Investment Pitches

Pitch Summary:
Tencent Holdings Limited operates the leading social network and messaging platforms (QQ, WeChat), the largest online entertainment and media business, and the largest online gaming business in China. Shares were up this quarter, given better-than-expected domestic games growth and continued strength in recent game releases. We continue to believe in Tencent's ability to compound earnings, given its growth structure, massive scale, and focus on efficient operations. Although on the earlier side, we also believe Tencent could be the largest generative AI beneficiary in China, given its ability to improve existing products and enter adjacent markets with massive scale and distribution. We continue to monitor the regulatory environment.

BSD Analysis:
Baron views Tencent as a dominant Chinese technology platform with multiple competitive advantages and significant AI upside potential. The manager emphasizes Tencent's leadership positions across social networking (WeChat, QQ), online gaming, and digital entertainment, providing massive scale and distribution capabilities. Recent performance was driven by better-than-expected domestic gaming growth and strong new game releases. The fund believes Tencent's growth structure and operational efficiency will enable continued earnings compounding. Notably, Baron sees Tencent as potentially the largest generative AI beneficiary in China, given its ability to enhance existing products and expand into adjacent markets leveraging its massive user base. The manager continues monitoring regulatory risks while maintaining conviction in the company's long-term growth trajectory and market-leading positions.

Pitch Summary:
Semiconductor giant Taiwan Semiconductor Manufacturing Company Limited (TSMC) contributed in the second quarter due to expectations for a continued strong cyclical recovery in semiconductors and significant incremental demand for AI chips. We retain conviction that TSMC's technological leadership, pricing power, and exposure to secular growth markets, including high-performance computing, automotive, 5G, and IoT, will allow the company to sustain strong double-digit earnings growth over the next several years.

BSD Analysis:
Baron maintains strong conviction in TSMC as a dominant AI beneficiary with technological leadership and pricing power. The manager highlights TSMC's exposure to multiple secular growth drivers including high-performance computing, automotive semiconductors, 5G infrastructure, and IoT devices. The fund expects continued strong cyclical recovery in semiconductors with significant incremental AI chip demand driving performance. TSMC's foundry leadership position and advanced manufacturing capabilities position it to capture disproportionate value from the AI infrastructure buildout. The manager projects sustained double-digit earnings growth over multiple years, supported by the company's technological moat and diversified end-market exposure. Baron views TSMC as well-positioned to benefit from both the current AI boom and longer-term semiconductor industry growth trends.

Pitch Summary:
Medtronic (MDT) is the world's largest manufacturer of implantable biomedical devices, with sales in over 150 countries. Cardiovascular (cardiac rhythm disease management and cardiovascular) accounted for 37% of '24 sales; Neuroscience 29%, Medical Surgical 26%, and Diabetes 8%. International revenues were 49.0% of '24 sales. The company's business was impacted during COVID-19 when medical procedures declined. Earnings peaked in 2018; five years later, they are still around $5 per share. Recent results have improved, leading us to believe the company is back on track, and a higher stock price should follow. The share price is down from $135 in 2022. We think the shares have a significant upside at their current price around $80. We have owned the stock in our Dividend strategy since early 2022 and added it to our Value Portfolio now as we think the valuation is compelling. With reaccelerating earnings growth, the stock should be very timely.

BSD Analysis:
Matrix added Medtronic to their Large Cap Value strategy based on signs of operational recovery following COVID-19 disruptions to elective medical procedures. The manager notes that while earnings peaked in 2018 and have remained flat around $5 per share, recent quarterly results suggest the company is returning to growth. With shares trading around $80 versus 2022 highs of $135, the valuation appears compelling for the world's largest implantable medical device manufacturer. The company's diversified revenue base spans cardiovascular (37%), neuroscience (29%), medical surgical (26%), and diabetes (8%) segments, with nearly half of sales generated internationally. Matrix's confidence stems from improving fundamentals and their belief that earnings growth is reaccelerating, positioning the stock for significant upside as the medical device market normalizes post-pandemic.

