Motorola Posts Record 2025 Results Amid High Valuation and Lingering Risks

What happened

Motorola Solutions announced record financial results for the fourth quarter and full year of 2025, with CEO Greg Brown emphasizing resilience, strong demand, and a record backlog. The company reported robust sales, earnings, and cash flow, building on prior momentum from Q3 2025's 8% revenue growth and 30.5% non-GAAP operating margin. However, shares trade at a premium valuation of approximately 31 times earnings, down 13% from recent highs, reflecting market concerns over sustainability. Key risks such as U.K. Airwave litigation, tariff pressures, and Silvus integration remain unresolved, potentially impacting margins and cash flow. Investors should scrutinize the backlog quality and margin durability beyond the positive headline numbers.

Implication

The record backlog and demand reinforce Motorola's entrenched market position but do not justify the current premium valuation without addressing core risks. Non-GAAP operating margins near 30% are robust but vulnerable to tariff impacts and potential adverse Airwave decisions. The Silvus integration adds leverage and execution risk, potentially straining future cash flows and capital allocation. Market sentiment remains crowded with bullish narratives, limiting upside potential absent a pullback to more attractive levels around $355. Monitoring near-term catalysts like FY2026 guidance and litigation outcomes is crucial for risk-adjusted investment decisions.

Thesis delta

The strong 2025 results confirm Motorola's operational execution but do not materially change the investment thesis. Risks related to valuation, regulatory outcomes, and integration persist, maintaining the 'WAIT' recommendation with an attractive entry near $355. No significant shift in the thesis is warranted based on this update.