The Ithaka Group Q1 2026 Commentary
The Ithaka US Growth Strategy declined 15.5% in Q1 2026, underperforming the Russell 1000 Growth Index by 570 basis points amid market volatility, rising oil prices, and AI-driven sector divergence. Geopolitical tensions in Iran pushed inflation expectations higher, prompting the Federal Reserve to hold rates steady, while AI infrastructure spending surged with hyperscalers planning ~$500 billion in AI-related capex. Stock selection in technology and financials weighed on performance, though materials and consumer discretionary saw relative gains. The firm maintains a long-term focus on high-conviction holdings with durable competitive advantages and strong unit economics.
- ▪The Ithaka US Growth Strategy returned -15.5% gross in Q1 2026, underperforming the Russell 1000 Growth Index, which fell -9.8%.
- ▪Global AI venture funding reached $242 billion in Q1 2026, while hyperscalers planned approximately $500 billion in AI-specific capital expenditures for the year.
- ▪Rising oil prices due to conflict in Iran pushed inflation expectations to 3.4%, leading the Fed to maintain rates at 3.50%-3.75% and delay anticipated rate cuts.
- ▪Technology sector underperformance was driven by software stocks, with major detractors including ServiceNow, Microsoft, and Robinhood.
- ▪Howmet Aerospace and Netflix were top contributors to performance, while ServiceNow and Microsoft were among the largest detractors.
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