Pitch Summary:
Lowe's (LOW) is the second largest home improvement chain, with a strong #2 market share of 20%,behind the industry leader Home Depot with a 29% market share. The home improvement industry continues to grow and consolidate around Home Depot and Lowes due to large selections, low prices, and high levels of service. Lowe's has a long history of double-digit revenue and earnings growth with high returns on capital. The company was a significant beneficiary during COVID-19 when low interest rates, rising housing prices, and living/working from home were major themes leading to an acceleration in its core home remodeling business. Since then, Lowe's shares have dropped from a high of over $260 in 2021 to a recent price of $215, where we started purchasing the shares. The valuation is attractive at 15 to 16 times earnings as Lowes shares typically trade for 20+ times earnings.

BSD Analysis:
Matrix initiated a position in Lowe's based on attractive valuation following a significant price decline from 2021 highs. The manager highlights Lowe's strong market position as the #2 home improvement retailer with 20% market share in a consolidating industry. The company demonstrated resilience during COVID-19, benefiting from housing market trends and work-from-home dynamics that accelerated home remodeling demand. With shares trading at 15-16x earnings versus historical multiples of 20x+, the manager sees compelling value in a business with a track record of double-digit growth and high returns on capital. The investment thesis centers on mean reversion in valuation multiples as the company maintains its competitive position in a growing, oligopolistic market structure dominated by Lowe's and Home Depot.

Pitch Summary:
We diversified our health care exposure with the addition of IDEXX Laboratories, a provider of diagnostics products for the companion animal and livestock markets. We expect penetration of this large and growing $45 billion market will continue to increase globally, with only 15% being served today. We are also encouraged by the opportunity for company-specific product cycles and consumables pull through to help sustain growth. Finally, despite solid operating margins today, we see multiple levers to drive continued margin expansion for IDEXX. The new position maintains our animal health exposure following the sale of vaccine and therapeutics provider Zoetis.

BSD Analysis:
ClearBridge's investment in IDEXX Laboratories represents a strategic play on the underpenetrated animal health diagnostics market, valued at $45 billion with only 15% currently served. The managers see significant runway for market expansion as pet ownership trends and livestock health monitoring continue to grow globally. The investment thesis is anchored on IDEXX's dominant position in companion animal diagnostics and its consumables-driven business model that generates recurring revenue streams. The fund highlights multiple margin expansion opportunities despite already solid operating margins, suggesting operational leverage potential as the company scales. Product cycle opportunities and consumables pull-through provide additional growth catalysts beyond market expansion. This position replaces their Zoetis holding, maintaining sector exposure while pivoting from vaccines and therapeutics to diagnostics. The timing appears strategic as the animal health market benefits from increased pet spending and livestock health awareness trends.

Pitch Summary:
ELF, in the consumer staples sector, is the third-largest mass cosmetics brand in the U.S. We believe the flywheel of ELF's consumer value proposition, its innovation pipeline, its unique ability to bring prestige-like products to mass consumers and high consumer engagement will enable the company to continue to outgrow the global market. We see significant opportunity for ELF to transform itself from an emerging U.S. color cosmetics brand to a global beauty stalwart by doubling its share in the U.S. over the next few years and gaining share in international and skincare markets. ELF is profitable, balancing growth and earnings, and has an attractive balance sheet.

BSD Analysis:
ClearBridge presents a compelling growth thesis for e.l.f. Beauty, positioning it as a transformative force in the mass cosmetics market. The managers highlight ELF's unique value proposition of delivering prestige-quality products at mass market prices, supported by strong consumer engagement and innovation capabilities. The investment case centers on significant market share expansion opportunities, with the company targeting to double its U.S. market share while expanding internationally and into skincare categories. The fund emphasizes ELF's current profitability and strong balance sheet as key differentiators in a competitive beauty landscape. This represents a strategic bet on the democratization of beauty products and ELF's ability to capture market share from traditional players. The timing appears opportunistic given the company's position as the third-largest mass cosmetics brand with substantial runway for growth. The managers view this as a way to participate in the global consumer recovery through a company with reset earnings expectations.

