| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| - | - | - |
Markets staged a strong recovery in Q2 2026, with the S&P 500 gaining 15% and finishing near record highs despite significant headwinds. The Middle East conflict that closed the Strait of Hormuz drove oil to $115 in April, pushing inflation to a three-year high of 4.2%. However, oil reversed sharply to $70 by quarter end following a ceasefire, removing the primary inflation driver. Semiconductor stocks led the rally with an 88% quarterly return, their strongest performance in nearly 30 years, fueled by massive AI infrastructure spending projected to reach $724 billion in 2026. Market leadership broadened significantly, with small-caps gaining 22% year-to-date and outperforming large-caps as profit margins improved from Fed rate cuts and valuations became more attractive. The Federal Reserve shifted from expected rate cuts to signaling potential hikes during the quarter, though easing oil prices may reduce this pressure. Technology stocks showed both the promise of AI transformation and the risks of elevated expectations, with late-quarter pullbacks demonstrating valuation sensitivity. Looking ahead, the path of inflation, sustainability of AI spending, and continuation of market breadth will shape the remainder of 2026.
Markets demonstrated resilience in Q2 2026 by recovering strongly despite geopolitical conflict, an oil shock, and elevated inflation, with the S&P 500 gaining 15% and finishing near record highs as oil prices reversed and market breadth expanded beyond mega-cap technology stocks.
The remainder of 2026 will be shaped by three key questions: whether inflation eases as oil prices have fallen, whether the AI investment cycle and associated stock gains can be sustained, and whether market breadth continues beyond mega-cap tech. The next inflation reports will determine Fed policy direction. AI spending must translate into real profits to justify current valuations, especially as more is funded through debt and equity issuance. Market leadership has broadened this year across sectors and company sizes, but it remains to be seen if this continues or narrows again. Despite facing war, energy shock, three-year high inflation, and potential Fed rate hikes, stocks traded to new highs in Q2, demonstrating market resilience.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 1 2026 | 2026 Q2 | AMZN, GOOG, META, MSFT, ORCL | AI, inflation, market breadth, oil, semiconductors, small caps, technology | - | Markets rebounded strongly in Q2 with the S&P 500 up 15% as oil prices reversed from $115 to $70 following a Middle East ceasefire. Semiconductor stocks surged 88% on massive AI infrastructure spending reaching $724 billion annually. Market breadth expanded with small-caps gaining 22% year-to-date, outperforming large-caps on improving margins and attractive valuations. Fed shifted toward potential rate hikes but easing oil may reduce pressure. |
| Apr 1 2026 | 2026 Q1 | - | AI, diversification, energy, Fed policy, Geopolitical, inflation, Market Rotation, oil | - | Q1 2026 saw oil prices surge 70% due to Middle East tensions, driving S&P 500 down 4.3% while smaller companies outperformed. AI disruption fears hammered software stocks down 30%. Federal Reserve rate cut expectations evaporated amid inflation concerns. Despite volatility, earnings estimates continued rising, suggesting market decline reflects geopolitical uncertainty rather than fundamental weakness. |
| Jan 1 2026 | 2025 Q4 | - | AI, Economic Data, Fed policy, Government Shutdown, Market Leadership, Rate Cuts | - | Markets ended Q4 near all-time highs despite government shutdown disruptions and Fed policy uncertainty. The S&P 500 gained 18% for the year, but AI themes matured toward selectivity and profitability focus. With expensive valuations and high expectations already priced in, 2026 faces a higher bar with less margin for error despite continued positives. |
| Oct 1 2025 | 2025 Q3 | - | AI, earnings, Federal Reserve, Labor Market, rates, small caps, technology | - | Markets hit new highs in Q3 driven by Fed rate cuts and AI investment boom. Small caps outperformed dramatically while technology spending reached fastest pace since late 1990s. Fed signals gradual easing with two more cuts expected by year-end. Market positioned for soft landing scenario despite labor market softening and expensive AI valuations creating potential headwinds. |
