Sands Capital Management released its Q1 2026 investor letter for its Select Growth Strategy, highlighting Shopify Inc. (NASDAQ: SHOP) as a key holding amid a difficult quarter for software stocks.
U.S. large-cap growth stocks fell sharply in the first quarter, with geopolitical tensions involving Iran triggering a broad risk-off move across markets late in the quarter.
AI continued to reshape market behavior, shifting capital toward asset-heavy sectors benefiting from infrastructure demand, which were seen as carrying less disruption risk than software-oriented businesses.
Sands Capital’s Select Growth Strategy returned -12.9% against the Russell 1000 Growth Index’s -9.8%, underperforming due to concerns about AI disruption affecting its sector and stock selections.
The strategy’s emphasis on higher-growth, asset-light service businesses faced headwinds as markets rotated toward more capital-intensive, lower-risk sectors during the quarter.
Shopify shares closed at $110.78 on June 8, 2026, with a one-month return of 12.17% and a 52-week gain of 1.57%, giving the company a market capitalization of $143.75 billion.
In its Q1 2026 letter, Sands Capital stated: “Shares declined alongside software stocks amid investor concerns about AI-related disruption.”
However, the firm expressed confidence in Shopify’s positioning, noting: “As a vertical application tailored to ecommerce, it is less likely to be displaced by agentic workflows.”
Sands Capital also pointed to emerging AI partnerships, writing that “Shopify has already enabled an integration with ChatGPT and created a universal protocol for AI shopping alongside Google, which applies third-party payment fees to transactions originating there, consistent with its platform model.”
The firm cited strong operating performance as further support for its view, noting that “Shopify has delivered three consecutive quarters of roughly 30 percent year-over-year gross merchandise volume growth, with 2025 marking its fastest calendar year growth since 2021.”
Shopify generated $3.2 billion in revenue during Q1 2026, representing a 34% increase year-over-year, underscoring the durability of its business model despite the broader software sector selloff.
Hedge fund ownership of Shopify declined modestly, with 88 hedge fund portfolios holding the stock at the end of Q4, down from 101 in the prior quarter, according to available data.
