| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.4% | 23.2% | 7.2% |
Sands Capital Select Growth returned 23.2 percent net in Q2 2026, outperforming the Russell 1000 Growth Index's 16.7 percent return, driven by broad-based strength across AI infrastructure holdings. The portfolio benefited from accelerating demand for memory, storage, semiconductor manufacturing, and data center power as agentic AI created new bottlenecks across the technology stack. Top contributors included Seagate Technology, Taiwan Semiconductor, Lam Research, NVIDIA, and Carpenter Technology, reflecting the broadening of AI infrastructure demand beyond GPUs. Importantly, earnings revisions, not multiple expansion, supported gains, with the portfolio ending the quarter at 24.0 times forward earnings, slightly below the market multiple. The team initiated positions in Advanced Micro Devices, Bloom Energy, Micron Technology, SanDisk, SpaceX, and Sphere Entertainment, while exiting DoorDash, Netflix, Nu Holdings, and Roblox to reduce consumer internet exposure and redeploy capital toward AI infrastructure beneficiaries. The portfolio is positioned across several bottlenecks essential to scaling AI, including memory, CPUs, AI chips, semiconductor manufacturing, capital equipment, and power, where supply cannot respond quickly to rising demand.
The emergence of agentic AI is creating a sustained demand shock for infrastructure across memory, CPUs, networking, storage, and power, with supply constrained in several critical areas where the portfolio is positioned.
The market's recovery came as AI development continued to advance, supported by improvements in computing power and the emergence of agentic capabilities. We expect the proliferation of agentic AI workflows to drive persistent constraints in compute capacity, sustaining the infrastructure buildout. We are closely monitoring developments that could change our outlook, including the sustainability of demand and risks such as competition from lower-cost open-source models, usage rationalization, and potential architectural breakthroughs that reduce compute intensity. We expect periods of digestion given strong returns, concentrated leadership, and elevated momentum exposure, but remain encouraged that the portfolio's recent strength has been tied to earnings growth.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 30 2026 | 2026 Q2 | AMD, AXON, BE, CRS, GOOGL, ICE, LRCX, MU, NVDA, SPOT, STX, TSM | AI, Cloud, Data centers, growth, infrastructure, Memory, semiconductors, technology | - | Select Growth returned 23.2 percent in Q2 2026, outperforming on broad AI infrastructure strength. The portfolio benefited from accelerating demand for memory, storage, and data center power as agentic AI created new bottlenecks. Top contributors spanned the semiconductor value chain from chips to fabrication to equipment. The team added exposure to memory, CPUs, and power while reducing consumer internet, positioning for durable AI infrastructure demand. |
| Apr 25 2026 | 2026 Q1 | APP, CRS, CVNA, DDOG, IOT, LRCX, MSFT, NET, NFLX, PWR, SE, STX, TSM | AI, Cloud, disruption, growth, infrastructure, Internet, semiconductors, technology | - | Select Growth underperformed amid AI-driven market rotation but views sell-off as indiscriminate. Fund evolved toward AI infrastructure beneficiaries, initiating memory-focused positions in Seagate and Lam Research while reducing cloud exposure. Maintains conviction in internet businesses with durable competitive advantages. Compressed valuations across growth businesses create attractive five-year setup with valuation premium near 2009 lows. |
| Jan 22 2026 | 2025 Q4 | AMZN, APP, AVGO, CVNA, DASH, GOOGL, ICE, META, MSFT, NFLX, NU, NVDA, RARE, RBLX, SE, SHOP.TO, SPOT, SQ, TSM, V | AI, defense, energy, growth, infrastructure, Robotics, Space, technology |
GOOGL CVNA TSM AMZN AVGO RBLX SE NFLX SPOT MSFT NOW TEAM ORCL AJG VG DXCM CRS PWR |
Sands Capital Select Growth underperformed in Q4 despite strong absolute returns, as multiple compression overwhelmed benchmark-beating earnings growth. The firm maintains disciplined exposure to AI infrastructure, defense technology, robotics, energy transition, cybersecurity, and space themes while avoiding bubble excesses. Portfolio positioned for long-term value creation across transformational innovation themes at historically attractive valuations. |