| Jul 1 2025 | 2025 Q2 | - | earnings, Fed policy, inflation, Market Volatility, Risk Appetite, tariffs, Trade Policy | - | Trade policy volatility defined the first half of 2025, creating dramatic market swings from Q1 escalation to Q2 de-escalation. Despite extreme volatility, markets ended largely unchanged with the S&P 500 recovering fully from 15% losses. The Federal Reserve paused rate cuts due to uncertainty while inflation expectations rose despite subdued actual data. Focus remains on long-term discipline amid ongoing policy uncertainty. |
| Apr 1 2025 | 2025 Q1 | - | AI, diversification, growth, Markets, Optimism, technology, Valuations | - | Financial Synergies maintains optimistic market outlook despite elevated valuations, citing declining rates, controlled inflation, and steady growth. AI offers significant opportunities with established profitable companies leading innovation. While Shiller P/E at 38x appears expensive, strong earnings growth and business fundamentals support current levels. Diversified portfolios across market segments can manage risk while capturing long-term growth opportunities. |
| Jan 2 2025 | 2024 Q4 | - | Estate Planning, financial planning, Market Highs, Wealth management | - | Financial Synergies' quarterly newsletter covers their internship program, estate planning guidance, and market education. They present data showing investing at S&P 500 all-time highs historically produced solid returns, with only 9% probability of 10%+ declines. The firm emphasizes wealth management's emotional aspects beyond numbers, focusing on client goals and legacy planning. |
| Oct 1 2024 | 2024 Q3 | META | AI, Data centers, infrastructure, Investment, returns, technology, value | META | Hundreds of billions in AI infrastructure spending continues despite limited corporate adoption. Meta exemplifies the challenge, needing 4% additional revenue growth to justify $40+ billion in extra data center investments. Companies with clear monetization paths and internal execution capabilities have better odds than those dependent on external factors for returns. |
| Jul 1 2024 | 2024 Q2 | 000660.KS, 005930.KS, 1299.HK, 2330.TW, 2912.TW, 300012.SZ, 300124.SZ, 3690.HK, 9999.HK, BBCA.JK, BCH, FMX, HDB, NTCO3.SA, RADL3.SA, UL | AI, Brazil, China, emerging markets, Indonesia, Quality, semiconductors, valuation | - | Aikya's emerging markets fund underperformed in October due to minimal semiconductor exposure during AI-driven rallies. The fund maintains quality and valuation discipline, benefiting from Indonesian bank holdings and defensive Chinese positions while facing headwinds from Latin American consumer slowdowns. Management prioritizes long-term absolute returns over benchmark tracking. |
| Apr 2 2024 | 2024 Q1 | 7318.T, HOLO | AI, deployment, energy, private equity, Take-privates, value creation | - | BXPE delivered 3.9% Q3 returns through record $1.3 billion deployment across high-conviction themes including AI, energy transition, and digitization. Strong portfolio fundamentals drove broad-based performance with 80% of investments appreciating. Major take-privates of TechnoPro and Hologic showcase deal sourcing capabilities while young portfolio composition indicates significant upside potential ahead. |
| Jan 1 2024 | 2023 Q4 | 004800.KS, 005930.KS, 009540.KS, 090430.KS, CDI.PA, NWSA, REA.AX, VI.PA | asset value, discount, Holdings, Korea, NAV, value | NWSA | AVI Global Trust focuses on discount-to-NAV opportunities, building Korean exposure to 9.5% of portfolio amid corporate governance reforms. Korean holdings delivered 25% weighted returns despite widespread discounts persisting. News Corp remains largest detractor but family trust resolution may catalyze value realization. Manager sees compelling environment for fundamental investors in underresearched, undervalued markets. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
OilOil prices spiked to $115 in early April due to Middle East conflict closing the Strait of Hormuz, then reversed sharply to $70 by quarter end following a ceasefire. The energy shock drove inflation to a three-year high of 4.2% year-over-year in May, with over half the monthly increase tied to energy. With oil returning to pre-conflict levels, the main driver of higher inflation has started to fade. |
Energy Inflation Middle East Commodities |
AIAI capital expenditures by major tech companies reached $724 billion projected for 2026 and nearly $900 billion for 2027, driving a historic semiconductor rally. The spending wave is reshaping financial markets with major IPOs like SpaceX raising $85 billion and companies issuing debt and equity to fund buildouts. The market is treating AI as a major technological shift, though the quarter showed how much future growth is already priced in. |
Technology Semiconductors Capital Expenditures Data Centers | |
