Ben’s Portfolio update end of June 2026
Returns and portfolio holdings:
| Portfolio | Notes | |
|---|---|---|
| 2022 | -15.6%* | *Jul-Dec, since I started posting my portfolio on Saul’s and fully adopting my version of Saul’s investing approach. |
| 2023 | 77.8% | |
| 2024 | 31.7% | |
| 2025 | 24.9% | |
| 2026 | YTD | Month |
| Jan | -8.2% | -8.2% |
| Feb | -15.9% | -8.3% |
| Mar | -14.7% | 1.3% |
| Apr | -9.4% | 6.3% |
| May | 25.2% | 38.1% |
| Jun | 28.9% | 2.9% |
These are my current positions:
| June 2026 | May 2026 | First buy* | |
|---|---|---|---|
| Cloudflare | 19.7% | 20.0% | 11/2/2020 |
| Datadog | 19.0% | 18.6% | 5/13/2020 |
| Nvidia | 16.1% | 17.4% | 5/13/2020 |
| Crowdstrike | 13.1% | 12.9% | 5/13/2020 |
| Snowflake | 11.1% | 11.5% | 2/8/2021 |
| Axon | 6.5% | 5.3% | 4/2/2024 |
| Astera Labs | 6.0% | 4.4% | 11/18/2025 |
| AppLovin | 4.5% | 5.6% | 11/18/2025 |
| Samsara | 2.5% | 2.8% | 1/8/2024 |
| Zscaler | 1.4% | 1.5% | 3/4/2021 |
*held through today
Company comments
Axon:
Axon reported Fiscal Q1 2026 on May 6, 2026. While Q4 was a clear blowout on both numbers and narrative level, Q1 presented a slightly more complex narrative that requires looking past the headline miss against my expectation. Revenue came in at $807 million, growing 1.3% sequentially and 33.7% YoY. While solid by probably most standards, this was quite a bit lower than my $836M expectation. Adjusted EBITDA followed suit, landing at $202M against my $217M target. On the surface, the sequential revenue stagnation might look concerning, which prompted me to revise my Q2 expectation down to $888 million (10% QoQ, 32.8% YoY) - even after factoring in management’s 1.5% bump to their full-year guidance (now expecting 30% to 32% annual growth). However, beneath the top-line and EBITDA misses, the underlying SaaS engine is still firing on all cylinders, proving that the thesis is fully intact (remember Axon has always been more lumpy than, say, a Datadog).
Looking at customer adoption and forward indicators, the narrative flips completely back to the bull case. I wanted to see around $134 million in net new ARR, but Axon delivered $146 million, bringing total ARR to $1.49 billion and actually accelerating year-over-year growth to 35.2% (up from 34.6% in Q4). This proves that the optical softness in recognized revenue is completely disconnected from underlying demand. Future contracted bookings (RPO) reinforced this, coming in at a staggering $14.3 billion despite typical Q1 seasonality, accelerating to 44.4% YoY growth from 42.6% last quarter. The catalyst here is clear: their AI-driven ecosystem is taking over. Revenue from AI Era Plan products - like Draft One and Axon Assistant - surged over 700% YoY, while Net Revenue Retention (NRR) held exactly where I wanted it at a best-in-class 125%. So the demand environment clearly hasn’t weakened.
My thesis around gross margins stays intact. Adjusted gross margin ticked up to 61.6% (compared to 60.6% last Q1), clearing my >61% target. This expansion played out exactly as the model dictates: the higher-margin Software & Services segment continues to grow faster (up 34.9% YoY) than the lower-margin Connected Devices segment (up 32.8%). Yet, management noted some underlying pressure points on the earnings call: global tariffs continue to weigh on hardware margins, alongside the rapid scaling of lower-margin Dedrone products (with counter-drone revenue up over 300%). Even on the software side, margins were slightly compressed by professional service costs tied to these big new product deployments. But just like last quarter’s hardware surge, I view this as a strategic trade-off. They are aggressively seeding the market - every Dedrone unit or Axon Body 4 deployed is a trojan horse locking customers into that sticky, rapidly growing software ecosystem.
