Sands Capital, an investment management company, has released its second-quarter 2026 investor letter for the Sands Capital Global Growth Fund. The strategy seeks the best growth businesses worldwide, leveraging a research team that explores both developed and emerging markets for sustainable competitive advantages.

During the quarter, global equities rebounded strongly, driven by AI infrastructure, a key market theme, with demand for computing capacity remaining robust and large technology firms maintaining significant capital investments. Emerging markets, led by Korea and Taiwan, outperformed U.S. and developed markets for six consecutive quarters. The strategy's portfolio returned 22.2%, outperforming the MSCI All Country World Index's 14.9%.

The quarter's gains were mainly attributable to earnings growth in AI infrastructure businesses. Relative results were driven by information technology and industrials, while financials and communication services detracted. The strategy is positioned to capitalize on evolving growth opportunities, with substantial exposure to AI infrastructure and other long-term prospects.

In its second-quarter 2026 investor letter, Sands Capital Global Growth Fund highlighted Arm Holdings plc (NASDAQ: ARM) as a new holding. Arm Holdings is a UK-based technology company that develops and licenses central processing unit designs and related technologies for semiconductor companies and original equipment manufacturers. Unlike chipmakers that manufacture their own products, Arm operates a licensing and royalty model, earning revenue as partners ship chips based on its designs. On September 4, 2026, the stock closed at $252.09 per share. Over the past month, Arm shares declined 5.88%, while gaining 81.18% over the past 52 weeks. The company has a market capitalization of $269.23 billion.

Sands Capital Global Growth Fund stated the following regarding Arm Holdings in its Q2 2026 investor letter:

"Arm Holdings plc (NASDAQ:ARM) is a leading designer of leading-edge semiconductors. The crux of our investment case is that Arm stands to benefit from rising central processing unit (CPU) demand driven by agentic AI. While graphics processing units (GPUs) are optimized for token generation through model inference and training, CPUs are better suited for agentic workflows such as scheduling, memory management, and tool execution. CPUs effectively function as the operating system for agentic AI workflows. We expect agentic AI adoption to drive an inflection in CPU demand, increasing Arm's CPU royalties from approximately 10 percent of revenue in 2026 to more than 30 percent by 2031. Arm's energy-efficient architecture provides what we view as a competitive advantage in selling AI CPUs to cloud hyperscaler customers while also helping preserve its more than 90 percent share within smartphones. SoftBank's majority ownership of Arm could provide additional upside potential, as SoftBank seeks to expand AI adoption across its broader investment ecosystem using Arm-based chips."

The letter's focus on agentic AI reflects a broader shift in how AI workloads are run: rather than relying solely on GPUs for training and inference, increasingly autonomous AI systems also draw heavily on general-purpose compute for orchestration tasks, which is the segment of the market Arm's designs address. Arm-based designs have also been adopted by major cloud providers in server CPUs, extending the company's reach beyond its traditional smartphone stronghold.

According to the letter's publisher, Arm Holdings is not among the 40 Most Popular Stocks Among Hedge Funds. Per its database, 52 hedge fund portfolios held Arm Holdings at the end of the second quarter, up from 46 in the previous quarter.

This article is originally published at Insider Monkey ().