SemiconductorsSemiconductor stocks posted their strongest quarter in nearly 30 years with an 88% return, comparable only to the late 1990s internet boom. The rally is anchored to massive AI infrastructure spending, with chipmakers reporting record earnings and growing backlogs. Companies indicate they are limited more by how fast they can build than by demand. |
Technology AI Capital Expenditures Earnings | |
Small CapsSmall-cap stocks outperformed with the Russell 2000 gaining 22% year-to-date, driven by improving profit margins as Fed rate cuts reduced floating-rate debt costs, economic resilience benefiting domestically-focused companies, and attractive valuations relative to mega-cap tech. Market leadership has broadened beyond a handful of mega-cap tech stocks. |
Value Rates Earnings Valuations | |
RatesThe Federal Reserve shifted from expected rate cuts to signaling potential rate hikes during Q2 as oil-driven inflation reached a three-year high. The market swung from pricing in rate cuts to pricing in a fall rate hike. With oil prices now back to pre-conflict levels, inflation is expected to ease, taking pressure off the Fed. |
Inflation Oil Liquidity | |
| 2026 Q1 |
OilOil prices rose over 70% in Q1 due to escalating geopolitical tensions and the closure of the Strait of Hormuz, a chokepoint for roughly 20% of global oil flows. The surge sent crude oil trading at the highest level since mid-2022, with prices near $100 per barrel by quarter-end. |
Energy Geopolitical Inflation Supply Commodities |
AIAI shifted from being viewed as a productivity tool to a potential replacement for entire categories of professional services. This change in perception led to a significant sell-off in the software industry, which declined nearly 30% from its peak, representing one of the largest non-recessionary drawdowns in over 30 years. |
Technology Software Disruption Professional Services Productivity | |
DiversificationMarket leadership shifted dramatically with smaller companies outperforming large caps. The equal-weight S&P 500 and Russell 2000 each gained nearly 1% while the market-cap weighted S&P 500 declined 4.3%, demonstrating the benefits of diversified exposure across company sizes and styles. |
Small Caps Value Market Leadership Portfolio Risk Management | |
InflationRising oil prices combined with already firming inflation led to a complete repricing of Federal Reserve rate cut expectations. Core PCE remains near 3% and producer-level price inflation has been rising, with gasoline prices already up nearly $1.00 per gallon since late February. |
Fed Policy Energy Consumer Prices Monetary Policy Economic Data | |
| 2025 Q4 |
AIEdgewood views AI as creating significant opportunities, particularly through Draft One which generates police reports in minutes with 50%+ time savings. The AI Era Plan is their fastest booked product to date, expanding software value per officer and driving higher attach rates across hardware and software products. |
AI Draft One LLMs Software Automation |
SemiconductorsThe firm maintains significant exposure to semiconductor companies including NVIDIA, Broadcom, and ASML. They note AI servers require greater connector/interconnect content versus traditional servers, driving healthy organic growth in related segments. |
Semiconductors AI Infrastructure Data Centers Memory Connectivity | |
GrowthEdgewood focuses on high-quality growth companies with estimated long-term EPS growth rates of 10-21%+. Their portfolio delivered 29% YoY earnings growth in the most recent quarter, significantly outpacing broader market indices. |
Growth EPS Growth Quality Compounding Fundamentals | |
Data CentersThe projected incremental 100GW of data center capacity necessary through 2030 creates large opportunities for portfolio companies. AI data centers drive structurally higher interconnect content with dense GPU racks requiring far more high-speed copper, fiber, and power interconnects. |
Data Centers Infrastructure GPU Connectivity Power | |
| 2025 Q3 |
AITechnology-related investment grew 14% year-over-year in Q2, the fastest pace since the late 1990s, driven by AI industry buildout with billions spent on chips, cloud architecture, and data centers. Management teams report strong demand with spending plans in the hundreds of billions and order backlogs spanning years. AI enthusiasm has fueled outsized gains in technology and semiconductor stocks, though some question whether spending is outpacing revenue growth. |
Data Centers Semiconductors Cloud Technology |
RatesThe Federal Reserve cut interest rates by 0.25% in September after a 9-month pause, framing it as risk management to keep economic expansion on track. The central bank updated its forecast to include two more rate cuts before year-end with potential for more in 2026. Treasury yields fluctuated but ended the quarter lower, causing bonds to trade higher with longer-maturity bonds outperforming. |
