ClearBridge Investments, a global equity manager, recently published second-quarter 2026 commentary for its “SMID Cap Growth Strategy”. A copy can be downloaded here. Small and mid-cap (SMID) growth equities experienced the strongest quarter in recent memory, with the Russell 2500 Growth Index rising 24.0%, driven by enthusiasm for AI infrastructure and higher-beta momentum stocks. The Strategy delivered double-digit returns in the quarter but trailed the soaring benchmark. Underperformance was driven by underexposure to top AI infrastructure stocks as well as weaknesses in healthcare and consumer discretionary sectors. The market leadership expanded beyond mega-cap technology, indicating potential opportunities from a broader cyclical recovery and AI adoption. In addition, you can check the Fund’s top five holdings to determine its best picks for 2026.
In its Q2 2026 investor letter, ClearBridge SMID Cap Growth Strategy highlighted Chewy, Inc. (NYSE:CHWY). Chewy, Inc. (NYSE:CHWY) is an online retailer of pet food and treats, supplies, and pet healthcare products, as well as pet services. On July 10, 2026, Chewy, Inc. (NYSE:CHWY) closed at $20.88 per share, reflecting a market capitalization of $8.55 billion. Chewy, Inc. (NYSE:CHWY) posted a one-month return of 7.96%, while its shares lost 44.78% over the past 52 weeks.
ClearBridge SMID Cap Growth Strategy stated the following regarding Chewy, Inc. (NYSE:CHWY) in its Q2 2026 investor update:
“Consumer discretionary results were primarily driven by weakness in Chewy, Inc. (NYSE:CHWY), a leading online retailer of pet food, pet supplies and related services. Shares were pressured by mixed end-market growth trends and investor concerns that the company could be an AI loser, despite otherwise solid company-specific execution. However, we view those concerns as overstated given Chewy’s competitive positioning, customer purchasing dynamics and margin expansion opportunities.”
Chewy, Inc. (NYSE:CHWY) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 53 hedge fund portfolios held Chewy, Inc. (NYSE:CHWY) at the end of the first quarter, compared to 56 in the previous quarter.While we acknowledge the risk and potential of Chewy, Inc. (NYSE:CHWY) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Chewy, Inc. (NYSE:CHWY) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Chewy, Inc. (NYSE:CHWY) and shared the list of stocks Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