Pitch Summary:
Repligendevelops and provides advanced bioprocessing technologies and systems for manufacturing large molecule drugs (e.g., monoclonal antibodies, cell and gene therapies). Its product offerings are categorized into four key areas: (1) Filtration; (2) Chromatography; (3) Process Analytics; and (4) Proteins, primarily used in the critical purification processes of biologics drug manufacturing to ensure efficacy and safety. During the quarter, shares detracted from performance following the announcement that CEO Tony Hunt, deemed pivotal in the company's success over the past decade, will step down to become Executive Chairman, effective September 1st. Current President and COO, Oliver Loeillot, will assume the CEO role. Additionally, the company's decision not to reaffirm forward guidance during this CEO transition sparked investor speculation about the potential for lowered forward guidance. Despite the management changes, we believe the long-term fundamentals of the company remain strong, supported by an experienced management team and a robust portfolio of products.

BSD Analysis:
The manager maintains confidence in Repligen despite leadership transition concerns and near-term uncertainty. The investment thesis is anchored on the company's critical role in biologics manufacturing through its comprehensive bioprocessing technology platform. Repligen's four-pillar approach spanning filtration, chromatography, process analytics, and proteins positions it as an essential supplier to the growing biologics industry. While acknowledging the significance of CEO Tony Hunt's departure and the market's negative reaction to guidance uncertainty, the manager emphasizes the strength of the underlying business fundamentals. The transition to President and COO Oliver Loeillot suggests internal succession planning and continuity. The company's products are integral to ensuring efficacy and safety in biologics manufacturing, providing defensive characteristics. The robust product portfolio and experienced management team beyond the CEO role support the manager's conviction in the long-term investment case despite short-term execution risks.

Pitch Summary:
Kura Sushi USA engages in the operation of technology-enabled Japanese restaurants. The company offers a distinctive dining experience by serving authentic Japanese cuisine through an engaging revolving sushi service model. While company shares have done well year-to-date, shares fell in the second quarter due to negative market sentiment around consumer spending, along with some profit taking, in our view. At the end of the quarter, the company reported weaker-than-expected fiscal third quarter results, noting a slowdown in same-store-sales (SSS) growth. Management attributed the SSS weakness primarily to challenges in the California market, where the company has significant exposure. Despite the disappointing quarter, we believe the company remains well positioned to potentially capitalize on its significant expansion opportunities within the U.S.

BSD Analysis:
The manager maintains a bullish outlook on Kura Sushi despite recent operational challenges and market headwinds. The investment thesis is built on the company's unique technology-enabled dining concept and authentic Japanese cuisine offering through its distinctive revolving sushi model. While acknowledging near-term pressures from consumer spending concerns and California market weakness, the manager views these as temporary obstacles rather than fundamental issues. The company's strong year-to-date performance prior to the second quarter decline suggests underlying business strength. The manager's conviction appears rooted in the significant expansion opportunity within the U.S. market for the company's differentiated dining concept. The technology-enabled approach and authentic Japanese cuisine positioning provide competitive advantages in the restaurant sector. Despite same-store sales growth deceleration, the long-term expansion potential remains intact according to the manager's assessment.

Pitch Summary:
Cabaletta Bio is a clinical-stage biotechnology company focused on the discovery and development of targeted cell therapies (CD19 "CAR-T") for autoimmune diseases. During the quarter, the company's shares were negatively impacted by several factors: 1) a challenging environment for biotechnology stocks, exacerbated by Fed policy decisions to maintain elevated interest rates, 2) intensified competition in antibody drugs for autoimmune diseases, and 3) concerns about the durability of CAR-T treatments. Despite the challenging quarter, we continue to believe Cabaletta's cell therapy represents a multibillion-dollar opportunity for treatment of autoimmune diseases with a first mover advantage to FDA approval. Additionally, the company is expected to release follow-up clinical trial data later this year, which will further demonstrate the efficacy, safety, and durability of their CAR-T therapy.

