Investor caution over delayed AI revenue weighed on Microsoft and large-cap growth stocks during the quarter.
Microsoft Corporation (NASDAQ:MSFT) underperformed in Q1 2026 as investors grew skeptical about near-term AI monetization, contributing to a broader decline in large-cap growth stocks. The Russell 3000 fell 4% during the period, while the S&P 500 also posted losses, reversing early-year gains amid geopolitical tensions and sector rotation.
Energy surged over 35%, contrasting with a 9% drop in the tech sector. The London Company Income Equity Strategy returned 4.4% (4.2% net), outperforming the Russell 1000 Value Index’s 2.1% rise, driven by stock selection and sector exposure. Market leadership narrowed to commodity-focused industries, pressuring software and AI-related equities.
The portfolio maintained diversification and quality positioning, aiming to capture upside while mitigating volatility in a fragmented market environment.