| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 14.7% | 22.2% | 4% |
Sands Capital Global Growth delivered exceptional second-quarter 2026 results, posting a 22.2 percent net return versus 14.9 percent for the MSCI ACWI, driven primarily by AI infrastructure businesses. The portfolio's strong performance was supported largely by earnings growth rather than multiple expansion, with semiconductor and hardware businesses accounting for over 60 percent of the index's rise. Top contributors included SK hynix, Bloom Energy, Taiwan Semiconductor, ASML Holding, and NVIDIA, all benefiting from persistent AI demand and supply constraints. Memory shortages broadened beyond high-bandwidth memory into conventional DRAM and NAND, with meaningful capacity additions difficult before the second half of 2027. Power constraints are creating demand for alternative data center solutions, validating Bloom Energy's fuel cell opportunity. The portfolio added positions in Arm Holdings, Lenskart Solutions, and Space Exploration Technologies while consolidating consumer internet exposure by selling Flutter Entertainment, HDFC Bank, and Tetra Tech. Despite the strong quarter, the portfolio trades at 22 times forward earnings, one of the lowest premiums to the market in its history. The strategy maintains material exposure to AI infrastructure while continuing to seek compelling opportunities beyond AI, positioning for what management views as a shifting opportunity set for growth investors.
Sands Capital Global Growth takes an unconstrained approach to seeking the best growth businesses anywhere, focusing on companies with sustainable above-average earnings growth, leadership positions in promising business spaces, and significant competitive advantages. The portfolio is concentrated and conviction-weighted, holding 36 businesses with a long-term investment horizon of 5+ years and an expected long-term EPS growth rate of 33 percent. The strategy delivered one of its five best quarters of absolute investment results on record in Q2 2026, driven primarily by AI infrastructure businesses, with strong absolute results supported largely by earnings growth rather than multiple expansion. Despite the over 20 percent quarterly rise, the portfolio ended the quarter trading at 22 times forward earnings, representing one of the lowest premiums to the market multiple in the portfolio's history.
The opportunity set for growth investors is shifting, and we have positioned Global Growth to go where we believe the growth will be. Technology and geopolitics are creating new business spaces and sources of durable earnings growth, but also new risks. AI infrastructure, and its increasing breadth, remains an important example, but it is not the only one. These forces are also transforming businesses that investors have traditionally viewed as cyclical, capital intensive, or less capable of sustained growth. In some areas, AI-related demand, supply discipline, and deeper customer commitments are changing earnings trajectories and improving the durability of business models. In others, especially software and internet, AI is raising new questions about competition, margins, and long-term value creation. We believe this environment rewards research depth and adaptability. Our long time horizon remains an advantage, in our view, but the pace of change requires us to act more quickly when new information alters the facts. We seek to own businesses that can benefit from structural change, while also continuing to own and evaluate companies with idiosyncratic earnings drivers that can provide balance across multiyear cycles. We believe Global Growth is well positioned. The portfolio maintains material exposure to businesses benefiting from AI-related infrastructure investment, but we continue to look beyond AI for compelling long-term opportunities. In our view, the portfolio's high and rising earnings growth expectations, combined with a historically low valuation, create an attractive setup for investors with a multiyear horizon.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 30 2026 | 2026 Q2 | 000660 KS, ARM, ASML, AVGO, BE, GALD SW, ICE, INTC, ISRG, MU, NFLX, NVDA, ONON, ORCL, SHOP, SPOT, TSM | AI Infrastructure, Data centers, emerging markets, Growth Equity, Long-Term Investing, semiconductors, technology | - | Sands Capital Global Growth posted 22.2 percent net returns in Q2 2026, driven by AI infrastructure businesses including SK hynix, Bloom Energy, and Taiwan Semiconductor. Memory shortages are structural and multiyear, with supply constraints extending through at least late 2027. Power limitations are creating new data center opportunities. The portfolio added Arm Holdings, Lenskart, and SpaceX while consolidating internet exposure. Despite strong performance, the portfolio trades at historically low valuations relative to the market. |
| Apr 25 2026 | 2026 Q1 | 000660 KS, APP, ASML, AXON, BE, DASH, FLUT, NET, NFLX, TSM | AI, energy, global, growth, semiconductors, software, technology | - | Global Growth underperformed in Q1 as AI disruption fears hit software while geopolitical tensions drove energy higher. The fund added AI infrastructure exposure through semiconductors and power solutions while reducing software weights. Despite near-term headwinds, management sees attractive five-year setup with 26% expected earnings growth and historically low valuations. |