| Oct 20 2025 | 2025 Q3 | AMZN, APP, AVGO, CVNA, DASH, DXCM, GOOGL, ICE, META, MSFT, NFLX, NU, NVDA, RARE, RBLX, SE, SPOT, SQ, TSM, V | AI, Cloud, growth, large cap, semiconductors, software, technology | - | Select Growth underperformed in Q3 2025 despite strong AI infrastructure demand driving key holdings like NVIDIA and AppLovin. Software sector showed dispersion with infrastructure providers outperforming while application software faced AI disruption concerns. Added Oracle and Alphabet to broaden AI exposure. Manager sees complex crosscurrents ahead requiring careful balance between AI beneficiaries and diversified growth drivers. |
| Jul 21 2025 | 2025 Q2 | AJG, AMZN, AVGO, CVNA, DASH, DXCM, ICE, META, MSFT, NFLX, NOW, NU, NVDA, RARE, RBLX, SE, SPOT, SQ, TSM, V | AI, Cloud, gaming, growth, semiconductors, Streaming, technology | - | Select Growth outperformed significantly in Q2 2025 returning 27.7% as consumer internet platforms and AI infrastructure drove gains. Strong earnings growth and tariff truce supported recovery from April volatility. NVIDIA, Microsoft Azure, Netflix, and Broadcom led contributions while portfolio actions managed tariff exposures and rebalanced toward Magnificent Seven. Strategy remains well-positioned for AI paradigm shift with diversified exposure across direct AI beneficiaries and efficiency enhancers. |
| Mar 31 2025 | 2025 Q1 | AMZN, APP, AVGO, AXON, DXCM, ICE, META, MSFT, NET, NFLX, NOW, NU, NVDA, RARE, SE, SPOT, SQ, TEAM, UBER, V | AI, Concentration, growth, large cap, semiconductors, software, technology | - | Select Growth underperformed modestly in Q1 as AI skepticism and trade tensions pressured growth stocks. Despite DeepSeek concerns, managers maintain AI conviction citing strong infrastructure spending and emerging applications. Portfolio repositioned toward semiconductor leaders Broadcom and TSMC while exiting lower-conviction holdings. Trade policy risks threaten global growth, but improved portfolio diversification and quality metrics provide better downside protection than 2021. |
| Dec 31 2024 | 2024 Q4 | AAPL, AMZN, DASH, DDOG, DXCM, ICE, META, MSFT, NFLX, NOW, NU, NVDA, RARE, RBLX, SE, SHOP.TO, SPOT, SQ, TEAM, V | AI, growth, innovation, long-term, software, technology | - | Sands Capital Select Growth underperformed in Q4 despite strong portfolio company earnings growth of 147% over three years versus 53% for the benchmark. The firm maintains conviction in AI infrastructure leaders like NVIDIA and ServiceNow while adding exposure to energy transition and gaming themes. Management expects valuation misalignment to correct as business fundamentals drive long-term returns. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIAI infrastructure demand is broadening across the stack, with agentic AI accelerating model usage and creating bottlenecks beyond accelerators alone, including CPUs, networking, storage, and advanced memory. The emergence of agentic AI has created another demand shock for infrastructure, as more capable models and higher task completion rates drive increased token consumption, compute usage, storage requirements, and power demand. The portfolio is positioned across several bottlenecks essential to scaling AI, including memory, CPUs, AI chips, semiconductor manufacturing, capital equipment, and power. |
Agentic AI Infrastructure Compute Memory Data Centers |
SemiconductorsSemiconductor capital spending and manufacturing complexity are rising, with the PHLX Semiconductor Sector Index delivering its strongest quarter since 1993. AI infrastructure demand is creating a more diversified semiconductor cycle, with beneficiaries emerging across several enabling technologies including memory, fabrication, and capital equipment. Advanced memory is difficult, capital intensive, and time consuming to manufacture, while the industry has become more consolidated and disciplined, supporting a more durable period of favorable economics. |
Semiconductor Equipment Foundries Memory Manufacturing Capital Spending | |
MemoryAdvanced memory has become a critical bottleneck in the AI infrastructure stack, with agentic AI systems requiring greater context, faster retrieval, and more persistent memory, increasing demand for DRAM, high-bandwidth memory, and NAND. The combination of accelerating demand and constrained supply can support stronger pricing, better margins, and a more durable earnings cycle for leading memory providers. Long fabrication lead times, greater manufacturing complexity, and significant capital requirements may support a more durable period of favorable economics than the memory sector has historically experienced. |
DRAM HBM NAND Storage Pricing | |
