September 2026 Portfolio Update

Hi there. We present our latest portfolio and the key updates on our portfolio holdings in this article. We also dig into the high-level implications of the recent Q2 earnings.

The Q2 earnings season has just drawn to a close, and earnings were strong across the technology sector, while other sectors were a mixed bag. Below, we cover the implications of the earnings announced for the parts of the market we cover, along with our take on different sectors.

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The Nvidia and Hyperscaler earnings have confirmed that the AI supercycle will continue for another year (through the end of 2027).

Nvidia: revenue growth of +106% YoY to $96B. The key surprise was the FY28 guide of ~70% revenue growth. The management said that Nvidia can grow faster than this, but is constrained by supply. This proves that the AI capex cycle will continue its strong growth until the end of 2027, as Nvidia captures the largest share of AI capex investment from large hyperscalers.

Amazon, Microsoft, Google and Meta: Big tech reported strong results and gave strong commentary regarding how AI capex will be monetized. On top of that they all qualitatively said that capex will go up next year (in 2027). The crux of their AI capex ROI argument was:

AMD: very strong read-through for CPUs, and their GPUs are ramping up as expected.

Results were strong across the board, with heavy short covering in many names. Earnings and revenue growth outperformed for many marquee names like ServiceNow, Salesforce, CrowdStrike, and Okta.

We are constructive on the sector but will be cautious, as the bear thesis that AI is disrupting moats has merit. Our views on SaaS remain similar to what we wrote in our SaaS overview in February.

The consumer story remains weak. Consumers at the lower end are dealing with persistent inflation and a weakish job market, while even luxury goods makers like LVMH etc. continue to face weak growth.

The key learning in this sector for us has been: wait for the KPIs to turn (e.g. SSSG% or revenue growth) before buying into these stocks. The weak spending environment is not going to change in a hurry, as the war in the Middle East shows no signs of letting up. An added negative is the rise in bond yields across the developed world, leading to higher borrowing costs for consumers and governments alike, which is not good for discretionary spending.

By ‘quality compounders,’ I am referring to companies like SPGI, MCO, EFX, ICE, and Netflix, etc. These were, and still are, neglected by the market as it chases AI. But they have recovered decently from their recent troughs, and we expect these names to do well. They usually have strong free cash flows, which will be important in an environment in which long-term interest rates are rising.

Results were decent across the board.

The key takeaway from the earnings season is that the AI trade has another year of runway, that the market has started paying for quality outside it, and that the drawdowns we look for are showing up in healthcare and consumer rather than tech. That is where our research effort is going.

The Rebound portfolio is now beating the market (S&P 500) by ~7.6% since inception in Aug’2025. Below is our portfolio snapshot from RC’s Schwab account.

We are quite satisfied with our returns in the last year (the RC portfolio was started on 25th August 2025), given how polarized the markets have been, with AI/Semi momentum names doing the best, to the detriment of other sectors.

This is a strong performance given our preference for value picks.