| Jan 22 2026 | 2025 Q4 | 6861.T, ADYEY, AMZN, ASML, AXON, CVNA, DOCU, DOL.TO, FLUT, GOOGL, ISRG, MELI, NET, NFLX, NOW, NVDA, SHOP.TO, SPOT, TSM, V | AI, defense, energy, global, growth, Robotics, Space, technology |
GOOGL ISRG GALD SW TITAN IN TSM NFLX AXON DASH MELI SPOT APP ARGX |
Sands Capital's Global Growth strategy returned 10.2% in 2025, lagging benchmarks due to valuation compression despite strong earnings growth. The portfolio maintains disciplined AI exposure while expanding into defense technology, robotics, energy transition, cybersecurity, and space themes. Trading at historically low valuations with intact fundamentals, management sees compelling long-term opportunities ahead. |
| Oct 20 2025 | 2025 Q3 | ADYEY, AMZN, ASML, AXON, DASH, DXCM, GOOGL, HDB, ICE, ISRG, MELI, NET, NFLX, NVDA, SHOP, SPOT, SQ, TEAM, TSM, V | AI, E-Commerce, global, growth, semiconductors, Streaming, technology |
NVDA GOOGL SHOP GALD AXON NFLX INTU DEXCOM TEAM |
Global Growth underperformed in Q3 2025 due to valuation compression and profit-taking in strong first-half performers. AI leaders like NVIDIA and Taiwan Semiconductor drove positive contributions while previous winners faced technical selling. The manager strategically repositioned toward classic growth businesses with more stable earnings profiles. The portfolio trades at its lowest forward earnings premium since 2016. |
| Jul 21 2025 | 2025 Q2 | ADYEN.AS, AMZN, AXON, BAJFINANCE.NS, DASH, DOL.TO, DXCM, FLUT, GOOGL, HDFCBANK.NS, ICE, MELI, NFLX, NVDA, ONON, PNDORA.CO, SPOT, SQ, TITAN.NS, V | AI, E-Commerce, global, growth, semiconductors, software, Streaming, technology |
NVDA NFLX AXON MELI NET |
Global Growth delivered exceptional Q2 performance driven by AI infrastructure leader NVIDIA and streaming dominant Netflix. The concentrated portfolio emphasizes sustainable competitive advantages across global markets, with recent refinements favoring classic growth over high-valuation names. Despite ongoing market volatility from AI narratives and geopolitical shifts, strengthened portfolio fundamentals and disciplined positioning support long-term wealth compounding through durable business growth. |
| Mar 31 2025 | 2025 Q1 | ADYEN.AS, AMZN, AXON, BAJFINANCE.NS, BLDR, DASH, EVD.DE, GOOGL, IOT, IRTC, ISRG, MELI, NFLX, NOW, NVDA, SHOP.TO, SPOT, SQ, TSM, V | AI, E-Commerce, global, growth, payments, semiconductors, technology | - | Global Growth declined 6.0% in Q1 amid growth stock rotation but outperformed growth indices. AI concerns around DeepSeek appear overblown given strong hyperscaler capex guidance and emerging real-world applications. Portfolio additions focused on improving earnings stability while maintaining conviction in AI infrastructure leaders like NVIDIA. Rising trade tensions increase macro risks, but portfolio positioning has improved significantly since 2021. |
| Dec 31 2024 | 2024 Q4 | 6861.T, ABNB, ADYEN.AS, AMZN, ASML, AXON, DASH, DOL.TO, DXCM, FLUT, GOOGL, MELI, NFLX, NKE, NVDA, PNDORA.CO, SHOP.TO, SPOT, SQ, V | AI, global, growth, innovation, long-term, technology | - | Sands Capital's Global Growth strategy delivered 15.7% returns in 2024 despite three challenging years. The firm maintains conviction that business fundamentals drive long-term returns, highlighting strong earnings growth across portfolio companies. Key themes include AI adoption, digital economy expansion, and energy transition. Management expects the disconnect between earnings growth and stock performance to eventually correct. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI infrastructure remained the dominant market theme, with semiconductor and hardware businesses accounting for over 60 percent of the MSCI ACWI's quarterly rise. Demand for compute capacity showed few signs of slowing, with large technology companies continuing to signal robust capital investment. The portfolio's AI infrastructure businesses drove strong absolute results, supported largely by earnings growth rather than multiple expansion. |
AI Infrastructure Compute Capacity Data Centers Agentic AI AI Workloads |
SemiconductorsMemory shortage broadened beyond high-bandwidth memory into conventional DRAM and NAND, driven by AI inference and agentic workloads. Physical constraints limit how quickly the industry can add supply, with meaningful capacity additions difficult before the second half of 2027. Lithography capacity could become one of the hardest constraints to scaling AI infrastructure, potentially creating tight supply conditions for years. |
Memory DRAM NAND HBM Lithography | |
Data CentersPower constraints are creating demand for alternatives to gas turbines and grid interconnects, which face multiyear availability delays. Bloom Energy's fuel cells are gaining traction in AI data center power, with Oracle's New Mexico site expected to deploy about 2.4 gigawatts of Bloom capacity. Customers appear increasingly willing to pay for faster time to power, modular deployment, and cleaner emissions. |
