The Artificial Intelligence (“AI”) investment cycle continued to drive equity market performance during the first half of the year, with leadership shifting from the companies funding the AI infrastructure buildout (including the “Magnificent Seven”) toward the companies providing the critical components and technologies required to support its expansion.

Several Carderock Capital selections benefited from this shift. During the first half of the year, four AI-related investments appreciated more than 50%, with our strongest performer gaining more than 150%. Companies such as Quanta Services, Monolithic Power Systems, Amphenol, and Lam Research contributed meaningfully to your portfolio returns. While we are pleased with these results, we recognize that periods of significant market enthusiasm can create temporary supply-and-demand imbalances, similar to other investment cycles throughout history. We believe these opportunities can be rewarding, but they are unlikely to persist indefinitely.