Portfolio Performance Overview
The Data Center Portfolio declined approximately 5% this week, underperforming the broader market as investors rotated out of high-growth AI and data center stocks. The portfolio’s thematic focus on data center infrastructure remains compelling, but near-term volatility has been elevated. Key detractors included Arm Holdings (ARM) and WiseTech Global (WTCHF), both of which we have decided to close.
Positions Closed This Week
Arm Holdings (ARM) – Closed
Arm has faced increasing competition from RISC-V architecture in its core smartphone and IoT markets, while its data center server chip ambitions have yet to gain traction. With a 23.94% decline since pick and a deteriorating competitive position, we see limited upside and have exited the position.
WiseTech Global (WTCHF) – Closed
WiseTech’s logistics software business is suffering from a global trade slowdown and rising competition. The stock has fallen 25.69% since pick, and we believe capital can be better deployed in other data center plays with stronger fundamentals.
Portfolio Positioning and Outlook
The portfolio remains heavily weighted toward data center REITs (DLR, EQIX), power and cooling infrastructure (VRT, ETN, NVT), and semiconductor leaders (NVDA, TSM). We continue to see strong secular demand from AI and cloud computing, though near-term headwinds include rising interest rates and valuation compression. We are monitoring positions in Modine (MOD) and Spire Global (SPIR) for further weakness but believe their long-term thesis remains intact.
Risk Concentration
The portfolio has significant exposure to NVIDIA (NVDA) and Taiwan Semiconductor (TSM), which together account for over 15% of the portfolio. Any regulatory or demand shock in the AI supply chain could materially impact performance. We are also overweight U.S. equities, with limited exposure to Asia-Pacific and Europe.
What to Watch Next
- Q2 earnings reports from NVDA, TSM, and VRT for data center demand signals.
- Federal Reserve interest rate decisions and their impact on REIT valuations.
- Geopolitical developments in Taiwan and their effect on semiconductor supply chains.
Disclaimer: This is not investment advice. Past performance is not indicative of future results. All investments carry risk, including loss of principal. Consult a financial advisor before making investment decisions.