Eagle Capital Management, an investment management company, released its second quarter 2026 investor letter. A copy of the letter can be downloaded here. In the quarter, Eagle Capital Management discussed how enthusiasm around AI capital spending has driven strong S&P 500 earnings growth while also increasing risks from elevated valuations, concentrated demand, and aggressive investment assumptions.
Eagle remains a strong believer in AI but prefers constructing a portfolio that can perform across multiple outcomes rather than relying on one forecast. The firm believes current earnings can overstate underlying economics because semiconductor equipment is depreciated over several years, while free cash flow growth remains much weaker. It also expects competition and additional capacity across AI labs, hyperscalers, and semiconductors to eventually create winners and losers.
These dynamics are encouraging Eagle to recycle capital toward attractive opportunities outside the most crowded AI trades while maintaining selective exposure to high quality beneficiaries. The portfolio trades at a 20% market discount with faster expected EPS growth. Please review the Strategy's top five holdings for key selections.
In its second-quarter 2026 investor letter, Eagle Capital Management highlighted Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is a multinational software company that develops and supports software, services, devices, and solutions, holding dominant positions in software, cloud infrastructure, generative AI, and gaming. On August 17, 2026, Microsoft Corporation (NASDAQ:MSFT) closed at $480.35 per share, reflecting a market capitalization of $3.57 trillion.
Microsoft Corporation (NASDAQ:MSFT) posted a one‑month return of 20.77%, while its shares lost 5.77% over the past 52 weeks. Eagle Capital Management stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its Q2 2026 investor letter: "Amazon Web Services ("AWS"), Microsoft Azure, and Google Cloud Platform ("GCP") are highly profitable businesses with strong growth, margins, and returns on capital. We own positions in each.
These businesses are growing faster and will be even bigger than we previously thought. However, there is little question that the industry structure they inhabit is worse than it was a few years ago. Software is controversial due to fears of AI driven disruption.
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