Data CentersData center power has become an increasingly important constraint in the AI buildout, with facilities facing grid interconnection delays, limited turbine availability, and rising power costs. Solid oxide fuel cells provide baseload, on-site power that can be deployed in modular units, making the technology well suited for data centers. Bloom Energy's faster time to power, lower water requirements, modular design, and potential cost competitiveness versus gas turbines could meaningfully expand its addressable market. |
Power Infrastructure Fuel Cells Grid Energy | |
CloudEarnings reports from hyperscale cloud providers underscored continued shortages in AI compute capacity, accelerating cloud revenue growth at attractive margins, expanding backlogs, and rising capital expenditure expectations. Estimates for 2026 hyperscaler AI capital expenditures moved materially higher during earnings season, with expectations for spending to exceed $700 billion. The combination of accelerating cloud revenue growth and improving cloud margins helped ease concerns about the return profile of AI spending. |
Hyperscalers Capital Expenditure Revenue Growth Margins Compute Capacity | |
AerospaceThe aerospace equipment cycle continued to recover, with Carpenter Technology demonstrating significant operating leverage as volume grew at its strongest rate since the post-COVID aerospace recovery. Specialty Alloys Operations generated an 86 percent incremental margin in a quarter when volume grew strongly. Carpenter's earnings power can continue to expand as the business benefits from improving volume, pricing, and mix, supported by specialized materials leadership, pricing power, and exposure to a multiyear aerospace production recovery. |
Aerospace Components Specialty Alloys Production Recovery Pricing Power Volume Growth | |
E-commerceShopify delivered its fastest revenue growth rate since 2021 at 32 percent, supported by strength in North America and higher payments penetration. The company is embedding AI into its platform to improve merchant productivity, product discovery, conversion, and win rates, creating potential latent pricing power over time. Early traction is encouraging, with Sidekick usage up 400 percent and Campaigns usage up 300 percent year over year, though concerns around AI-related expenses and forward guidance weighed on shares. |
Platforms Payments Merchant Services AI Tools Revenue Growth | |
StreamingSpotify's 2026 investor day reinforced that AI could expand, rather than impair, the business model, with management highlighting a path to mid-teens revenue growth through 2030, supported by new monetization opportunities including AI music features, Audiobook+, and personal podcasts. The Universal Music Group partnership provides a potential path to turn AI music into a paid feature. However, shares declined following first-quarter results after management guided margins lower due to a near-term increase in operating expenses related to future product development. |
Music Monetization AI Features Margins Product Development | |
| 2026 Q1 |
AIAI remained the central force shaping market behavior with new developments from Anthropic heightening disruption concerns across knowledge-based industries. The emergence of agentic AI tools has broadened the scope of potential disruption, with consensus estimates for hyperscaler capital expenditures now exceeding $650 billion for 2026. The fund views AI as likely to reshape competitive leadership across many industries but believes certain competitive moats like network effects and infrastructure control will become increasingly important. |
Artificial Intelligence Agentic AI Hyperscalers Disruption Infrastructure |
SemiconductorsThe fund initiated positions in semiconductor equipment and memory providers, viewing memory as the key bottleneck to scaling AI systems. TSMC reported accelerating AI demand with management raising capital expenditure plans to $54 billion for 2026. The fund expects exponential increase in memory demand coupled with constrained supply growth to drive higher pricing and volumes. |
Memory Foundries Semi Equipment AI Infrastructure Capacity | |
Data CentersCapital rotated toward asset-heavy industries positioned to benefit from AI-related infrastructure demand. Businesses providing products or services that alleviate bottlenecks in data center development were among the best performers, with strong returns across power infrastructure, memory, and networking providers. The fund views this as a durable trend tied to AI infrastructure buildout. |
