able to boost output to meet insatiable demand for parts, displacing parts coming from China, will do even better.

“You’re looking at a step change in military philosophy,” says Bill Birmingham, managing director at Rex Shares, an asset management firm offering the REX Drone exchange-traded fund, which is down about 7% since the ETF launched in late October. The push for American “drone dominance has opened the door to so much innovation.”

Just how much that innovation is needed has been on display in Iran. While the U.S. and Israel were able to kill key political and military leaders, knock out conventional defenses, and destroy the Iranian navy, they couldn’t prevent Iran from using homegrown drones to terrorize Gulf states and shut the Strait of Hormuz. Iranian drones left America unable to keep oil flowing from the Middle East without a peace deal, imperiling the world economy.

The cost advantage of the new weapons of war is too big to ignore. The U.S. fired hundreds of million-dollar interceptor missiles in days, which will take months to rebuild, leading to fears of depleted stocks, denials of depleted stocks, deals to expand missile production, and the president invoking the Defense Production Act. It is a contributing factor to President Donald Trump’s proposed $1.5 trillion fiscal 2027 defense budget, up about 50% from the 2026 defense budget.

In July, Defense Secretary Pete Hegseth unveiled America’s plan to achieve dominance by quickly getting drones into the hands of the American soldier. His announcement followed Trump’s July executive order calling for American industry to beef up its manufacturing capabilities. The Defense Autonomous Warfare Group, or DAWG, which was created through a Biden-era drone initiative originally called Replicator, is set to see its budget explode from $225 million in fiscal year 2026 to $55 billion in fiscal year 2027.

William Blair analyst Louie DiPalma estimates the U.S. market size for lower-cost drones at nearly $100 billion annually, including those that can still be carried by a soldier. There will be additional spending for more sophisticated drones, including General Atomics’ Predator and Reaper, and Boeing’s new autonomous Ghost Bat, a collaborative combat aircraft, or CCA, being developed with the Royal Australian Air Force to fly recon or bombing missions with or without manned fighter jets.

Even before the war with Iran started, a group of companies gathered in February at Fort Benning in Georgia to compete in a drone competition, Gauntlet I, designed to put low-cost, one-way attack drones into the hands of American soldiers.

The winner wasn’t American. It was Shrike, a first-person-view strike drone that uses a 12-mile fiberoptic tether to prevent jamming and provide the operator with clear imagery. It was built with Ukrainian drone tech and scored a near-perfect 99.3. Ukraine is making millions of drones a year and could make millions more if the parts were available.

Still, “despite four years of unprecedented visibility into Ukrainian battlefield innovations, and the recent war in Iran, Western forces have not institutionalized key lessons into doctrine, force structure, or procurement priorities,” says Mick Ryan, senior fellow for military studies at the Lowy Institute, an Australian think tank.

For the U.S., building drone-war dominance must start at home. To jump-start that initiative, the U.S. government banned nonmilitary drones from DJI, a Chinese manufacturer with 70%-plus market share. The ban wasn’t to protect America from the security risks of using Chinese technology, but to signal to American industry that the time had come to make, rather than import, the devices that will determine the outcome of conflicts in the coming age.

“We need to be a great manufacturing superpower,” says Ethan Thornton, founder of privately held Mach Industries, which uses flexible manufacturing to produce drones and munitions. “The gap between us and China is only increasing.”

A host of companies—new and old—will be vying to become those manufacturers. Many of them are private. Entrepreneur Palmer Luckey’s Anduril is the most valuable privately held defense start-up and aims to be the department store for the U.S. military, building weapons with off-the-shelf commercial technology, including drones.

Shield AI is merging artificial intelligence “hive-mind” tech with low-cost drones. Los Angeles-based Neros Technologies took second place in Gauntlet I with its Archer quadcopter. The U.S. military has deployed Virginia-based Napatree Technology’s drone interceptors to hunt other drones.

Investors have more than enough drone stocks to choose from—at least a dozen—but the best stocks are likely to be from the drones that have been battle-tested, says Byron Callan, managing director at Capital Alpha Partners. “The Good Housekeeping seal of approval is if [the drones] have actually been used in Ukraine.”

Four meet that threshold: AeroVironment, Aevex, Red Cat Holdings, and Swarmer. The latter three are recent start-ups, with the potential to grow into big business, but the risk that comes with companies that are only beginning to boost revenue.