Power Constraints Fuel Cells Grid Interconnects Onsite Power Energy Infrastructure | |
Emerging MarketsEmerging markets outperformed U.S. and developed market equities for the sixth consecutive quarter, led by strength in Korea and Taiwan. The portfolio increased exposure to India through Lenskart Solutions and maintained conviction in Bajaj Finance, which is executing on its AI strategy to expand wallet share through hyper-personalization and structurally lower operating costs. |
Korea Taiwan India Asia EM Outperformance | |
E-commerceShopify delivered strong first-quarter results with revenue growing 34 percent year over year, the fastest pace since 2021, and payments penetration climbing to 66 percent. The company is embedding AI to improve merchant productivity, discovery, and conversion, with Sidekick usage up fourfold and AI-driven traffic up thirteenfold year over year. Management guided for sequential deceleration against tougher comparisons. |
Merchant Platforms Payments Penetration AI Assistants GMV Growth Enterprise Adoption | |
StreamingNetflix shares remained under pressure alongside several consumer internet businesses, reflecting weak investor sentiment and concerns about competition from short-form video and user-generated content. Instagram Reels generates more than three times Netflix's global consumption. Netflix continues to show pricing power with limited churn after its most recent U.S. price increase, and advertising is gaining traction as a potential path for average revenue per user growth. |
Premium Video Short-form Video Pricing Power Advertising User Engagement | |
SpaceSpaceX provides foundational infrastructure for the emerging space economy through the world's leading orbital launch platform and the largest low-Earth-orbit broadband network through Starlink. The company's reusable launch technology has lowered marginal launch costs substantially, and SpaceX currently accounts for about 85 percent of global mass-to-orbit. Starlink serves more than 11 million subscribers in more than 100 countries and has established a profitable broadband business. |
Orbital Launch Satellite Broadband Reusable Rockets Starlink Space Infrastructure | |
RoboticsIntuitive Surgical came under pressure with the broader medtech industry as investors weighed fewer product cycles, health care utilization concerns, and competition for capital from AI infrastructure. First-quarter results beat consensus estimates across key metrics. The company is expected to roll out several AI features over the next few years, including anatomy identification and critical-structure highlighting during surgery, which could accelerate robotic surgery adoption and create a software licensing opportunity. |
Surgical Robotics Medical Devices AI Features Procedure Growth Software Licensing | |
| 2025 Q4 |
AIThe fund extensively analyzes whether current AI markets represent a bubble, comparing it to the late 1990s internet bubble. They question AI equipment depreciation schedules, datacenter power demands, and whether promised returns will materialize, while noting the market's shift in viewing Google from AI laggard to leader. |
Artificial Intelligence Bubble Valuations Infrastructure Technology |
BiotechnologyThe short book faced headwinds particularly within biotech this quarter. The fund also references biotech companies that go public via reverse mergers and spend capital on stock promotion rather than lab research as patterns they use for successful shorts. |
Biotech Short Selling Reverse Mergers Stock Promotion | |
| 2025 Q3 |
AIArtificial intelligence remained a key market theme, bolstered by strong business results and continued innovation. The portfolio benefits from AI-related demand through holdings like NVIDIA, which delivered strong datacenter growth, and Taiwan Semiconductor, which continues to benefit from AI infrastructure buildout. Google has moved quickly to develop high-quality AI products to counter competitive threats. |
Artificial Intelligence Datacenter Infrastructure Innovation Computing |
SemiconductorsThe semiconductor sector showed strong performance with NVIDIA sustaining growth despite China headwinds and Taiwan Semiconductor benefiting from AI-related demand and CoWoS capacity expansion. The upcoming Vera Rubin superchip is expected to significantly boost compute performance and expand use cases. |
Chips Foundries Memory Computing Manufacturing | |
E-commerceE-commerce platforms demonstrated strong momentum with Shopify showing gross merchandise value up 31% year-over-year, driven by larger merchants and improving monetization. The company continues to outpace global ecommerce growth through enterprise adoption and international expansion. |
Online Retail Platforms Merchants Digital Commerce Growth | |
StreamingNetflix continues to execute well as the world's largest streaming content producer, raising full-year revenue guidance by $700 million citing stronger subscriber growth and improved ad performance. The business maintains leadership in engagement, retention, and content quality. |
Content Subscribers Video Entertainment Digital Media | |
| 2025 Q2 |
