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February continued to be characterized by increased market volatility, with technology-related stocks in particular affected by a more pronounced ”risk-off” climate. However, focusing on the fundamental development of the companies, we were able to observe a continued strong reporting season for the fourth quarter among the holdings in the portfolio, as well as a continued positive news flow around AI-related investments (capex), an area where a significant proportion of the portfolio companies have exposure.
We wrote in January about the increased investment levels announced by Meta, and in February even more substantial increases from Google and Amazon followed. Google guided for capex of USD 175–185 billion for the current year, compared to USD 90 billion in 2025 and well above market expectations of around USD 120 billion. Amazon, at the same time, guided for capex of USD 200 billion, compared to expectations of around USD 145 billion. In total, the four largest players (Amazon, Meta, Google and Microsoft) are now expected to invest over USD 650 billion in 2026.
The portfolio remains exposed to companies that we believe will be downstream winners from these increased investment budgets.
Among the more notable reports in February from portfolio companies, Arista Networks (holding) stands out. The company beat expectations for Q4 and guided significantly above consensus for Q1. Arista also raised its 2026 revenue growth forecast to 25 percent, from 20 percent previously, supported by AI-related revenue doubling year-on-year. Given what we see in other parts of the market, as well as Arista's strong balance of prepaid revenue, we believe there is a significant likelihood of further upward revisions during the year. It is clear that the business is benefiting greatly from the ongoing expansion of AI infrastructure, particularly in Ethernet-based AI networks. Meta and Microsoft are both major customers, which means that Arista is directly exposed to their increased capex and growing need for Ethernet networks.
Nvidia (which remains one of the portfolio's largest holdings) also reported a very strong earnings update. Revenue for Q4 accelerated to 73 percent year-on-year growth, driven by data center operations and a clear upscaling of the company's latest Blackwell chips. Q1 guidance of $78 billion exceeded even the most optimistic market expectations of about $75 billion. In addition, Q4 gross margin came in above expectations, as did Q1 gross margin guidance.