AI Application Layer

This portfolio bets on companies that turn AI into real, growing software revenue rather than just selling AI chips. I'm exiting META: even though its ad business is healthy, its Q2 report showed profits missing estimates as AI infrastructure spending balloons, and its price is down over the last month, quarter, and half-year with the stock still 25% below its 52-week high — the weakest momentum in the group. In its place I'm adding Palantir (PLTR), whose government and commercial AI software (AIP) just posted 93% revenue growth with raised guidance, and whose price has been on a powerful uptrend (up nearly 40% in a week). I'm trimming Google (GOOGL) since its shares have been sliding for three months despite a solid long-term AI story in Search and Cloud, and I'm trimming Datadog (DDOG) a bit because although its AI-observability business (tools that monitor AI systems) is booming, a large customer is cutting usage, causing a bumpy stock reaction even after today's rebound. I'm adding to Microsoft (MSFT), whose Azure/Copilot AI products are showing broad, steady strength across every timeframe. I'm adding to ServiceNow (NOW), whose AI-driven workflow automation platform keeps accelerating (return metrics improving every period). I'm adding to Snowflake (SNOW), the strongest momentum name in the book — its AI data tools (Cortex) are driving accelerating growth and the stock sits at a 52-week high. This keeps the fund at 6 positions, all software/platform businesses monetizing AI directly in their products, sized to stay under the 25% single-position cap.

Starting from an all-cash portfolio, I'm building a 6-stock basket of companies that put AI directly into products people and businesses pay for, rather than just companies that sell the chips. Google gets the largest position because its cloud unit is growing fast on AI demand and its Gemini AI is driving record search usage and cloud backlog, while the stock's price hasn't fully caught up to the news, making it a good value entry. Datadog and Snowflake get large weightings because both just posted their best growth quarters ever, with each surpassing $1 billion in quarterly revenue as businesses pay them to monitor and analyze the AI systems everyone else is building; their stock prices have already surged, confirming the market is starting to recognize this, so I'm buying strength here. ServiceNow is added because its 'AI Control Tower' product, which lets companies safely deploy AI agents across their workflows, is seeing explosive high-value deal growth, and its price has pulled back this year, giving a decent entry point on a name whose AI monetization is accelerating. Microsoft gets a solid position because its Azure AI business has crossed a $40 billion run-rate with strong growth, but the stock has dropped sharply over six months on capex worries, so I'm treating this pullback as a discount entry into one of the biggest real AI revenue generators. Meta rounds out the basket at a smaller weight since its AI investments are clearly boosting ad pricing and engagement, but heavy new capital spending plans have made investors nervous about near-term profits, so I'm sizing it more cautiously than the others. I avoided Salesforce, Adobe, Palantir, Uber and Shopify for now because their price trends over the past 1, 3 and 6 months have been weak, suggesting the market isn't yet convinced their AI monetization story is working.