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February continued to be characterised by high market volatility, with technology-related stocks in particular affected by a more pronounced risk-off climate. However, focusing on fundamentals, we were able to see a strong fourth quarter reporting season among the companies in the portfolio, as well as a continued positive news flow around AI-related investments (capex), to which a significant proportion of the portfolio companies are exposed.
We wrote in January about the increased investments announced by Meta, and in February even more significant increases followed from Google and Amazon. Google guided for capex of $175-185 billion for the year, compared to $90 billion in 2025 and significantly above market expectations of around $120 billion. Amazon, meanwhile, guided for capex of $200 billion, compared to expectations of around $145 billion. Combined, the four largest players (Amazon, Meta, Google and Microsoft) are now expected to invest over $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 prominent reports in February from portfolio companies, Arista Networks (holding) beat expectations for Q4 and guided well above consensus for Q1. The company also raised its 2026 revenue growth forecast to 25 percent from a previous 20 percent, supported by a doubling of AI-related revenue year-on-year. Given what we see in other parts of the market and 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 company is benefiting from the ongoing expansion of AI infrastructure, particularly in Ethernet-based AI networks. Meta and Microsoft are both large 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 strong results. Revenue for Q4 accelerated to 73 percent year-on-year growth, driven by data center operations and a clear upscaling of the 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 the company's Q1 gross margin guidance.
On the short side, we continue to see weak data points in the automotive sector and therefore maintain short positions in semiconductor companies with high exposure to the automotive industry.
The fund fell 1 percent in February and is up 0.9 percent so far this year.