BSD Analysis:
Despite recent headwinds, the manager maintains a bullish stance on Cabaletta Bio's CAR-T therapy platform for autoimmune diseases. The investment thesis is predicated on the company's first-mover advantage in applying CAR-T technology to autoimmune conditions, representing a potentially transformative approach beyond traditional treatments. The manager acknowledges near-term challenges including biotech sector weakness, competitive pressures, and durability concerns, but views these as temporary obstacles. The multibillion-dollar market opportunity for autoimmune disease treatments provides significant upside potential if the therapy proves successful. Upcoming clinical trial data releases later this year represent key catalysts that could validate the platform's efficacy, safety, and durability. The manager's conviction appears based on the innovative nature of the technology and the substantial unmet medical need in autoimmune diseases. The FDA approval pathway advantage could provide significant competitive moats if successfully executed.

Pitch Summary:
Agilysysis a provider of software, hardware, and professional services designed to cater to the hospitality industry. Their technology is employed by hotels, resorts, restaurants, and gaming businesses to oversee the complete guest experience, offering solutions in point-of-sale (POS), property management systems (PMS), inventory procurement, document management, analytics, payment processing, and other related applications. We believe the company's comprehensive suite fuels the continuous transition towards a genuine omnichannel perspective of hospitality operations to entice customers in the post-Covid-19 travel environment. Moreover, the company's shift to cloud technology is gaining market share and their revamped product suite continues to attract top industry brands, noting a landmark deal with Marriott signed in December 2022. During the period, the company reported strong fiscal fourth quarter results, where revenues beat analyst estimates, driven by accelerating subscription revenue growth. Management subsequently increased their fiscal full-year revenue projections, citing robust expansion in their PMS and POS solutions through new customer acquisitions and enhancements to existing customer services. Additionally, the company anticipates that the PMS integration with Marriott will start contributing to recurring revenue by mid-2025, noting a potential increase in revenues by 30% over the next three years.

BSD Analysis:
The manager presents a compelling bull case for Agilysys based on the company's comprehensive hospitality technology platform and successful cloud transition. The investment thesis centers on the post-COVID recovery in travel and hospitality, where Agilysys is well-positioned to benefit from industry digitization trends. The landmark Marriott partnership represents a significant validation of the company's technology and provides substantial revenue visibility. The shift to cloud-based solutions is driving market share gains and recurring revenue growth, as evidenced by accelerating subscription revenues. Management's raised guidance and the projected 30% revenue increase over three years from the Marriott integration alone demonstrates significant growth potential. The company's comprehensive suite spanning POS, PMS, and analytics positions it as a one-stop solution for hospitality operators. The omnichannel approach aligns with evolving customer expectations in the post-pandemic environment.

Pitch Summary:
Naterais a specialty lab providing genetic testing services in the reproductive health, oncology and transplant markets. Reproductive health tests are run to screen for common genetic disorders such as trisomy 13, 18, and 21 in pregnant women - these tests are also known as non-invasive prenatal testing (NIPT). The company's oncology franchise is led by Signatera, a test used to detect minimal residual disease (MRD) -the applications of this test are primarily to monitor therapy response and detect cancer recurrence. Lastly, Natera'stransplant franchise is led by Prospera, a test used to monitor transplant organ rejection. Natera'stests are all based on the company's proprietary liquid biopsy platform to detect cell-free DNA. During the quarter, shares contributed to performance as the company reported strong fiscal first quarter results, where revenues and profit margins came in above analyst estimates. Better-than-expected revenues stemmed from higher test volumes and reimbursement rates, especially for the company's Signature test which is used to monitor cancer recurrence. Additionally, management raised its 2024 revenue and profit margin guidance.