AIRapid progress in large language model capabilities remains the most important driver for AI businesses like NVIDIA. LLM performance has improved more than sevenfold over the past year, with key enablers including reasoning models, reinforcement learning without human feedback, and advances in pre-training. Microsoft reported a fivefold year-over-year increase in AI token processing, suggesting broader adoption across applications and users. |
NVIDIA LLM Semiconductors Cloud Data Centers |
E-commerceMercadoLibre delivered another strong quarter in Latin America, surpassing consensus estimates for revenue and operating income. Despite its scale, MercadoLibre still represents less than 5 percent of the region's total retail market. The company is investing across key strategic pillars including marketplace, logistics, loyalty, and wallet to capture more of this opportunity. |
MercadoLibre Latin America Payments Logistics | |
StreamingNetflix shares rose following strong first-quarter results reflecting solid subscriber growth and retention, continued margin expansion, and increased capital returns including a $3.5 billion share repurchase. Advertising momentum continued with reports of a $9 billion internal ad revenue target by 2030. Video entertainment has historically remained resilient during economic downturns. |
Netflix Advertising Media Buybacks | |
CloudCloudflare reported a strong quarter highlighted by its largest deal to date—a five-year, $130 million contract for its Workers platform. This deal underscores Workers' growing competitiveness against hyperscalers on both performance and price. The quarter also included major Zero Trust wins and strong momentum across use cases. |
Cloudflare Cybersecurity Enterprise Software | |
DefenseAxon Enterprise began 2025 with strong momentum, reinforcing the durability of its growth strategy. The company's expanding software portfolio and AI-powered tools continue to gain traction. Revenue rose over 30 percent in the first quarter, supported by recurring sales and improved margins. International demand is strengthening with new contracts across the U.K., Latin America, and Asia. |
Axon Government IT Defense Electronics | |
| 2025 Q1 |
AIAI remains a foundational driver of long-term growth despite first quarter volatility. The emergence of DeepSeek triggered concerns about AI infrastructure spending sustainability, but hyperscalers' capital expenditure guidance suggests the AI investment cycle remains strong. Evidence shows scaling laws remain intact and real-world applications are emerging across portfolio holdings in fraud detection, content creation, and workflow automation. |
Infrastructure Scaling Applications Investment Compute |
E-commerceMercadoLibre delivered strong fourth quarter results with operating income exceeding consensus by 37 percent, driven by operations in Argentina. The business serves 100 million annual unique ecommerce customers and more than 60 million monthly active financial technology users. Amazon reported solid quarterly results with stable revenue growth despite broader market headwinds. |
Latin America Fintech Growth Revenue Users | |
PaymentsVisa reported strong quarterly results with 14 percent earnings growth, driven by lower incentives, higher cross-border revenue, and a lower tax rate. The company reinforced confidence in sustaining mid-teens annualized earnings growth for at least the next decade, supported by expansion into commercial payments, money management, and value-added services. |
Cross-border Commercial Growth Services Revenue | |
SemiconductorsNVIDIA shares declined amid DeepSeek concerns and broader market rotation, but the company unveiled a multiyear roadmap with major gains in cost efficiency and performance, including a 40-fold improvement in inference per watt. Taiwan Semiconductor was added as the world's largest producer of leading-edge logic chips, positioned to benefit from AI proliferation and compute demand growth. |
Leading-edge Foundry Performance Efficiency Demand | |
StreamingNetflix contributed positively to relative performance during the quarter. Spotify delivered strong fourth-quarter results with robust revenue and monthly active user growth, along with gross and operating margin expansion. Management called 2025 the year of accelerated execution following 2024's year of monetization, signaling continued operating expense discipline and product innovation. |
Revenue Users Margins Innovation Growth | |
| 2024 Q4 |
AIAI has rapidly evolved from a conceptual novelty to a transformative tool reshaping industries. Sands Capital owns businesses that enable AI at the infrastructure layer like NVIDIA and those finding specific use cases like Axon Enterprise and ServiceNow. AppLovin built an AI advertising placement platform that reaccelerated its video game ad business. |
Infrastructure Applications Automation Advertising Enterprise |
E-commerceThe fund has witnessed businesses find new ways to seize the promise of an ever-expanding digital economy. Grab Holdings emerged as a leading super app in Southeast Asia, and Full Truck Alliance has become known as the Uber for trucks in China, streamlining freight logistics. |
Digital Marketplaces Logistics Southeast Asia China | |