After their ER, Axon made the rounds at Needham, BofA, J.P. Morgan, and TD Cowen. Throughout these fireside chats, management hammered home the underlying “why” behind their huge bookings growth. At TD Cowen, they specifically emphasized the deep equity and trust they’ve built with law enforcement over years of delivering disruptive categories - from CEWs to body cams to cloud evidence. This entrenched trust is exactly why they are seeing such rapid product-market fit and frictionless adoption for their newer AI Era Plan and real-time operations solutions. Management expressed high confidence that this bookings momentum will continue throughout the year. Ultimately, the recognized revenue might be lumpy quarter-to-quarter, but Axon is successfully selling more software, to more users, at higher price points, and securing huge future cash flows in the process.
Overview of how Axon performed versus my prior expectations:
- Revenue expectation: $836M (5% QoQ, 38.6% YoY), implying that YoY growth stays roughly close to Q4 and same 5% QoQ growth as last Q1.
→ Revenue was $807M (1.3% QoQ, 33.7% YoY), quite a bit lower than I had expected. - Q2 revenue expectation: $903M (8% QoQ, 35% YoY), assuming YoY growth will decelerate somewhat.
→ taking the lower than I had expected Q1 revenue as well as their 1.5% FY guidance raise, I am now expecting $888M (10% QoQ, 32.8% YoY) for Q2. - I would like to see around $134M net new ARR (total ARR to ~$1.48b).
→ net new ARR was $146M and total ARR grew to 1.49b, accelerating YoY growth to 35.2% from 34.6% in Q4. - I would like to see RPO around $14.4b.
→ RPO (future contracted bookings) was $14.3b (has Q1 seasonality) and accelerated YoY growth to 44.4% from 42.6% in Q4. - I would like to see NRR around 125%.
→ NRR was 125%. - I would like to see adjusted gross margin greater than 61%.
→ adjusted gross margin was 61.6%, up from 60.6% last Q1, as the higher margin Software & Services segment continues to grow faster (up 34.9% YoY) than the lower margin Connected Devices segment (up 32.8%). - I would like to see adjusted EBITDA around $217M.
→ adjusted EBITDA was $202M. - Thoughts from previous quarter: [Axon’s 4Q25 earnings recap.](Ben’s Portfolio update end of February 2026)
AppLovin:
AppLovin reported fiscal Q1 2026 on May 6, 2026. Revenue came in at $1842M (11.1% QoQ, 59.0% YoY). While this fell slightly short of my somewhat aggressive $1857M (5.5% beat) expectation, it ultimately delivered a 4.7% beat - putting it squarely in line with their historical beat cadence of 4.5% to 5.6% over the last few quarters. The more important takeaway here is their Q2 revenue guide of $1930M (4.8% QoQ, 53.3% YoY). Using the same historical beat framework, I now interpret this baseline to mean Q2 will eventually land closer to $2017M (9.5% QoQ, 60.2% YoY). This is an important signal because it implies an end to the recent YoY revenue growth deceleration we’ve been watching. Reaccelerating - or at least stabilizing - growth at a 60% YoY clip at a nearly $8 billion annual run rate shows the core gaming business remains incredibly resilient even before the broader e-commerce rollout takes full effect.
Looking at the bottom line, the results remain phenomenal, though there is one metric worth unpacking. Adjusted EBITDA margin ticked up slightly to 84.5% (beating my >=80% expectation), proving that the absurdly strong operating leverage and 95% flow-through we saw in Q4 wasn’t a holiday anomaly. Gross margins also pushed higher to 88.9%, and net margin landed comfortably at 65.4%. However, the one wrinkle was the free cash flow margin, which dropped to 69.8%, missing my 75% target and sitting noticeably below Q4’s 79%. Digging into the earnings transcript, management addressed this drop, attributing it largely to typical Q1 working capital dynamics - specifically the cash timing of seasonal tax obligations following a massive Q4. This is a known seasonal effect, evidenced by last year’s Q1 FCF margin of 71.2%. Given that operating margin (78.2%) and EBITDA margin both held or expanded, this FCF dip is purely a cash-timing issue rather than any degradation in underlying unit economics.