Infrastructure Power Networking Bottlenecks AI Buildout | |
CloudThe fund reduced exposure to cloud hyperscalers, preferring AI exposure in the supply chain for compute over the buyers of that compute. They note buyers of AI computing power are increasingly reliant on purchases from a narrow set of AI model providers and face increasing competition from neo cloud providers in the transition from traditional infrastructure as a service to hyperscale AI. |
Hyperscalers Infrastructure as a Service Neo Cloud Competition | |
E-commerceInternet holdings faced weakness due to concerns about AI-driven disruption and multiple compression. However, the fund believes these businesses benefit from durable competitive advantages including physical infrastructure, network effects, and direct access to consumer demand. Shopify delivered three consecutive quarters of roughly 30% year-over-year gross merchandise volume growth. |
Network Effects Consumer Demand Competitive Advantages Growth | |
| 2025 Q4 |
Behavioral FinanceManager discusses behavioral biases in investing, comparing rational Morning Investor mode versus impulsive Nighttime Investor decisions. Emphasizes the importance of overcoming psychological biases like avoiding action that could cause regret, and building habits to make better investment decisions. |
Behavioral Biases Psychology Decision Making |
ValueMature (Value) businesses led performance in Q4 and were the strongest contributors for the full year, reflecting durable execution in companies generating healthy free cash flow and returning capital. The strategy benefits from exposure to value-oriented businesses. |
Value Investing Free Cash Flow Capital Return | |
GrowthEmerging (Growth) businesses were weak in Q4, reversing substantial gains from earlier in 2025, though they delivered strong full-year performance and generated significant alpha relative to benchmark. Manager maintains commitment to growth exposure despite recent weakness. |
Growth Investing Emerging Businesses Alpha Generation | |
| 2025 Q3 |
AIAI investment cycle remained dominant with hyperscalers raising 2026 capex forecasts by over $80 billion to above $430 billion industry-wide. Evidence of improving monetization emerged, particularly at Meta Platforms where AI-powered tools drove stronger engagement and advertising returns. Oracle announced contracts to deliver over $500 billion in computing power over the next five years. |
Infrastructure Monetization Capex Hyperscalers Computing |
SemiconductorsAI infrastructure providers, particularly semiconductor businesses, delivered some of the strongest returns. NVIDIA sustained growth with datacenter segment accelerating from 64% to 73% year-over-year growth. Taiwan Semiconductor benefited from strong AI-related demand and is expanding CoWoS capacity to narrow supply-demand gap. |
Datacenter Supply Demand Growth Infrastructure | |
CloudCloud services showed reacceleration with the Magnificent Seven delivering 26% earnings growth led by cloud services, advertising, and ecommerce. Oracle is emerging as a leader in infrastructure for AI workloads, moving from second-tier competitor to preeminent infrastructure provider for significant AI companies. |
Infrastructure Growth Reacceleration AI Services | |
SoftwareSoftware sector showed pronounced dispersion with narrow cohort of infrastructure and cybersecurity providers driving gains while horizontal application software remained pressured by AI disruption concerns. Key concerns included pressure on seat-based pricing models and fears that generative AI could reduce barriers to entry. |
Disruption Infrastructure Cybersecurity Pricing Competition | |
| 2025 Q2 |
AIAI infrastructure spending continues to drive demand with advances in computing power unlocking new capabilities and lower cost models. The portfolio benefits from businesses directly exposed to AI demand, those leveraging AI for efficiency gains, and companies using AI to improve products through personalization and cost reduction. |
Infrastructure Computing Demand Efficiency Personalization |
SemiconductorsSemiconductor industry produced the strongest returns gaining more than 40 percent in the quarter. NVIDIA addressed rack yield concerns with major hyperscalers deploying nearly 72,000 Blackwell GPUs per week, while Broadcom benefits from leadership in networking technologies interconnecting AI accelerators. |
GPUs Networking Infrastructure Hyperscalers Accelerators | |
