Market Overview - U.S. equities showed upward momentum in Q3, with the S&P 500 Index increasing by 8.1% and the Russell Midcap Growth Index rising by 2.8% [2] - Investor optimism was driven by favorable tariff outcomes, the passing of the One Big Beautiful Bill Act, anticipated interest rate cuts, and strong corporate earnings [2] Strategy Performance - The ClearBridge Growth Strategy outperformed its benchmark for the second consecutive quarter, supported by diversified growth contributors [3] - Key themes driving performance included artificial intelligence (AI) and cryptocurrency, with significant gains from holdings like Broadcom, AppLovin, Palantir, and Robinhood [3][4] Sector Contributions - Strong stock selection and strategic sector positioning were pivotal, with Broadcom's announcement of a new customer for its AI-focused XPU chips highlighting its market leadership [4] - L3Harris benefited from increased demand in defense spending, while TKO secured a lucrative deal with Paramount for UFC rights, showcasing the value of premium content [5] Portfolio Positioning - The strategy maintained a disciplined approach by trimming winners and reallocating capital into new opportunities, adding four new positions during the quarter [8] - Notable additions included On Holding, a premium footwear designer, and Roblox, a leading user-generated gaming platform, both expected to drive strong revenue growth [9][10] Individual Stock Performance - Leading contributors to performance included AppLovin, TE Connectivity, Broadcom, Robinhood, and L3Harris, while detractors were Vertex Pharmaceuticals, Chipotle, and HubSpot [20] - The strategy closed positions in Paylocity and Ultragenyx Pharmaceutical, reflecting a focus on evolving investment theses [20] Outlook - The strategy aims to maintain a balanced portfolio to capture upside in strong markets while providing downside protection during volatility [16] - The focus remains on monitoring stock-specific and sector allocations, reallocating capital to opportunities with attractive risk-reward profiles [17]

Core Insights - Nvidia's stock has recently declined by 4% from its 52-week peak of $184, influenced by an antitrust probe in China and competition from Broadcom [1][2] - OpenAI is increasing competitive pressure on Nvidia by developing its own AI chip in collaboration with Broadcom, which may challenge Nvidia's market dominance [3][4][5] - Nvidia's revenue from China has been volatile, with significant losses anticipated due to export bans and regulatory scrutiny, impacting future earnings potential [6][7][8] Nvidia's Competitive Landscape - OpenAI's strategic moves, including the release of "open-weight" models, aim to democratize AI access and reduce reliance on Nvidia's proprietary platforms [5] - Broadcom's custom XPU chips are gaining traction, posing a credible challenge to Nvidia's leadership in the AI chip market [2][4] Financial Performance and Projections - Nvidia generated $17 billion in revenue from China last fiscal year, accounting for 13% of global sales, but this was down from $21 billion the previous year [7] - Earnings estimates for Nvidia have improved, with projections indicating a 48% increase in FY26 and a further 39% increase in FY27, reaching $6.19 per share [9][10] - The average price target for Nvidia shares is $211.42, suggesting an 18.9% upside from current levels [13][15] Valuation Comparison - Nvidia's stock trades at a forward earnings multiple of 40X, which is more reasonable compared to Broadcom's 53X [11]

Core Insights - Broadcom's fiscal Q3 results exceeded expectations, leading to a stock surge of up to +16% and reaching a new 52-week high of $356 per share [1] - The company is emerging as a credible competitor in the AI chip market, impacting the stock prices of Nvidia and AMD [1][2] Financial Performance - Broadcom reported record Q3 sales of $15.95 billion, a 22% increase from $13.07 billion in the same quarter last year, surpassing estimates of $15.82 billion [3] - AI semiconductor revenue rose 63% year-over-year to $5.2 billion, with VMware contributing $6.8 billion to the overall sales [3] - Q3 earnings per share increased 36% to $1.69, exceeding expectations of $1.66 [4] - Adjusted EBITDA for Q3 spiked 30% to $10.7 billion, while free cash flow soared 47% to $7 billion [4] Future Outlook - Broadcom raised its Q4 revenue guidance, expecting sales to increase 24% to $17.4 billion, above the Zacks Consensus of $16.96 billion [10] - The company forecasts Q4 AI revenue to grow to $6.2 billion, marking 11 consecutive quarters of growth [10] Product Development - Broadcom's advancement in AI is driven by its custom XPU chips, designed for high-performance computing workloads [6] - The company secured $10 billion in XPU orders from a new customer, speculated to be OpenAI, expanding its client base beyond major players like Meta and Alphabet [9] Valuation Metrics - Following the stock rally, Broadcom trades at a forward earnings multiple of 46.1X, which is a premium compared to Nvidia and AMD at 39.7X and 41.1X, respectively [12] - The price-to-forward sales valuation stands at 24X, comparable to Nvidia but significantly higher than AMD's 8.8X [12]