Swarmer, which is connected to Blackwater founder Erik Prince, builds artificial-intelligence-based command-and-control software to link drones, letting one operator command an autonomous swarm. Its tech has been deployed hundreds of thousands of times in missions for Ukraine. Swarmer, which went public in March, has a market capitalization of $500 million and trades at 20 times 2027 revenue of $25 million. Only one analyst, Lucid Capital Markets’ Alex Fuhrman, covers Swarmer shares. He rates the stock Buy, and his $60 price target suggests a 33% rise from a recent $45.

Ukraine is making millions of drones a year and could make millions more if the parts were available. Above: a Ukrainian military member in a vehicle next to Sting drone interceptors used to target Russian drones. (Roman PILIPEY / AFP via Getty Images)

Aevex’s Phoenix Ghost provides a kamikaze drone capable of loitering for up to six hours in the air while it waits for a target to appear. The company, which has a market value of $2 billion, went public in April, and its shares have traded in a range from roughly $17 to $42.

Part of the issue is the boom/bust cycle of Ukrainian demand. Roughly 50% of Aevex’s sales of $606 million will come from Ukraine in 2026, but those sales could dry up in 2027, according to Jefferies analyst Sheila Kahyaoglu, as Ukraine turns from a drone importer to a drone exporter. Despite the loss of Ukrainian business, Aevex’s sales are still expected to grow more than 10% between 2026 and 2027. Aevex is the cheapest of the four at roughly 30 times estimated 2027 earnings, and all nine of the analysts who cover the stock rate it a Buy.

Red Cat, which went public in 2021, makes reconnaissance drones, first-person-view attack drones, and drones that work when GPS doesn’t. Its maritime division also makes the Variant 7 maritime drone, which was modeled on Ukrainian technology. Red Cat trades at eight times 2027 sales of $218 million, and all the analysts covering the company rate the shares Buy. Clear Street analyst Brian Dobson sees the company benefiting from the DJI ban, and his $19 price target, up from a recent $10.50, is 10 times his 2028 sales target.

AeroVironment, which went public in 2007, was one of the first American contractors to bring hardware to the front lines. Its Switchblade loitering munitions have helped take out Russian tanks and other weapons, while its Raven and Puma drones provide real-time intelligence for warfighters on the battlefield. It is expected to have sales of about $2 billion in calendar year 2026 and $2.4 billion in 2027, and 17 of the 20 analysts who cover the $8 billion company rate its shares a Buy.

The high-tech weapons for modern wars comes from all over the world these days. European defense technology company Stark’s stand at an International exhibition near Paris earlier this month. (Photograph by Dmitry Kostyukov)

AeroVironment also has the benefit of making antidrone technology, which is becoming as important as drones themselves. That includes everything from radar jamming to edge computing—which untethers enemy drones from GPS—to low-cost drone interceptors. AeroVironment’s Locust lasers have already been deployed in Iran. The ‘directed energy’ weapon, which can be used on ships or mounted on a truck, can burn through the hull of an incoming drone. “We probably are pretty close to Star Wars…I don’t know how long before it’s hand-held,” says Adrian Helfert, chief investment officer of wealth manager Westwood Group.

Ondas is another beneficiary of higher spending on antidrone technology. Its reusable Iron Drone Raider system literally catches incoming drones in a net. It also supplies radio-signal jamming technology. Oppenheimer analyst Tim Horan rates shares Outperform and has a $16 price target, up from a recent $9, valuing the stock at about 17 times estimated 2027 sales. It isn’t expected to be profitable until 2029.

But with technology changing so quickly, buying suppliers, in a picks-and-shovels approach to the drone sector, may be the best way to bet on the nascent drone technology in the U.S., says Jefferies’ Kahyaoglu. Two of her favorites are diversified defense prime contractor L3Harris Technologies and Kratos Defense & Security Solutions. L3 is spinning out its missile business in an IPO expected later this year. That will give investors a new company that makes missile hardware, electronics, and solid rocket motors. Kratos is a drone leader, developing the XQ-58A Valkyrie, a collaborative combat aircraft, which won’t be disrupted by new start-ups making lower-cost guidable munitions. It also makes propulsion systems for drones and missiles.

Kahyaoglu’s target for Kratos is $80, up more than 50% from a recent $51. Kratos stock, at 50 times estimated 2027 earnings, trades like a high-growth drone company. L3 trades like a traditional defense prime at a reasonable 22 times.

Two start-ups supplying parts are Arxis and Applied Aerospace & Defense. Arxis makes highly engineered electronic and mechanical parts for any drone or missile platform. Wells Fargo analyst David Strauss rates Arxis stock Overweight and sets a $52 price target, up from a recent $46. He calls the company a “purpose-built industrial compounder,” meaning he expects it to parlay its cash flow into acquisitions to drive higher growth. It is priced for growth, with shares trading for about 54 times estimated 2027 earnings, which are expected to double from 2026.