CloudMicrosoft delivered better-than-expected results with reacceleration in Azure growth as the key highlight. Demand for AI-related services remains strong with sequential improvement in non-AI-related Azure revenue, positioning Microsoft well for enterprise AI adoption. |
Azure Enterprise Infrastructure Services Growth | |
E-commerceConsumer internet platforms showed strong performance spanning gaming, social media, streaming, and food delivery. These asset-light business models are insulated from tariff margin pressures and benefit from low marginal costs allowing each additional user to enhance profitability. |
Platforms Marketplaces Digital Scalability Margins | |
StreamingNetflix demonstrated resilience with solid subscriber growth, continued margin expansion, and increased capital returns including a $3.5 billion share repurchase. Video entertainment remains resilient during economic downturns with Netflix's scale and market leadership supporting durability. |
Content Subscribers Advertising Resilience Leadership | |
GamingRoblox showed reacceleration across key metrics including daily active users, bookings, and hours played with the strongest sequential increase since 2020. The platform demonstrated significant operating leverage with EBITDA margins expanding 760 basis points to 17 percent. |
Platform Engagement Monetization Leverage Growth | |
| 2025 Q1 |
AIAI remains a foundational driver of long-term growth despite market 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 materializing across fraud detection, content creation, and workflow automation. |
Infrastructure Scaling Applications Compute Investment |
SemiconductorsAdded exposure to leading-edge semiconductor enablers through Broadcom and Taiwan Semiconductor purchases. TSMC benefits from its chokepoint position in AI chip manufacturing, while Broadcom supports compute scalability through ethernet networking and custom accelerators. The portfolio repositioned toward structural growth in leading-edge semiconductors. |
Leading-edge Manufacturing Networking Foundries Scalability | |
CloudCloud infrastructure providers continue investing heavily in AI capabilities. Amazon's 2025 capital expenditure guidance exceeded $100 billion, driven by intensifying AI infrastructure investment. Cloudflare gained recognition as a key beneficiary of AI inference growth through its edge computing platform. |
Infrastructure Investment Edge Computing Growth | |
E-commerceSea delivered its fifth consecutive beat-and-raise quarter with Shopee growing gross merchandise volume 24 percent year-over-year while achieving positive EBITDA margin. Amazon reported solid quarterly results with stable revenue growth despite broader market pressures. |
Growth Margins Volume Revenue Performance | |
StreamingSpotify delivered strong fourth-quarter results with robust revenue and monthly active user growth, plus gross and operating margin expansion. The company reported its strongest quarter of premium subscription net additions in five years and launched a new premium Music Pro tier. |
Subscriptions Users Margins Revenue Premium | |
GamingAppLovin faced pressure from short reports alleging app-install manipulation, which the managers view as largely unfounded. The company's revenue is tied to purchases rather than clicks, and customers use sophisticated attribution tools. Sea's gaming business is expected to generate approximately $1 billion in EBITDA as part of 2025 guidance. |
Attribution Revenue EBITDA Performance Growth | |
| 2024 Q4 |
AIAI has rapidly evolved from a conceptual novelty to a transformative tool reshaping industries since ChatGPT's launch in late 2022. Portfolio companies like AppLovin, ServiceNow, and Axon Enterprise are leveraging AI to enhance their core offerings and create value for customers. The firm owns many businesses that enable AI at the infrastructure layer, such as NVIDIA, which remains the architectural leader. |
Infrastructure Transformation Innovation Automation Platform |
E-commerceThe firm has found criteria-meeting businesses leveraged to novel forays into ecommerce. AppLovin has begun fine-tuning its large-language model for ecommerce, receiving strong early feedback from ecommerce advertisers and providing an opportunity to expand outside its core gaming vertical to aggregate demand from nongaming applications. |
Digital Marketplaces Advertising Platform Growth | |
