Sands Capital Management, LLC released its Q1 2026 investor letter for its “Select Growth Strategy”. A copy of the letter is available to download here. Select Growth mainly targets leading U.S. businesses, driving positive structural changes. U.S. large-cap growth stocks fell in the first quarter. Sharp dispersion driven by AI advances marked the quarter, but late in the quarter, geopolitical tensions with Iran caused a broad-based risk-off move across the market. AI continued to influence market behavior, with AI-related investments increasing dispersion and shifting capital to asset-heavy sectors benefiting from AI infrastructure demand, which faced less disruption risk. While equities struggled, corporate fundamentals remained strong. Select Growth underperformed the Russell 1000 Growth Index, returning -12.9% vs. -9.8%, due to concerns about AI disruption affecting sector and stock choices. The Strategy’s focus on higher-growth, asset-light, service businesses faced challenges as markets rotated toward more capital-intensive, lower-risk sectors. Underweights in cyclical and defensive sectors slightly hurt relative results amid the broader market shift. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Sands Capital Select Growth Strategy highlighted AppLovin Corporation (NASDAQ:APP). AppLovin Corporation (NASDAQ:APP) is a mobile technology company specializing in developing software-based platforms for advertisers to enhance the marketing and monetization of their content. On June 9, 2026, AppLovin Corporation (NASDAQ:APP) closed at $520.84 per share. One-month return of AppLovin Corporation (NASDAQ:APP) was 14.84%, and its shares gained 35.84% over the past 52 weeks. AppLovin Corporation (NASDAQ:APP) has a market capitalization of $174.97 billion.
Sands Capital Select Growth Strategy stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q1 2026 investor letter:
“AppLovin Corporation (NASDAQ:APP) is one of the leading providers of advertising solutions for mobile game developers. Shares declined alongside broad-based weakness in gaming and ecommerce stocks, amplified by the release of Google’s generative gaming platform, Project Genie, and concerns that Meta Platforms may emerge as a more aggressive competitor. Fourth-quarter results remained strong, with revenue growing 66 percent year over year and advertising EBITDA margins reaching 84 percent. These results highlight continued momentum in AppLovin’s core advertising business. Our view on the risks is mixed. We see generative gaming as a potential accelerant that could expand content supply and benefit AppLovin’s distribution platform, while acknowledging that competition from Meta Platforms represents a credible longer-term risk. We weigh these dynamics against what we view as an attractive valuation, supported by our expectation that AppLovin will double ecommerce gross advertising spending to over $2.5 billion in 2026.”
AppLovin Corporation (NASDAQ:APP) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 91 hedge fund portfolios held AppLovin Corporation (NASDAQ:APP) at the end of the first quarter, compared to 108 in the previous quarter. In Q1 2026, AppLovin Corporation (NASDAQ:APP) reported revenue of $1.84 billion, an increase of 59% year-over-year and 11% sequentially. While we acknowledge the risk and potential of AppLovin Corporation (NASDAQ:APP) 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 AppLovin Corporation (NASDAQ:APP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered AppLovin Corporation (NASDAQ:APP) and shared the list of top unstoppable growth stocks to invest in. In addition, please check out our hedge fund investor letters Q1 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.