Federal Reserve Treasury Monetary Policy | |
Small CapsSmall-cap stocks rallied sharply in anticipation of the Fed's rate cut, with the Russell 2000 surpassing its previous high from 2021 and returning nearly 12%. Small caps posted their biggest quarter of outperformance over the S&P 500 since Q1 2021. Like emerging markets, small caps are viewed as more sensitive to rate cuts and shifts in global financial conditions. |
Russell 2000 Rate Sensitivity | |
| 2025 Q2 |
Trade PolicyTrade policy uncertainty dominated the first half of 2025, with escalating tariffs in Q1 followed by de-escalation in Q2. The administration implemented targeted tariffs on China, Canada, and Mexico, then announced sweeping global tariffs before shifting toward de-escalation with trade agreements. Policy uncertainty remains fluid with court challenges and upcoming deadlines creating ongoing volatility. |
Tariffs China Trade War Policy Uncertainty |
InflationTariff uncertainty caused inflation expectations to rise sharply despite actual inflation remaining subdued. Consumer expectations diverged significantly from trailing inflation data, with the University of Michigan survey showing rising expectations while the Consumer Price Index continued drifting lower. The debate continues whether companies will pass through tariff costs or absorb them to remain competitive. |
Expectations Consumer Prices Tariffs Fed Policy Pricing | |
RatesThe Federal Reserve held interest rates steady due to trade policy uncertainty, adopting a wait-and-see approach before deciding on rate cuts. Markets expect gradual rate cuts beginning in September, with approximately 1.25% in cuts anticipated over the next 18 months. Long-term Treasury yields remained volatile but ended the first half largely unchanged. |
Fed Policy Rate Cuts Treasury Monetary Policy Uncertainty | |
Risk AppetiteMarket sentiment shifted dramatically from cautious in Q1 to renewed optimism in Q2 as trade tensions eased. The transition created two distinct market environments, with defensive low volatility stocks outperforming in Q1 before high beta cyclical stocks led the Q2 rebound. Growth and technology stocks experienced the most dramatic reversal. |
Sentiment Volatility Growth Technology Cyclicals | |
EarningsCompanies posted stronger than expected Q1 earnings, contributing to the Q2 market rebound. The upcoming corporate earnings season will provide crucial insight into how companies are navigating tariffs and policy uncertainty, including updates to pricing strategies and earnings guidance for coming quarters. |
Corporate Guidance Pricing Strategy Outlook | |
| 2025 Q1 |
AIAI represents incredible potential from curing diseases to improving productivity to reshaping how we live and work. The rapid rise of artificial intelligence is unsettling at times but offers endless opportunities. Current AI-related companies are well established with strong profitability and healthy balance sheets, unlike unprofitable dot-com companies of the past. |
Technology Innovation Productivity Growth Disruption |
ValuationsCurrent market valuations are high with the Shiller P/E ratio at 38x versus historical average of 27x. While stocks appear expensive by historical standards, valuations don't reliably predict near-term returns. Strong business fundamentals and earnings growth have justified some elevated expectations in recent quarters. |
Price-to-earnings Expensive Fundamentals Earnings Historical | |
| 2024 Q3 |
AIMassive investments in AI infrastructure continue despite skepticism about returns. The manager analyzes whether hundreds of billions in AI spending will generate adequate returns, comparing it to historical technology adoption cycles. Early corporate adoption remains limited but infrastructure investments by major players suggest confidence in eventual productivity gains. |
Data Centers Infrastructure Productivity Technology Investment |
| 2024 Q2 |
AIThe market's continued excitement for AI potential led semiconductor stocks materially higher, with Taiwanese and Korean markets at record highs. While the fund believes in AI's long-term potential, they maintain quality and valuation discipline rather than chasing momentum. |
Semiconductors Taiwan Korea Technology |
QualityAikya's investment approach relies on two key pillars: Quality and Valuation. They invest exclusively in high-quality companies when available at sensible valuations, maintaining this discipline despite market momentum in other areas. |
Valuation Investment Discipline Companies | |
| 2024 Q1 |