BSD Analysis:
The manager demonstrates strong conviction in Natera's diversified genetic testing platform across three key markets. The investment thesis is built on the company's proprietary liquid biopsy technology that enables non-invasive testing across reproductive health, oncology, and transplant monitoring. The recent first quarter results exceeded expectations on both revenue and margin metrics, driven by increased test volumes and improved reimbursement rates. The Signatera oncology test appears to be a key growth driver, particularly for monitoring cancer recurrence. Management's decision to raise full-year guidance signals confidence in the business trajectory. The company's ability to command higher reimbursement rates suggests strong clinical utility and market acceptance of its testing services. Natera's platform approach across multiple end markets provides diversification and multiple avenues for growth.

Pitch Summary:
Wingstopis a high-growth franchisor and operator of cooked-to-order fried chicken wings with over 20 different sauces that consumers have grown to love. The company operates just over 2,000 of its namesake stores around the globe, with the majority of those in the U.S. Shares contributed to performance during the quarter after the company reported strong fiscal first quarter operating results. The company reported better-than-expected revenues which were driven by several factors, including increased brand awareness through effective digital advertising, menu innovation such as its new chicken sandwich launch, and strong delivery service partnerships.

BSD Analysis:
The manager presents a bullish view on Wingstop, highlighting the company's strong execution across multiple growth drivers. The investment thesis centers on the company's ability to drive revenue growth through effective digital marketing, menu innovation, and strategic delivery partnerships. The recent fiscal first quarter results exceeded expectations, demonstrating the effectiveness of management's strategy. The company's global footprint of over 2,000 stores provides a solid foundation for continued expansion. The introduction of new menu items like chicken sandwiches shows the company's ability to innovate beyond its core wing offerings. Strong delivery partnerships position Wingstop well in the evolving quick-service restaurant landscape. The manager's positive stance appears justified by the company's demonstrated ability to drive brand awareness and revenue growth through multiple channels.

Pitch Summary:
Martin Marietta, a leading supplier of building materials such as aggregates, cement, ready-mixed concrete, and asphalt, serves the construction and infrastructure industries across the U.S., Canada, and the Bahamas. During the quarter, the company reported mixed fiscal first quarter operating results, where revenues came in slightly below analyst estimates. While the company noted that lower-than-expected shipments in aggregates was due largely to weather, a 13% increase in aggregate pricing starting in January 2024 helped offset this weakness. Moreover, management provided lower than expected 2024 aggregates volume guidance as they shift their focus on higher priced projects. Given the disappointment in projected aggregate volumes, shares detracted from performance during the quarter.

BSD Analysis:
Alger presents a neutral to cautious view on Martin Marietta following mixed Q1 results and disappointing volume guidance. The fund acknowledges the company's leading position in building materials across North America, serving critical construction and infrastructure markets. While Q1 revenues missed estimates due to weather-impacted aggregate shipments, management's 13% pricing increase in January demonstrates pricing power in the current environment. However, lower-than-expected 2024 volume guidance reflects management's strategic shift toward higher-priced projects, suggesting margin optimization over volume growth. This strategic pivot, while potentially beneficial for profitability, disappointed investors focused on volume expansion. The weather-related shipment weakness highlights the cyclical nature of the business and operational challenges. Alger's neutral stance reflects the balance between Martin Marietta's market leadership and pricing power against volume headwinds and execution concerns in the near term.

Pitch Summary:
DraftKings is a digital sports entertainment and gaming firm designed to ignite the passion of sports enthusiasts through a diverse offering that spans daily fantasy, regulated gaming, and digital media. We believe the company's expertise in product development and customer acquisition, which established it as the market leader in daily fantasy sports (DFS), positions DraftKings to be a key driver in advancing the U.S. sports betting market's growth. The company reported strong fiscal first quarter results, with revenues beating analyst estimates due to broad-based momentum in customer engagement and acquisition. However, on May 28th, the Illinois Senate passed a new state budget that includes a tiered progressive tax on sportsbook operators, effective July 1, 2024. This new tax ranges from 20% to 40% on gross revenues, a significant increase from the current 15% tax rate. Despite management's belief that it can mitigate the tax impact by reducing promotions in Illinois, this development negatively affected the company's share price.