Energy TransitionPortfolio includes businesses pioneering clean transportation and renewable energy solutions. Chinese electric vehicle manufacturer BYD and lithium battery maker Contemporary Amperex Technology (CATL) are leading clean transportation and renewable energy solutions in China and increasingly around the world. |
Clean Energy Electric Vehicles Batteries Sustainability Infrastructure | |
GamingRoblox has become a frontrunner in the metaverse by creating a platform for virtual environments and immersive experiences that appeal to a global audience. AppLovin built an AI advertising placement platform that has reaccelerated its video game ad business and positioned it to expand into the much larger ecommerce ad market. |
Metaverse Platform Virtual Advertising Entertainment |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 22, 2026 | Fund Letters | Frank M. Sands | GOOGL | Alphabet Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | advertising, AI, cloud, inference, monetization, scale, Search | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | CVNA | Carvana Co. | Consumer Discretionary | Specialty Retail | Bull | New York Stock Exchange | Credit, ecommerce, Inventory, Logistics, Margins, Refinancing, scale | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | TSM | Taiwan Semiconductor Manufacturing Co. | Information Technology | Semiconductors & Semiconductor Equipment | Bull | New York Stock Exchange | AI, Capacity, Foundry, Geopolitics, Pricing, semiconductors, Yields | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | AMZN | Amazon.com Inc. | Consumer Discretionary | Broadline Retail | Bull | NASDAQ | advertising, CapEx, cloud, efficiency, Logistics, Margins, scale | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | AVGO | Broadcom Inc. | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | accelerators, AI, Cyclicality, Demand, hyperscalers, Margins, Networking | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | RBLX | Roblox Corp. | Communication Services | Entertainment | Bull | New York Stock Exchange | CapEx, Creators, Engagement, Gaming, monetization, platform, Regulation | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | SE | Sea Ltd. | Consumer Discretionary | Broadline Retail | Bull | New York Stock Exchange | Competition, ecommerce, Engagement, Fintech, Logistics, profitability, Reinvestment | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | NFLX | Netflix Inc. | Communication Services | Entertainment | Bull | NASDAQ | acquisition, antitrust, Engagement, Ip, leverage, Pricing, Streaming | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | SPOT | Spotify Technology SA | Communication Services | Entertainment | Bull | New York Stock Exchange | AI, Audio, Engagement, Margins, Pricing, royalties, Subscriptions | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | MSFT | Microsoft Corp. | Information Technology | Software | Bull | NASDAQ | AI, Bottlenecks, Capacity, CapEx, cloud, enterprise, monetization | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | NOW | ServiceNow Inc. | Information Technology | Software | Bull | New York Stock Exchange | Automation, Competition, disruption, Sentiment, Software, valuation, Workflow | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | TEAM | Atlassian Corp. | Information Technology | Software | Bull | NASDAQ | Collaboration, Developers, disruption, migration, Pricing, Sentiment, Software | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | ORCL | Oracle Corp. | Information Technology | Software | Bear | New York Stock Exchange | Balance_Sheet, CapEx, cloud, Competition, growth, leverage, Partnerships | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | AJG | Arthur J. Gallagher & Co. | Financials | Insurance Brokers | Neutral | New York Stock Exchange | acquisition, Brokerage, compounding, diversification, inflation, Insurance, Pricing_Cycle | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | VG | Venture Global Inc. | Energy | LNG Infrastructure | Neutral | New York Stock Exchange | Commissioning, Execution, Exports, Governance, infrastructure, litigation, LNG | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | DXCM | DexCom Inc. | Health Care | Medical Devices | Bear | NASDAQ | Adoption, Cgm, Competition, Diabetes, Reimbursement, reliability, valuation | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | CRS | Carpenter Technology Corp. | Industrials | Aerospace & Defense | Bull | New York Stock Exchange | Aerospace, Alloys, Capacity, Certification, duopoly, Pricing_Power, Turbines | Login |
