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In August, the second quarter earnings season continued, with positive results from many of our portfolio companies, although overall portfolio performance was dampened by a generally weaker market and continued macroeconomic concerns around interest rates and inflation, as well as the effects of tariffs.
In terms of company fundamentals, we continued to see strong results from our AI-exposed companies – TSMC (which reported its Q2 results in July) reported strong July sales again, and more generally, Taiwanese July sales figures showed continued strength, indicating a strong build-out of Nvidia's latest systems.
Arista Networks (owned) showed that AI demand is much more than just computers and GPUs – they see a much greater demand for their high-performance networking systems.
August also saw the launch of the latest ChatGPT-5 model, which we believe will continue to support the shift to reasoning models, one of the biggest drivers of increased demand for computing.
On the short side, we are still short in some analog semiconductors, where we still see cyclical risks, and still short in some IT services/consulting, where we believe macro uncertainty is impacting some business cycles. The fund fell 3% in August, despite what we see as fundamental strength in our portfolio companies.