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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Baillie Gifford - International Alpha. This analysis is provided for institutional research purposes only and is not investment advice.
"International Alpha is capitalizing on the AI revolution through diversified semiconductor exposure while adding uncorrelated growth drivers at attractive valuations. Samsung and TSMC profits surged on memory and chip demand, prompting profit-taking to fund positions in overlooked AI enablers like Wärtsilä and undervalued software names."
Baillie Gifford's International Alpha strategy delivered strong operational performance in Q2 2026, with 40 percent of holdings seeing upward earnings revisions and two-thirds expected to deliver double-digit earnings growth over three years. The portfolio kept pace with rising markets despite unusual concentration in AI-related sectors. Core semiconductor holdings Samsung and TSMC continued exceptional profit growth driven by high-bandwidth memory and leading-edge compute demand, prompting the manager to take profits and diversify into less obvious AI beneficiaries including Wärtsilä for datacenter power infrastructure. New positions in MTU Aero Engines and Argenx add uncorrelated growth exposure at attractive valuations. The manager added to software names like Scout 24 that sold off on unfounded AI disruption concerns. Energy holdings Petrobras and TotalEnergies detracted as oil prices normalized, though resource security and electrification remain important long-term themes. China exposure faced headwinds from subdued consumer activity, but Tencent's AI compute leadership and resilient core business support continued conviction. With portfolio valuation premium at a 15-year low and broad-based operational strength, the manager expresses confidence in delivering outperformance despite recent challenges.
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