Energy TransitionChinese electric vehicle manufacturer BYD and lithium battery maker Contemporary Amperex Technology are pioneering clean transportation and renewable energy solutions in China and increasingly around the world. Tetra Tech, Sika, and Brazil-based WEG work to create greener and more sustainable solutions. |
Electric Vehicles Batteries Clean Transportation Sustainable Infrastructure Renewable Energy | |
StreamingNetflix increasingly shifted from being a global streaming leader to becoming a global entertainment leader. The key to this shift is Netflix's recent success in live events, which changes the business model and earning potential. Live events support higher subscriber growth and more advertising revenue. |
Live Events Entertainment Advertising Subscriber Growth Content |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | GOOGL | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cloud, monetization, Search | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | ISRG | Intuitive Surgical, Inc. | Health Care | Health Care Equipment & Supplies | Bull | NASDAQ | buybacks, healthcare, Procedures, robotics, Surgery | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | GALD SW | Galderma Group AG | Health Care | Pharmaceuticals | Bull | Swiss Exchange | Aesthetics, dermatology, innovation, Margins, pharmaceuticals | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | TITAN IN | Titan Company Limited | Consumer Discretionary | Textiles, Apparel & Luxury Goods | Bull | National Stock Exchange of India | brands, Consumption, India, Jewelry, Margins | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | TSM | Taiwan Semiconductor Manufacturing Co. | Information Technology | Semiconductors & Semiconductor Equipment | Bull | New York Stock Exchange | AI, Foundry, Pricing, scale, semiconductors | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | NFLX | Netflix, Inc. | Communication Services | Entertainment | Bear | NASDAQ | Content, Ip, Pricing, scale, Streaming | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | AXON | Axon Enterprise, Inc. | Industrials | Aerospace & Defense | Bull | NASDAQ | growth, Public safety, Recurring, SaaS, Security | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | DASH | DoorDash, Inc. | Consumer Discretionary | Hotels, Restaurants & Leisure | Bull | NASDAQ | advertising, delivery, Logistics, Margins, scale | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | MELI | MercadoLibre, Inc. | Consumer Discretionary | Broadline Retail | Bull | NASDAQ | ecommerce, Fintech, Latin America, Moat, scale | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | SPOT | Spotify Technology S.A. | Communication Services | Entertainment | Bull | New York Stock Exchange | AI, Audio, Margins, Pricing, Streaming | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | APP | AppLovin Corporation | Information Technology | Software | Bull | NASDAQ | advertising, AI, ecommerce, Mobile, Software | Login |
| Jan 22, 2026 | Fund Letters | Brian A. Christiansen | ARGX | argenx SE | Health Care | Biotechnology | Bull | Shanghai Stock Exchange | biotechnology, growth, Immunology, Orphan, pipeline | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | NVDA | NVIDIA Corp. | Information Technology | Semiconductors | Bull | NASDAQ | AI, Compute, datacenter, growth, innovation, margin, Pricing, semiconductors | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | GOOGL | Alphabet Inc. | Communication Services | Internet Services | Bull | NASDAQ | advertising, AI, cloud, innovation, monetization, Regulatory, Search | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | SHOP | Shopify Inc. | Information Technology | E-Commerce | Bull | NYSE | e-commerce, enterprise, GMV, growth, International, Margins, SaaS | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | GALD | Galderma Group AG | Health Care | Pharmaceuticals | Bull | Swiss Exchange | Aesthetics, dermatology, growth, guidance, Injectables, margin, pharmaceuticals | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | AXON | Axon Enterprise Inc. | Industrials | Public Safety Technology | Bull | NASDAQ | AI, ARR, growth, Public safety, SaaS, technology, Workflow | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | NFLX | Netflix Inc. | Communication Services | Streaming Media | Bull | NASDAQ | advertising, Engagement, leadership, Margins, Streaming, Subscriptions, valuation | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | INTU | Intuitive Surgical Inc. | Information Technology | Medical Devices | Bull | NASDAQ | growth, innovation, Margins, Medical devices, robotics, Surgery | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | DEXCOM | Dexcom Inc. | Health Care | Medical Devices | Bull | NASDAQ | Diabetes, growth, healthcare, innovation, Margin recovery, Sensors | Login |
| Oct 20, 2025 | Fund Letters | Brian A. Christiansen | TEAM | Atlassian Corp. Plc. | Information Technology | Software | Bull | NASDAQ | AI, Collaboration, growth, productivity, SaaS, Software | Login |
| Jul 21, 2025 | Fund Letters | Brian A. Christiansen | NVDA | NVIDIA Corporation | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI, datacenters, hyperscalers, infrastructure, Margins, semiconductors | Login |
