Defense & Disruption: Lockheed Takes a Hit, Tesla Bets on Autonomy

Taking a Look at Lockheed Martin (LMT) & Tesla (TSLA) Q2 2025 Earnings Results,

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This week, we covered quarterly results from two of the most influential companies in the world.

Lockheed Martin (LMT): Fortitude Under Fire

Lockheed Martin (LMT) delivered Q2 2025 sales of $18.2B (flat YoY), but large one-time charges on legacy programs drove a sharp drop in reported earnings. Pre-tax write-offs totaling $1.6B (on a classified Aeronautics project and international helicopter programs) plus other charges cut GAAP EPS to $1.46 (vs $6.85 a year ago). Excluding those items, underlying EPS was around $7.30 — reflecting resilient core profitability. Despite the charges, management reaffirmed full-year guidance for sales and free cash flow, citing robust demand (with allied nations expanding F-35 orders, over $1B in new missile contracts, and additional GPS satellite procurements). Our IVT model indicates LMT shares are now modestly undervalued after the post-earnings dip; we’ve maintained our base-case fair value (with a slight upward revision) and continue to view Lockheed as a long-term core holding on the front lines of defense innovation.

Tesla (TSLA): Ambition Amid Adversity

Tesla matched market expectations in Q2 2025, posting $22.5B in revenue (a slight beat) and non-GAAP EPS of $0.40 (in line with consensus). However, revenue fell 12% YoY — Tesla’s first notable sales drop in years — and earnings slid 23% as earlier price cuts and softer deliveries took a toll. Automotive gross margin narrowed to 17.7%, and operating income shrank 42% YoY (to $0.9B, with nearly half of that from regulatory credits), underscoring near-term profit pressures. Elon Musk cautioned of “a few rough quarters” ahead, but emphasized Tesla’s future opportunities — from the upcoming Cybertruck launch and a new affordable model to expansion in autonomous Robotaxi services — as drivers of reaccelerating growth. We’ve updated our IVT model and trimmed our fair value estimate (now below the current share price); while we acknowledge Tesla’s long-term leadership in EV and AI, we remain selective given the stock’s premium valuation.

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