BSD Analysis:
Alger presents a bullish thesis on DraftKings centered on the company's market leadership and growth potential in U.S. sports betting, despite regulatory headwinds. The fund emphasizes DraftKings' competitive advantages in product development and customer acquisition, established through its dominance in daily fantasy sports. Strong Q1 results with revenue beats demonstrate broad-based momentum in customer engagement and acquisition, validating the company's market position. However, Illinois' new progressive tax structure (20-40% vs. 15% previously) represents a significant regulatory challenge that pressured shares. Management's strategy to mitigate tax impact through reduced promotions shows operational flexibility, though execution remains uncertain. The thesis relies on DraftKings' ability to drive U.S. sports betting market expansion while navigating evolving state-level regulations. The fund appears confident in the company's long-term positioning despite near-term tax pressures, viewing regulatory challenges as manageable given DraftKings' market leadership and operational expertise.

Pitch Summary:
Advanced Micro Devices (AMD) is a major global supplier of PC microprocessors and graphics processors to computing original equipment manufacturers (OEMs). The company's product range spans desktops, notebooks, servers, graphics, and embedded/semi-custom chips. AMD operates in a large addressable market, covering areas such as PCs, servers, high-end gaming, and deep learning. Additionally, AMD has introduced competitive AI technologies, including powerful accelerators poised to capture a share in a market worth several hundred billion dollars. During the quarter, the company reported fiscal first-quarter operating results that met analyst estimates, with strengths in data center GPUs and server CPUs offsetting weaknesses in their gaming and embedded businesses. Moreover, management raised their fiscal second-quarter revenue guidance, albeit slightly below consensus estimates, where they expected double digit growth in data center revenues, while projecting a decline in their gaming segment, driven by weaknesses in both desktop GPUs and Semi-Custom Systems-on-a-Chip (SoC). While weaker-than-expected near-term results weighed on shares during the quarter, we believe the company is positioning itself to potentially benefit from long-term growth in AI infrastructure spending. Specifically, the company continues to gain server CPU market share, which could potentially accelerate as traditional compute deployments begin to recover.

BSD Analysis:
Alger maintains a bullish long-term view on AMD despite near-term headwinds, focusing on the company's positioning for AI infrastructure growth. The fund acknowledges mixed Q1 results that met estimates, with data center GPU and server CPU strength offsetting gaming and embedded weaknesses. Management's raised Q2 guidance, though below consensus, projects double-digit data center revenue growth while gaming segment declines. The thesis centers on AMD's competitive AI technologies and accelerators targeting a multi-hundred billion dollar market opportunity. AMD's continued server CPU market share gains position the company to benefit from traditional compute recovery and AI infrastructure buildout. While gaming weakness and slightly disappointing guidance pressured shares, Alger views this as temporary noise against a compelling long-term AI infrastructure story. The fund believes AMD's diversified product portfolio across PCs, servers, and AI accelerators provides multiple avenues for growth as enterprise AI adoption accelerates.

Pitch Summary:
Microsoft is a beneficiary of corporate America's transformative digitization. The company operates through three segments: Productivity and Business Processes (Office, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). During the quarter, shares contributed to performance after the company reported strong fiscal third quarter results, underscoring its leadership position in the cloud and highlighted its role as a primary facilitator and beneficiary of AI adoption. Company revenue growth, operating margin, and earnings growth surpassed consensus expectations. The utility scale Azure cloud business grew 31% in constant currency of which 7% was AI related versus 3% two quarters ago. Further, management noted most of the AI revenue continues to stem from inference rather than training indicating high quality AI applications by Microsoft's clients. Management also indicated that the significant cost-cutting programs in corporate America are done, suggesting that the cost optimization headwinds previously impacting Azure's growth are over. Separately, management provided color on their new AI-productivity tool, Copilot, noting that approximately 60% of Fortune 500 companies are already using Copilot, and that the quarter witnessed a 50% increase in Copilot assistance integration within Teams. We continue to believe that Microsoft has the potential to hold a leading position in AI, given its innovative approach and demonstrated high unit volume growth opportunity.