| Jul 21, 2025 | Fund Letters | Brian A. Christiansen | NFLX | Netflix, Inc. | Communication Services | Entertainment | Bull | NASDAQ | advertising, Competition, Content, leverage, Streaming, Subscriptions | Login |
| Jul 21, 2025 | Fund Letters | Brian A. Christiansen | AXON | Axon Enterprise, Inc. | Industrials | Aerospace & Defense | Bull | NASDAQ | International, Margins, Publicsafety, Regulation, SaaS, Subscriptions | Login |
| Jul 21, 2025 | Fund Letters | Brian A. Christiansen | MELI | MercadoLibre, Inc. | Consumer Discretionary | Broadline Retail | Bull | NASDAQ | ecommerce, Fintech, Logistics, Margins, Penetration, Regulation | Login |
| Jul 21, 2025 | Fund Letters | Brian A. Christiansen | NET | Cloudflare, Inc. | Information Technology | IT Services | Bull | New York Stock Exchange | cybersecurity, Edge, Enterprises, growth, Networking, valuation | Login |
| TICKER | COMMENTARY |
|---|---|
| 000660.KS | SK hynix is the world's largest dedicated producer of memory chips. The business contributed positively during the quarter as the memory shortage broadened beyond high-bandwidth memory, or HBM, into conventional DRAM and NAND. AI inference and agentic workloads are increasing demand across the memory stack, while physical constraints limit how quickly the industry can add supply. SK hynix described the shortage as structural, multiyear, and broad-based, with meaningful capacity additions difficult before the second half of 2027. Pricing reflects the severity of the imbalance. SK hynix reported sequential DRAM price increases in the mid-60 percent range and NAND price increases in the mid-70 percent range. Industry checks suggest prices could continue rising in the second half of 2026, as AI data center demand absorbs available supply. HBM remains strategically important, but conventional DRAM and NAND are driving a larger share of near-term earnings revisions and should strengthen future HBM negotiations. |
| BE | Bloom Energy provides fuel cell systems that can supply onsite power for AI data centers. Shares rose after first-quarter 2026 results and new corporate announcements provided evidence that its opportunity may be expanding meaningfully. The most notable update was Oracle's New Mexico site, which is expected to deploy about 2.4 gigawatts of Bloom capacity, exceeding Bloom's cumulative historical installations. Management also indicated that additional large-scale projects are under discussion. These developments help validate the thesis that power constraints are creating demand for alternatives to gas turbines and grid interconnects, which face multiyear availability delays. Bloom's fuel cells remain modestly more expensive than gas turbines, but customers appear increasingly willing to pay for faster time to power, modular deployment, cleaner emissions, minimal noise, minimal water usage, high uptime, and native direct current output. As adoption increases, cost competitiveness remains the key debate, but recent announcements suggest Bloom is gaining traction in AI data center power. |
| TSM | TSMC benefited from strong AI demand, supported by its position as the world's largest scaled manufacturer of leading-edge chips. The biggest takeaway from first-quarter 2026 results, in our view, was a gross margin beat that came in well ahead of consensus and our expectations. We believe the margin improvement reflects strong demand for leading-edge nodes and advanced packaging, rather than unsustainable pricing. Demand for TSMC's N2 to N5 nodes reinforces our view that the company will play a central role in the agentic AI hardware cycle, supported by emerging demand for AI CPUs and broad demand for accelerator chips. TSMC's competitive position also remains differentiated despite recent attention on competitors' packaging advances. Our research indicates Broadcom will continue scaling with TSMC, even after evaluating Intel's EMIB-T packaging technology. We believe that major customers' continued reliance on TSMC, even after testing alternatives, underscores the company's technological advantage and ecosystem depth. |
| ASML | ASML is a Dutch semiconductor equipment company specializing in lithography systems, which chipmakers use to print patterns on silicon wafers. ASML's investment results primarily reflected rising long-term expectations for memory systems sales, as AI demand increases the need for advanced DRAM and logic chips. We believe lithography capacity could become one of the hardest constraints to scaling AI infrastructure, potentially creating tight supply conditions for years. Our bottom-up analysis suggests both Chinese and non-Chinese fabs may need to materially increase lithography capacity to meet AI chip demand. Agentic AI could also increase CPU intensity in data centers, with some observers expecting the CPU-to-GPU ratio to move from one CPU per four to eight GPUs toward one-to-one or higher. For ASML, more advanced CPUs and broader AI infrastructure buildout should support additional leading-edge logic demand. We believe ASML remains well positioned as AI drives greater chip complexity, higher wafer requirements, and increased lithography intensity. |