This continued margin expansion also puts another nail in the coffin of the bear narrative surrounding Meta’s entry into the MAX auction. Just a few months ago, there was market panic that increased bid density from mega-cap tech would compress AppLovin’s margins or deteriorate its moat. Q1’s 88.9% gross margin and 84.5% EBITDA margin clearly counter that thesis. As I noted after Q4, when competitors like Meta bid more aggressively, they just increase the total demand in the auction, driving up the value of ad inventory while AppLovin collects its 5% fee. The fact that margins are expanding while revenue scales nearly 60% YoY proves that the ecosystem is getting healthier, and AppLovin’s AXON models are still selectively winning the impressions that matter most. So really, competition is just expanding the pie, not eating AppLovin’s slice.
Finally, the Q1 call and analyst Q&A gave us some necessary color on the e-commerce rollout. Back in Q4, management was piloting generative AI creative tools to help non-gaming brands easily spin up the native video ads required to succeed on AppLovin’s network. Based on the Q1 commentary, that bottleneck is being actively cleared. The GenAI pilot is successfully lowering the barrier to entry for early retail partners, suggesting that e-commerce brands don’t need dedicated gaming-style creative teams to see high returns on the platform. While management appears to be maintaining their timeline for general availability in H2, the continued scaling of their referral-only pilot - coupled with the Q2 guide signaling a halt to revenue deceleration - suggests they are successfully setting the stage for their next leg of growth. Overall, it’s rare to see a company maintain this level of software-like operating leverage while scaling so aggressively, and I’m looking forward to seeing how the e-commerce general availability impacts the back half of the year.
Overview of how AppLovin performed versus my prior expectations:
- Revenue expectation: $1857M (12% QoQ, 60.2% YoY), implying a 5.5% beat.
→ Revenue was $1842M (11.1% QoQ, 59.0% YoY), a 4.7% beat. (In retrospect my expected beat was on the high-side: 2Q25: 4.5% beat, 3Q25 beat: 5.6% beat, 4Q25: 4.6% beat, and now a 4.7% beat, but I justified that due to potential upsides I detailed in my last Applovin wrap-up). - Q2 new revenue guide: $1913M (3.0% QoQ, 52% YoY) which I would interpret as $1987M (17% QoQ, 58% YoY).
→ Q2 new revenue guide was $1930M (4.8% QoQ, 53.3% YoY), which I now interpret as $2017M (9.5% QoQ, 60.2% YoY), implying a 4.5% beat and signaling a stop to the recent YoY revenue growth deceleration. - I would like to see a GAAP Gross Margin of 87-88%.
→ GAAP Gross Margin was 88.9%. - I would like to see a FCF margin around 75%.
→ FCF margin was 69.8%, down from 71.2% last Q1 and 79% in Q4 (something to watch and see if they addressed the drop in the earnings call transcript). - I would like to see an Operating margin around 77%.
→ Operating margin was 78.2%. - I would like to see a Net margin greater or equal to 60%.
→ Net margin was 65.4%. - I would like to see an adjusted EBITDA margin greater or equal to 80%.