BSD Analysis:
Alger presents a strong bull case for Microsoft, positioning the company as a primary beneficiary of corporate digitization and AI adoption. The fund emphasizes Microsoft's diversified business model across productivity software, cloud services, and computing platforms. Strong Q3 results exceeded expectations across revenue, operating margins, and earnings, demonstrating operational excellence. Azure's 31% constant currency growth, with 7% attributed to AI (up from 3% two quarters prior), highlights accelerating AI monetization. The shift from AI training to inference revenue indicates mature, high-quality AI applications by enterprise clients. Management's commentary that corporate cost-cutting programs are complete suggests Azure growth headwinds are dissipating. Copilot's rapid enterprise adoption, with 60% of Fortune 500 companies using the tool and 50% quarterly growth in Teams integration, demonstrates Microsoft's AI leadership. The thesis centers on Microsoft's unique position to capture value from both cloud migration and AI transformation, with multiple revenue streams benefiting from secular digitization trends.

Pitch Summary:
Amazon.com is a renowned online retailer and leader in cloud computing. The company's Amazon Web Services (AWS) division offers utility-scale cloud solutions that support corporate America's digital transition. During the quarter, Amazon's shares contributed to performance as the company reported strong fiscal first-quarter results, with revenues and operating income beating analyst estimates. Notably, AWS revenue growth accelerated, driven by easing cloud cost optimizations, renewed workload migrations, and an increasing contribution from AI workloads. On their earnings call, management highlighted plans to increase capital expenditures to enhance their technology infrastructure, catering to the surging demand for AI-driven computing.

BSD Analysis:
Alger maintains a bullish stance on Amazon, emphasizing the company's dual leadership in e-commerce and cloud computing through AWS. The fund highlights Amazon's strong Q1 performance with revenues and operating income exceeding analyst expectations. Most notably, AWS revenue growth accelerated as cloud cost optimization headwinds eased and workload migrations resumed. The increasing contribution from AI workloads represents a significant growth catalyst, positioning AWS to benefit from the AI infrastructure buildout. Management's commitment to increased capital expenditures for technology infrastructure demonstrates Amazon's strategic focus on capturing AI-driven computing demand. The thesis centers on Amazon's role as a critical enabler of corporate America's digital transformation, with AWS serving as the backbone for enterprise cloud adoption and AI implementation. This positions Amazon to benefit from multiple secular growth trends including cloud migration and artificial intelligence adoption.

Pitch Summary:
Nvidia Corporation is a leading supplier of graphics processing units (GPUs) for a variety of end markets, such as gaming, PCs, data centers, virtual reality, and high-performance computing. The company is leading in most secular growth categories in computing, and especially artificial intelligence and super-computing parallel processing techniques for solving complex computational problems. Simply put, Nvidia's computational power is a critical enabler of AI and therefore essential to AI adoption, in our view. During the quarter, the company reported better-than-expected fiscal first quarter results driven by strong demand from data centers. Additionally, management noted that large cloud service providers, contributing approximately 45% of data center sales, recognize the high return on investment offered by Nvidia's computing solutions, which are driving AI spending. The company also introduced its next-generation H200 chip, which nearly doubles the inference performance compared to the H100 chip, enhancing how trained AI models process new data. Lastly, management raised their fiscal second quarter guidance, noting that demand for their current H100 chips remains strong, and that demand for their next generation products is estimated to outstrip supply over the next year. We continue to believe the company is well positioned to potentially benefit from the growing AI data center workloads, which are driving demand for the increased interconnections and fully accelerated software stacks, thereby enabling leading application performance and fast result times.

