NZS Capital, LLC, an investment management company, released its “NZS Growth Equity Strategy” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. The NZS Growth Equity strategy experienced a return of -8.75% (gross) and -8.91% (net) in Q1 2026, underperforming the -3.30% of the Morningstar Global Target Market Exposure Index. This decline was primarily due to weakness in growth stocks and a significant exposure to software. While the materials sector positively impacted absolute returns, the semiconductor sub-sector also showed strong contributions. Major detractors from absolute returns included Information Technology, Financials, and Healthcare. The overall market decline presented the firm with new investment opportunities amid rising uncertainty and inflation expectations. In addition, please check the Strategy’s top five holdings to know its best picks in 2026
In its first-quarter 2026 investor letter, NZS Capital highlighted stocks like JFrog Ltd. (NASDAQ:FROG). Incorporated in 2008, JFrog Ltd. (NASDAQ:FROG) is a technology company that provides a software supply chain platform to enable secure software delivery and management across teams. On June 18, 2026, JFrog Ltd. (NASDAQ:FROG) closed at $82.72 per share. One-month return of JFrog Ltd. (NASDAQ:FROG) was 12.78%, and its shares gained 105.13% over the past 52 weeks. JFrog Ltd. (NASDAQ:FROG) has a market capitalization of $10.11 billion.
NZS Capital stated the following regarding JFrog Ltd. (NASDAQ:FROG) in its Q1 2026 investor letter:
“The next largest bucket of software that we own has a consumption or take-rate based pricing model. For example, JFrog Ltd.’s (NASDAQ:FROG) binary artifactory is priced on the total amount of data storage and data transfer on its platform, which has seen dramatic growth due to the accelerated pace and volume of software being written by its customers enabled by vibe coding efficiencies. Snowflake and Cloudflare are optionality positions that also fit into this basket.”
JFrog Ltd. (NASDAQ:FROG) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 47 hedge fund portfolios held JFrog Ltd. (NASDAQ:FROG) at the end of the first quarter, compared to 50 in the previous quarter. JFrog Ltd. (NASDAQ:FROG) reported revenue of $154 million in Q1 2026, representing 26% year-over-year growth. While we acknowledge the potential of JFrog Ltd. (NASDAQ:FROG) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.