→ adjusted EBITDA margin was 84.5%. - Thoughts from previous quarter: [AppLovin’s 4Q25 earnings recap.](Ben’s Portfolio update end of February 2026)
Astera Labs:
Astera Labs reported its Fiscal Q1 2026 on May 5, and the results largely mirrored the dynamic we saw back in Q4: revenue was a bit lighter than my projection, but the forward guidance more than compensated for that. They delivered $308M in revenue (up 14% QoQ and 93.4% YoY), which was a 5.8% beat of their guidance mid-point, but fell short of my $317M expectation. So while their 3-quarter history of beating their guide by 11% to 12% seems to have tightened a bit, the Q2 new revenue guide of $360M actually points towards revenue growth re-acceleration. I now interpret that guide as setting up an actual Q2 delivery of around $382M (which would represent ~24% QoQ and 99% YoY growth). So, while the immediate top-line beat was modest by their recent standards, the forward trajectory confirms that the overall growth story is very much alive.
Diving into the product mix, commentary from their recent May and June appearances at J.P. Morgan, TD Cowen, and Evercore provided excellent color on how the revenue base is evolving. Aries remains the bedrock of the company, still driving roughly 60% of revenue in the early stages of this year, with PCIe Gen 6 now making up more than a third of total revenue. But the main shift is happening with Scorpio. As management noted at J.P. Morgan, Scorpio X officially transitioned from its 2H25 pre-production phase into early volume production in Q1. The ramp is moving fast: Astera expects the combined Scorpio family (P-Series and X-Series) to actually overtake Aries and become their largest product line by the end of this year. This is a great validation of their “scale-up” architecture play and is the primary lever they are pulling to expand their dollar content per accelerator well beyond the current $1000 mark.
On the Ethernet and front-end network side, Taurus continues to execute well. During the TD Cowen and Evercore conferences, management directly addressed ongoing investor debates regarding the long-term viability of Active Electrical Cables (AECs) versus optics at upcoming 1.6T and 3.2T speeds. Their stance is: we are just on the cusp of the 800G ramp, and there is still a tremendous amount of share to take from passive copper before those outer-year speed transitions even begin to matter. Additionally, their announcements at Computex in early June highlight that they are optimizing for ecosystem integration. By expanding their Cloud-Scale Interop Lab in Taiwan, they are embedding themselves directly with major ODMs like Quanta, Inventec, and GIGABYTE. As we have seen before, for hyperscalers, time lost in platform qualification is fatal, and this physical proximity allows Astera to significantly shorten debugging cycles for their partners. It’s also worth noting that they are now explicitly positioning their interconnect platform to support both proprietary and open-standard fabrics, as in integrating NVLink Fusion alongside the newly formed UALink standard.
The most important fundamental takeaway from this quarter, however, is on the margin and expense side. Gross margin came in at 76.4%, naturally stepping down slightly from the “77%+” era as the product mix skews heavier toward those module-based Scorpio and Taurus shipments. Keep in mind, that 2% non-cash gross margin headwind from the Amazon warrants we discussed last quarter will officially start hitting in Q2, so we should expect gross margins to compress a bit further next quarter. The real item to watch right now is the OpEx hike. I flagged in my last update that SBC-subtracted operating expenses were outpacing revenue growth, and that trend severely intensified in Q1. OpEx grew 29% QoQ - blowing past their own 20% guidance and dragging the operating margin down to 36.2%. While we knew the XScale acquisition and the new Israeli design center would take a bite, the magnitude of this step-up means they are heavily front-loading investments to chase that 10x larger than before $25B TAM. The saving grace here is cash generation: despite the P&L expense pressure, Free Cash Flow margin shot up to 21.7% (up from 3.7% a year ago). As long as FCF scales like this and top-line growth holds in the 80-90% YoY range, I think they have the breathing room to absorb these aggressive IP land grabs.
Overview of how Astera Labs performed versus my prior expectations:
- Revenue expectation: $317M (17.2% QoQ, 98.5% YoY), implying an 8.6% beat.
→ Revenue was $308M (14.0% QoQ, 93.4% YoY), a 5.8% beat. Note: previous three quarters beat was consistently between 11% and 12%. - Q2 new revenue guide: $345M (9% QoQ, 80% YoY) which I would interpret as $380M (20% QoQ, 98% YoY).