BSD Analysis:
Alger presents a compelling bull case for NVIDIA, positioning the company as the essential enabler of AI adoption through its GPU technology. The fund highlights NVIDIA's dominant position across multiple secular growth categories in computing, particularly artificial intelligence and high-performance computing. Strong Q1 results were driven by robust data center demand, with cloud service providers representing 45% of data center sales and recognizing high ROI from NVIDIA's solutions. The introduction of the H200 chip, which nearly doubles inference performance versus the H100, demonstrates continued innovation leadership. Management's raised guidance and commentary about demand outstripping supply for next-generation products reinforces the company's pricing power and market position. The thesis centers on NVIDIA's critical role in AI infrastructure buildout, with growing data center workloads driving demand for advanced interconnections and accelerated computing stacks. This positions NVIDIA to capture significant value from the AI transformation across corporate America.

Pitch Summary:
Daktronics designs and manufactures electronic scoreboards and large-screen video boards for commercial purposes. The company has a leading market share of 50% in LED displays in the United States. Its ability to provide full-service design, manufacturing and installation solutions later translates into recurring maintenance revenue and long-term customer relationships. Sales of newer optic technologies and back-end enhancements as older signage is replaced every 7-10 years are driving organic growth. Demand for its products is also supported by a strong investment cycle in live entertainment and sports as well as the transportation market and shift to electronic billboards. The business profitability has improved to a new baseline in FY 2024 and is expected to continue to increase from current levels, driven by improved manufacturing efficiencies and strong on-time delivery to customer sites resulting in higher gross and operating margins.

BSD Analysis:
THB presents a compelling bull case for Daktronics based on its dominant market position and improving fundamentals. The company's 50% market share in U.S. LED displays provides significant competitive advantages and pricing power. The full-service model creates sticky customer relationships and generates recurring maintenance revenue streams, enhancing business quality and predictability. The 7-10 year replacement cycle for signage provides a natural growth driver as older installations are upgraded with newer optical technologies. Strong secular tailwinds from increased investment in live entertainment, sports venues, and the shift to electronic billboards support demand visibility. Most importantly, the company has established a new profitability baseline in FY 2024, with management expecting continued margin expansion driven by operational improvements and manufacturing efficiencies. The combination of market leadership, recurring revenue characteristics, and margin expansion creates an attractive investment opportunity in the electronic display market.

Pitch Summary:
Brookfield Renewable Corp. operates one of the world's largest renewable power platforms with a global portfolio featuring hydroelectric, solar, and wind projects along with other assets. We became Brookfield Renewable shareholders in 2020 when the company bought a holding of ours, TerraForm Power, and the acquisition generated significant returns for the Fund. We remained shareholders post-merger because we believed Brookfield Renewable was a well-managed company with excellent assets and strong growth prospects trading at a reasonable valuation. The stock performed well during the quarter when the company signed a large, multi-year deal to provide electricity generation to Microsoft's AI-focused data centers, highlighting a long-term growth opportunity that we believe has been unappreciated by the market. We increased our position during the period as we believe the stock continues to offer attractive value.

BSD Analysis:
The manager's thesis on Brookfield Renewable evolved from an initial acquisition-driven entry through TerraForm Power to a conviction holding based on the company's operational excellence and growth prospects. The investment rationale emphasizes Brookfield's position as one of the world's largest renewable power platforms with a diversified global portfolio of high-quality assets. The recent Microsoft deal for AI data center power supply represents a significant validation of the long-term growth opportunity in renewable energy, particularly as technology companies seek clean power sources for energy-intensive operations. This contract highlights an underappreciated growth driver that the market has not fully recognized, providing upside potential beyond traditional renewable energy demand. The decision to increase the position reflects confidence in the company's attractive valuation relative to its growth prospects and asset quality. Brookfield Renewable benefits from secular trends toward decarbonization, corporate renewable energy procurement, and the growing power demands of AI and data center infrastructure. The company's experienced management team and global platform provide competitive advantages in developing and operating renewable energy projects.