| Jan 22, 2026 | Fund Letters | Frank M. Sands | PWR | Quanta Services Inc. | Industrials | Construction & Engineering | Bull | New York Stock Exchange | backlog, Electrification, Energy_Transition, Grid, infrastructure, Labor, utilities | Login |
| TICKER | COMMENTARY |
|---|---|
| STX | Seagate Technology is a global leader in mass-capacity data storage. Our holding in the business was the largest contributor, as improving supply-demand conditions continued to support stronger pricing expectations for hard disk drives. The company reported strong first-quarter results, with revenue rising 44 percent year over year and non-GAAP gross margin reaching a record 47 percent. Demand for storage capacity is improving as AI-related workloads require greater data retention and retrieval, while industry supply remains constrained. Management now expects pricing to grow at a multiyear mid-teens rate, following 12 percent year-over-year pricing growth in the quarter. We believe this combination of rising demand, limited supply response, and improving pricing discipline will support durable earnings growth. |
| TSM | Taiwan Semiconductor's contribution reflected continued confidence in its bottleneck position within leading-edge semiconductor manufacturing. First-quarter revenue was in line with consensus expectations, while gross margin exceeded consensus and guidance implied continued strength through the balance of the year. The company remains the scaled manufacturing partner for many of the most advanced AI chips, with robust demand across leading-edge nodes and advanced packaging. We believe Taiwan Semiconductor's manufacturing leadership, pricing power, and strategic position in the AI supply chain should continue to support durable long-term growth. |
| LRCX | Lam Research is a leading global provider of semiconductor fabrication equipment. Shares of the business benefited from renewed confidence in semiconductor capital spending and the rising complexity of chip manufacturing. In the first quarter, revenue grew 24 percent and adjusted earnings per share grew 42 percent year over year, while June-quarter guidance exceeded consensus expectations. The company is a critical supplier of etch and deposition equipment, both of which become increasingly important as memory architectures and leading-edge semiconductor manufacturing grow more complex. We believe Lam's exposure to high-bandwidth memory, advanced NAND, and a recovering memory investment cycle gives it a differentiated role within the AI infrastructure supply chain. |
| NVDA | NVIDIA's contribution reflected continued evidence that demand for accelerated computing remains robust. First-quarter revenue grew 85 percent and earnings per share grew 131 percent, driven by sustained demand for AI infrastructure. While GPUs remain the core driver, the company's opportunity is broadening as AI adoption expands from training toward inference, agentic workflows, and enterprise use cases. Management also highlighted meaningful standalone CPU revenue visibility, reinforcing NVIDIA's evolution from a GPU supplier into a systems-level provider across the AI infrastructure stack. We believe NVIDIA remains one of the clearest beneficiaries of a large and potentially underappreciated AI capital spending cycle. |
| CRS | Carpenter Technology is a leading supplier of specialty nickel alloys for the aerospace industry. Fiscal third-quarter results reinforced our margin thesis as the company demonstrated significant operating leverage as the aerospace equipment cycle continued to recover. Specialty Alloys Operations generated an 86 percent incremental margin in a quarter when volume grew at its strongest rate since the post-COVID aerospace recovery. In our view, the results helped validate that Carpenter's earnings power can continue to expand as the business benefits from improving volume, pricing, and mix. We maintain conviction, supported by Carpenter Technology's specialized materials leadership, pricing power, and exposure to a multiyear aerospace production recovery. |
| ICE | Intercontinental Exchange (ICE) is one of the world's largest operators of financial exchanges and clearinghouses. Shares declined as investor concerns around AI disruption in ICE's Mortgage business and potential competition from perpetual futures contracts weighed on the stock. Much of the underperformance appears to reflect multiple compression rather than a weakening of fundamentals, which remain solid. In our view, the market is overestimating the risk that AI will displace ICE Mortgage. The business is not simply a workflow solution; it is a platform that connects lenders, data vendors, and other participants required to originate, sell, and service mortgages, while also serving as a system of record for a significant portion of the U.S. mortgage ecosystem. We also believe concerns around perpetual futures competition are overstated, as the structure of these products may limit their use in institutional hedging and risk management, particularly before accounting for liquidity. As such, we believe the recent sell-off more than discounts these risks. |