Core Viewpoint - President Trump's tariffs on imports have significantly impacted the stock market, particularly the tech-heavy Nasdaq Composite, which has declined over 20% from its recent high [1][2] Impact on Tech Stocks - Tech companies are facing challenges due to reliance on global production, leading to increased costs from new import duties [1] - Investors are concerned about future tech earnings, resulting in a sell-off of tech shares and a drop in valuations, making many established tech stocks appear undervalued [2] Long-term Investment Opportunities - Despite the risks posed by tariffs, historically strong companies have managed to overcome challenges, suggesting that long-term investors may find attractive buying opportunities in the current market [3] Recommended Tech Stocks - **Nvidia**: A leader in AI chips, Nvidia has experienced significant revenue growth and is currently trading at 21x forward earnings estimates, down from 50x [5][7] - **Meta Platforms**: Known for its social media apps, Meta is investing heavily in AI, trading at 20x forward earnings estimates, down from 29x [8][10] - **Broadcom**: A networking powerhouse, Broadcom's AI revenue surged 77% to over $4 billion, with shares trading at 23x forward earnings estimates, down from over 35x [11][14] - **Oracle**: With strong growth in multicloud database revenue, Oracle is trading at 21x forward earnings estimates, down from over 30x [15][17] - **Alphabet**: The owner of Google, Alphabet is trading at 16x forward earnings estimates and is heavily investing in AI, making it an attractive option for long-term investors [18][20]

Core Viewpoint - The Nasdaq index has recently fallen into correction territory, dropping over 10% from its peak due to concerns about the impact of President Trump's tariffs on the economy and corporate earnings, leading investors to shift away from growth stocks, particularly in the AI sector [1] Group 1: Market Overview - The Nasdaq index, which had previously led stock market gains, has experienced a significant downturn, indicating a shift in investor sentiment [1] - Growth stocks, especially those in the AI sector, are particularly sensitive to economic uncertainties, making them vulnerable during such times [1] Group 2: Investment Opportunities - Despite the current market conditions, investing in growth companies has historically proven beneficial for long-term investors, as the Nasdaq tends to recover after downturns [2] - Many AI stocks are currently trading at bargain prices, presenting a potential opportunity for investors [3] Group 3: Company Highlights - **Nvidia**: A leader in the AI chip market, Nvidia has shown double- and triple-digit revenue growth with margins exceeding 70%. Its shares are currently trading at 27 times forward earnings estimates, down from 50 earlier this year, making it an attractive long-term investment [4][5][6] - **Palantir Technologies**: Known for its AI-driven platform, Palantir has seen double-digit revenue growth in both government and commercial sectors. Its forward PEG ratio is below 1, indicating it is not overvalued, making it a solid long-term buy [7][9][10] - **Alphabet**: Utilizing AI to enhance its Google Search platform, Alphabet has seen significant growth in its Google Cloud business, which reported a 30% revenue increase to $12 billion. The stock trades at 18 times forward earnings estimates, making it a bargain among top tech stocks [11][12][13] - **Broadcom**: The company reported a 77% increase in AI revenue to over $4 billion and expects strong demand for its products. Its shares are trading at 29 times forward earnings estimates, down from over 36 earlier this year, presenting a good entry point for investors [14][15][16] - **Amazon**: AI is enhancing efficiency in Amazon's e-commerce and cloud computing operations, with AWS achieving a $115 billion annual revenue run rate. The stock is currently trading at 31 times forward earnings estimates, down from 45 last year, indicating a strong buy opportunity [17][18][19]