Applied Aerospace, which completed its IPO in early June, supplies structural components for companies that make autonomous weapons systems. It’s so new that Wall Street hasn’t yet picked up coverage. Shares have struggled out of the gate, trading for a recent $18, below the IPO price of $20.

While the Iran war has put the spotlight on the shiny new toys, it also revealed the limitations of the established defense companies. Between the end of February and Trump’s June 14 announcement of an Iran memorandum of understanding to end hostilities, Lockheed Martin and Northrop Grumman stocks were down 18% and 14%, respectively. The iShares U.S. Aerospace & Defense ETF fell 4%, while the S&P 500 rose 8%.

Part of the problem is that the stocks were already priced for a lot of good news—the iShares ETF was up 57% in the 12 months before fighting in Iran broke out. The war also raised Democrats’ odds of retaking part of Congress in midterm elections, which could generate pushback on ever-rising military spending.

Iran’s Shahed drones might deserve credit for the declines, too. Just how many $30 million tanks does a military need if they can be ‘neutralized’ with a $5,000 quadcopter? A lot. While money will go to new drones, there will still be plenty for more advanced jets, ground vehicles, and boats.

“Views that drones will massively displace spending on manned platforms ignore institutional and political biases on military power,” says Capital Alpha Partners analyst Byron Callan. “Israel, Russia, and Ukraine, which are the three most drone-savvy militaries, aren’t abandoning manned weapons.”

That leaves a lot of potential upside for the traditional defense giants, which might not be able to—or want to—compete with start-ups rushing to strap explosives to quadcopters. The Air Force, for instance, plans to buy thousands of collaborative combat aircraft, sophisticated autonomous wingmen assisting manned fighter jets, helping maintain American air dominance. Autonomous subs and ships are also on the Navy’s docket. Many of those will be made by the usual suspects, including Northrop, Lockheed, and Boeing, with parts supplied by RTX and others.

While defense contractors might not be able to move at the speed of start-ups, they have capital, helping them function like a technology incubator. Lockheed has a venture fund, which has helped seed more than 120 companies since its founding in 2007. Lockheed recently increased the size of its fund from $400 million to $1 billion.

“Our investments help create a pipeline of cutting-edge technologies that create a resilient industrial base, drive growth, and ultimately help the United States and its allies deter the most pressing emerging threats,” says CFO Evan Scott. That fund has helped make Lockheed a favorite of Westwood’s Helfert, who recommends the stock.

Ultimately, war is a never-ending race to achieve technical superiority over the enemy. Drones of all shapes and sizes for land, sea, and air will proliferate for decades.

As the war with Iran has highlighted, the drone wars are just beginning.

The company says it is coming out of the process with a 75% debt reduction and sufficient liquidity

Saks Global is emerging from Chapter 11 bankruptcy and rebranding itself as Exemplar Luxury Group.

The company said it is coming out of the process with a 75% debt reduction and sufficient liquidity. It has been partnering with Pentwater Capital Management and Bracebridge Capital throughout its restructuring process.

Both firms will have two representatives on a newly reconstituted seven-person board, the company said. They will be joined by Chief Executive Geoffroy van Raemdonck, as well as former Ulta Beauty CEO Dave Kimbell and former Moët Hennessy and DFS Group CEO Philippe Schaus.

The company filed for bankruptcy in January amid mounting debts, just around a year after its $2.7 billion merger with Neiman Marcus. Van Raemdonck, who oversaw Neiman Marcus’s own bankruptcy process, was brought in as CEO to lead a restructuring.

As CEO, van Raemdonck closed stores, cut staff, and severed some partnerships, The Wall Street Journal reported. The company said in April that it had secured $500 million from bondholders to support its restructuring.

Van Raemdonck said the rebranding reflects the company’s commitment to its three main retailers: Neiman Marcus, Saks Fifth Avenue, and Bergdorf Goodman.

“We greatly appreciate the commitment of our new owners, who understand the value of our banners and the growth opportunity for Exemplar Luxury Group,” he said. “Neiman Marcus, Saks Fifth Avenue and Bergdorf Goodman have long set the standard for luxury retail in the U.S., and we are committed to building upon that legacy.”

The company said it plans to focus on leveraging its retail model and curating product portfolios and experiences to meet the needs of high-income consumers.