| NVDA | NVIDIA contributed positively during the quarter, supported by strong first-quarter results and continued investor confidence in the durability of AI infrastructure spending. Revenue grew 85 percent, and earnings per share grew 131 percent, reflecting sustained demand for accelerated computing. We believe NVIDIA remains well positioned as AI adoption broadens from training to inference, agentic workflows, and enterprise use cases that require significantly more computing power over time. Importantly, the opportunity is expanding beyond graphics processing units, with management highlighting meaningful visibility into standalone central processing unit revenue. This reinforces NVIDIA's growing role as a systems-level provider across the AI infrastructure stack. We maintain conviction that the scale and duration of future AI capital spending remain underappreciated. NVIDIA's software ecosystem, product roadmap, and leadership in programmable computing should position the business well to sustain above-average growth as AI workloads become more complex and more widely adopted. |
| NFLX | Netflix shares remained under pressure alongside several consumer internet businesses, reflecting weak investor sentiment and concerns about competition, engagement, and long-term margins. Given those concerns, investors appear to have used Netflix and similar businesses as a funding source to allocate capital to higher-momentum AI-related stocks. The central debate is whether short-form video and user-generated content can continue taking viewing time from premium streaming services. AI-powered recommendation engines and short-form platforms keep gaining engagement, with Instagram Reels generating more than three times Netflix's global consumption. Even so, Netflix continues to show pricing power, with limited churn after its most recent U.S. price increase. This suggests consumers still view the service as a strong value relative to other premium streaming options. Advertising is also gaining traction, creating a potential path for average revenue per user growth beyond future price increases. Management has indicated that Netflix does not plan to pursue AI-generated or user-generated content, instead remaining focused on premium video. While that differentiated strategy could prove durable, the current valuation appears to reflect competitive uncertainty, with Netflix trading at its lowest forward earnings multiple since 2022. |
| ICE | Intercontinental Exchange is a leading provider of financial market infrastructure, spanning global exchanges, clearinghouses, fixed income data, and mortgage technology. The business detracted during the quarter, as investor concerns about AI disruption and mortgage market sensitivity continued to pressure its valuation multiple, even as fundamentals remained strong. In our view, the market is overstating the risk that AI will displace its mortgage technologies business. Intercontinental Exchange's platforms are deeply embedded systems of record, which AI models may rely on as trusted data sources rather than replace. Mortgage activity has also begun to improve as rates eased from 2024 peaks and buyers adjusted to higher costs. This should support gradual recovery in recurring mortgage revenue. Meanwhile, the exchanges business continues to benefit from broader market participation and more global energy trading activity. With the multiple compressed to roughly 15 times earnings, versus a historical level closer to 20 times, we believe current expectations understate Intercontinental Exchange's durability. |
| ISRG | Intuitive Surgical is a leading provider of robotic surgical systems. Shares came under pressure with the broader medtech industry. Health care equipment and supplies was among the weakest industries in the quarter, as investors weighed fewer product cycles, health care utilization concerns, inflation, competition for capital from AI infrastructure, and concerns about ex-U.S. competition. We believe the share price pressure obscures a stronger fundamental setup. First-quarter 2026 results beat consensus estimates across key metrics, including revenue, non-GAAP earnings, non-GAAP operating margins, da Vinci procedures, and overall robot placements. Looking ahead, we expect Intuitive to roll out several AI features over the next few years, including anatomy identification, critical-structure highlighting during surgery, and, over time, support for surgeon dexterity and automation. These features could accelerate robotic surgery adoption and create a software licensing opportunity that we expect to carry higher gross margins than the corporate average. While we do not expect a quick rerating in the shares, which trade at levels not seen since the 2022 market selloff, we favor the risk/reward profile given Intuitive's recurring revenue base, market leadership, and longer-term AI potential. |