→ Q2 new revenue guide was $360M (16.7% QoQ, 87.6% YoY), which I now interpret as $382M (23.8% QoQ, 99% YoY), implying a 6% beat. - I would like to see a Gross Margin around 76%.
→ Gross margin was 76.4%. - I would like to see an Operating margin around 39%.
→ Operating margin was 36.2% (down from 39.4% last Q, but up from 33.7% a year ago). Also, SBC-subtracted operating expense growth, which I flagged in my last update as outpacing revenue growth on a quarterly basis, intensified this Q1, now growing 29% QoQ, up from 22% QoQ last quarter and significantly above their 20% QoQ guidance. For comparison, revenue grew 14% QoQ in Q1 and 17.4% QoQ in Q4. So, while a large part of the Q1 OpEx hike was expected, this is something to keep watching while their XScale acquisition and new Israeli design center are absorbed by this hike. - I would like to see a Net margin around 38%.
→ Net margin was 35.7% (down from 37.9% last Q, and down from 37.4% a year ago). Note, while net margin was down YoY, it is good to see FCF margin up to 21.7% from 3.7% a year ago. - Thoughts from previous quarter: [Astera Labs 4Q25 earnings recap.](Ben’s Portfolio update end of February 2026)
Wrap up
Lately, on various investing forums, I keep seeing variations of the exact same question: “Where is the next publicly traded company that is going to explode in share price thanks to the AI revolution?”
Right now, the vast majority of investors are staring intently at the AI infrastructure layer - the chipmakers, the hardware builders, and the data center suppliers - trying to squeeze out the next big winner. While that infrastructure build-out has been undeniably historic, I can’t help but feel that many are missing the forest for the trees.
The infrastructure layer is the foundation, but foundations are built to support something larger. To me, it looks like the AI Application and Agent Layer is arriving, and companies like Datadog, Snowflake, and Cloudflare are actively enabling its rollout.
A definitive signal for this arrived with the Q1 reports. While the broader market was distracted trying to find the next hardware proxy, certain elite software companies began flashing clear signs of significant revenue growth acceleration. This isn’t a speculative thesis anymore; it is actively showing up in the financial results.
As we saw clearly during this historic earnings season:
- Datadog and Snowflake completely obliterated the “software is doomed” narrative by posting staggering revenue acceleration.
- Cloudflare continued to demonstrate strong execution, further solidifying a definitive market bifurcation.
- The cloud computing index (WCLD) responded to this shifting tide by surging 40% from its recent market bottom.
This acceleration perfectly aligns with what I view as the start of the next wave of the AI revolution. We are moving past the pure hardware provisioning phase and entering a period driven by applications, data utilization, and true end-user adoption.
If you are looking for the next wave of explosive growth, it isn’t hidden in an obscure hardware supply chain - it is sitting right in front of us in high-execution, AI-accelerated software.
So I ask: which publicly traded companies specifically do YOU think will be leading this next wave of the AI revolution? And more importantly: Why?
Hope you all have a fantastic July!
Ben
Past recaps
2022: Jul 2022 | Aug 2022 | Sep 2022 | Oct 2022 | Nov 2022 | Dec 2022
2023: Jan 2023 | Feb 2023 | Mar 2023 | Apr 2023 | May 2023 | Jun 2023 | Jul 2023 | Aug 2023 | Sep 2023 | Oct 2023 | Nov 2023 | Dec 2023
2024: Jan 2024 | Feb 2024 | Mar 2024 | Apr 2024 | May 2024 | Jun 2024 | Jul 2024 | Aug 2024 | Sep 2024 | Oct 2024 | Nov 2024 | Dec 2024
2025: Jan 2025 | Feb 2025 | Mar 2025 | Apr 2025 | May 2025 | Jun 2025 | Jul 2025 | Aug 2025 | Sep 2025 | Oct 2025 | Nov 2025 | Dec 2025