AIBlackstone continues to focus on the picks and shovels of AI through infrastructure investments such as chips and data centers, while the market's maturation has opened the door for measured exposure to the application layer. BXPE invested in OpenAI and Anthropic — two category-defining AI research labs with complementary strategies in consumer and enterprise use cases. |
Data Centers OpenAI Anthropic Infrastructure Applications |
Energy TransitionAfter two decades of stagnation, US electricity demand is projected to rise by 40% over the next 10 years. One key reason is data centers, where over 80% of hyperscalers and operators cite power availability as their top growth constraint. Electrification and reshoring of manufacturing are also fueling this secular trend. |
Electricity Demand Data Centers Electrification Power Infrastructure | |
DigitizationDigitization — investments tied to the global shift online — was a top contributor, accounting for 21% of Q3 performance. This theme represents the ongoing digital transformation across various industries and business models. |
Digital Transformation Online Technology Business Models | |
| 2023 Q4 |
South KoreaBuilding exposure to Korea due to ongoing corporate governance reform agenda and rich array of deeply undervalued companies. Korean names have contributed +1.1% to NAV with weighted average total return of +25%. 68% of KOSPI index still trading below book value and 61% without sell-side coverage. |
Corporate Governance Value Discount Reform |
ValueFocus on companies trading at discount to estimated underlying net asset value. News Corp trading at significant discount with REA stake accounting for 75% of market cap. Amorepacific Holdings trading on widest ever discount of 52%. |
Discount NAV Undervalued Asset Value |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 21, 2025 | Fund Letters | Provident Financial Articles | META | Meta Platforms Inc | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising technology, Artificial Intelligence, capital expenditure, cash flow generation, data centers, digital advertising, social media, user monetization | Login |
| Oct 31, 2025 | Fund Letters | Provident Financial Articles | NWSA | News Corp | Communication Services | Publishing | Bull | NASDAQ | Asset Unlock, Australia, discount, Dow Jones, Family Trust, information services, media, Publishing, REA Group, Value | Login |
| TICKER | COMMENTARY |
|---|---|
| MSFT | The bottom chart graphs the combined capital spending of five of the largest tech companies building AI infrastructure: Microsoft, Amazon, Meta, Alphabet, and Oracle. The group spent a combined $32 billion in 2016. By 2025, that figure had grown to roughly $416 billion. The pace continues to climb: the five companies are projected to spend about $724 billion this year and nearly $900 billion next year. |
| AMZN | The bottom chart graphs the combined capital spending of five of the largest tech companies building AI infrastructure: Microsoft, Amazon, Meta, Alphabet, and Oracle. The group spent a combined $32 billion in 2016. By 2025, that figure had grown to roughly $416 billion. The pace continues to climb: the five companies are projected to spend about $724 billion this year and nearly $900 billion next year. |
| META | The bottom chart graphs the combined capital spending of five of the largest tech companies building AI infrastructure: Microsoft, Amazon, Meta, Alphabet, and Oracle. The group spent a combined $32 billion in 2016. By 2025, that figure had grown to roughly $416 billion. The pace continues to climb: the five companies are projected to spend about $724 billion this year and nearly $900 billion next year. |
| GOOG | The bottom chart graphs the combined capital spending of five of the largest tech companies building AI infrastructure: Microsoft, Amazon, Meta, Alphabet, and Oracle. The group spent a combined $32 billion in 2016. By 2025, that figure had grown to roughly $416 billion. The pace continues to climb: the five companies are projected to spend about $724 billion this year and nearly $900 billion next year. In the public market, companies such as Alphabet and Oracle are issuing both stock and bonds to fund their spending. |
| ORCL | The bottom chart graphs the combined capital spending of five of the largest tech companies building AI infrastructure: Microsoft, Amazon, Meta, Alphabet, and Oracle. The group spent a combined $32 billion in 2016. By 2025, that figure had grown to roughly $416 billion. The pace continues to climb: the five companies are projected to spend about $724 billion this year and nearly $900 billion next year. In the public market, companies such as Alphabet and Oracle are issuing both stock and bonds to fund their spending. |
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