| SHOP | Shopify is a leading global ecommerce platform enabling the next generation of retail. Shares declined as concerns around AI-related expenses and forward guidance overshadowed strong quarterly results. Revenue grew 32 percent, the company's fastest growth rate since 2021, supported by strength in North America and higher payments penetration. Investors focused on rising LLM costs associated with Sidekick, Shopify's AI assistant, and second-quarter guidance that implied sequential deceleration. In our view, these concerns are manageable. Shopify is embedding AI into its platform to improve merchant productivity, product discovery, conversion, and win rates, creating potential latent pricing power over time. Early traction is encouraging, with Sidekick usage up 400 percent and Campaigns usage up 300 percent year over year. We maintain conviction in Shopify's long-term growth, supported by enterprise adoption, international expansion, rising take rate, and AI-driven discovery and product enhancements. |
| SPOT | Spotify shares declined following first-quarter results after 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 likely signals the early stages of a new AI-enabled product cycle. Spotify's 2026 investor day helped address concerns around AI by reinforcing that AI 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 Universal Music Group partnership also provides a potential path to turn AI music into a paid feature. We believe Spotify's scale, pricing power, and distribution advantage position it to convert AI-enabled products into higher revenue per user and long-term margin expansion. |
| AMD | Advanced Micro Devices is a leading provider of high-performance computing and AI semiconductor solutions. The company has built its position through sustained innovation in CPUs, GPUs, and adaptive computing, emerging as a scaled alternative to incumbent providers. Demand for compute is rising rapidly, driven by generative AI, inference, agentic applications, and broader cloud infrastructure investment, all of which require higher-performance and more energy-efficient processing. We believe AMD is well positioned to benefit as customers seek greater supplier diversity, open standards, and cost-effective alternatives in AI infrastructure. More specifically, we expect the business to benefit from emerging architectures needed to support agentic AI, as expanding orchestration and workflow management workloads may require materially greater CPU resources per GPU. |
| BE | Bloom Energy added exposure to power, another increasingly important constraint in the AI buildout. The company's solid oxide fuel cells provide baseload, on-site power that can be deployed in modular units, making the technology well suited for data centers facing grid interconnection delays, limited turbine availability, and rising power costs. We believe Bloom has crossed from an emerging technology into a more credible data center power solution, supported by Oracle's decision to deploy up to 2.8 gigawatts of Bloom's fuel cell technology at its New Mexico facility. In our view, Bloom's faster time to power, lower water requirements, modular design, and potential cost competitiveness versus gas turbines could meaningfully expand its addressable market. |
| MU | Micron Technology increased the portfolio's exposure to memory, which has become a critical bottleneck in the AI infrastructure stack. Agentic AI systems require greater context, faster retrieval, and more persistent memory, increasing demand for DRAM, high-bandwidth memory, and NAND. At the same time, advanced memory remains difficult, capital intensive, and time consuming to manufacture. The industry has also become more consolidated and disciplined, which should limit the speed of supply response. We believe this combination of accelerating demand and constrained supply can support stronger pricing, better margins, and a more durable earnings cycle for leading memory providers. |
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