| SPOT | Spotify is the world's largest subscription streaming audio service by market share. Shares declined after first-quarter results, as management guided margins lower due to a near-term increase in operating expenses. In our view, this spending reflects investment in future product development rather than a structurally higher cost base, and it may signal the early stages of a new AI-enabled product cycle. Spotify's 2026 investor day helped address concerns around AI by reinforcing that the technology could expand, rather than impair, the business model. Management highlighted a path to mid-teens revenue growth through 2030, supported by new monetization opportunities, including AI music features, Audiobook+, and personal podcasts. The UMG partnership also provides a potential path to make AI music a paid feature. We believe Spotify's scale, pricing power, and distribution advantage position it to convert AI-enabled products into higher average revenue per user and long-term margin expansion. |
| SHOP | Shopify is a leading commerce platform providing software and financial services that merchants use to start, run, and scale their businesses. Shares declined during the second quarter as concerns over AI-related costs and decelerating revenue guidance overshadowed strong first-quarter 2026 results. Revenue grew 34 percent year over year, the fastest pace since 2021, gross merchandise volume rose 35 percent, and payments penetration climbed to 66 percent of volume. Investors focused on second-quarter guidance implying sequential deceleration against tougher comparisons, and on rising large language model costs tied to Sidekick, Shopify's AI assistant, which the company does not directly monetize. We view these concerns as overdone. Shopify is embedding AI to improve merchant productivity, discovery, and conversion, reinforcing competitive differentiation and latent pricing power. Early traction is encouraging, with Sidekick usage up fourfold and AI-driven traffic up thirteenfold year over year. We maintain conviction in Shopify's long-term growth, supported by enterprise adoption, international expansion, and AI-driven differentiation. |
| ARM | Arm Holdings is a leading designer of leading-edge semiconductors. The crux of our investment case is that Arm stands to benefit from rising central processing unit (CPU) demand driven by agentic AI. While graphics processing units (GPUs) are optimized for token generation through model inference and training, CPUs are better suited for agentic workflows such as scheduling, memory management, and tool execution. CPUs effectively function as the operating system for agentic AI workflows. We expect agentic AI adoption to drive an inflection in CPU demand, increasing Arm's CPU royalties from approximately 10 percent of revenue in 2026 to more than 30 percent by 2031. Arm's energy-efficient architecture provides what we view as a competitive advantage in selling AI CPUs to cloud hyperscaler customers while also helping preserve its more than 90 percent share within smartphones. SoftBank's majority ownership of Arm could provide additional upside potential, as SoftBank seeks to expand AI adoption across its broader investment ecosystem using Arm-based chips. |
| MU | Micron Technology's results late in the quarter reinforced this narrative, as management described persistent supply-demand tightness in memory chips and resilient demand from strategic customers. |
| ORCL | The most notable update was Oracle's New Mexico site, which is expected to deploy about 2.4 gigawatts of Bloom capacity, exceeding Bloom's cumulative historical installations. |
| AVGO | Our research indicates Broadcom will continue scaling with TSMC, even after evaluating Intel's EMIB-T packaging technology. |
| INTC | Our research indicates Broadcom will continue scaling with TSMC, even after evaluating Intel's EMIB-T packaging technology. |
| ONON | During our engagement, we discussed opportunities to strengthen the board's governance structure as the company continues to grow. A key topic was the concentration of leadership responsibilities. The company's founders, who also serve as co-chairs, recently assumed the additional role of co-CEOs. We asked whether the company plans to separate the chair and CEO roles in the future. Management said it has not considered separating the roles but noted that it has discussed establishing a lead independent director. We expressed our support for creating a Lead Independent Director role as an important step toward strengthening independent board oversight while maintaining the company's current leadership structure. We also encouraged the company to continue evaluating board composition over time to ensure the board maintains the breadth of experience and perspectives needed to support the business as it scales. We acknowledged recent governance improvements, including the company's decision to extend the vesting period for long-term equity awards from two years to three years. We also noted that the outgoing CEO will forfeit a one-time equity award. In our view, these changes strengthen the long-term alignment between executive compensation and shareholder interests. We also encouraged the company to continue enhancing its compensation framework over time by considering longer vesting periods, post-vesting holding requirements, or minimum executive share ownership guidelines. |
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