AI Momentum Powers a Strong Quarter for DXID

July 2026

The market staged a powerful and broad-based advance in the second quarter. Dynamic Active Innovation and Disruption ETF (DXID) gained 55.4% versus the Morgan Stanley World Index (CAD), which gained 15.8%. Importantly, market strength was not confined to the mega caps, as the Russell 2000 TR Index (CAD) climbed 23.5%. Inflation fears and a new Fed Chair rattled markets at the beginning of June, though markets rallied from there with the complete collapse of oil and gold prices. We saw several stocks branded AI losers re-rate to AI winners with triple-digit returns over the past two years. Beyond new leadership, we believe re-rating losers to winners will be equally profitable for the rest of 2026.

On June 22, 2026, I shared my current views with CNBC's Squawk Box. I believe the big picture investors need to keep in their minds is that we are living through the most profound and consequential technology and industrial revolution we have seen in the past one hundred plus years. That was evident, and the second quarter made it hard to ignore. The frontier labs shipped new flagship models almost monthly, with OpenAI's GPT-5.5 in late April and Anthropic's Claude Opus 4.8 in late May, and the gap between the leading U.S. and Chinese systems has narrowed. What matters to us is not the benchmark scores but the change in what these models do: they have moved from answering questions to executing work, and that shift multiplies the compute required behind every interaction.

Contributors to DXID’s performance included the following;

Micron (MU), which we would classify as a value/re-rater stock, was one of the standouts as the memory cycle inflected sharply in favor of the high-bandwidth memory that AI consumes. As we move from training to inference and agentic AI, these systems are enormous data hogs, so they need vast amounts of a special high-speed memory called HBM that sits right next to the AI chips. Micron is one of only three companies in the world that can make this memory, which has made it a critical and scarce supplier. In simple terms, if AI chips are the engine, Micron sells the fuel tank and fuel lines.

Dell Technologies (DELL) is another more traditional value stock that is re-rating. Growth is accelerating, and the market is beginning to appreciate the scale of its AI server backlog and the operating leverage that comes with it. Demand is rising for packaging everything into complete, ready-to-run server systems for data centers. As companies race to build AI capacity, they place huge orders with Dell to deliver these machines at scale.

Datadog (DDOG) is a growth name we know well and should remind investors that the AI buildout extends well beyond silicon and into the software layer. Accelerating consumption on its platform led to significant gains as more AI-driven workloads translated directly into platform usage and monitoring demand. We continue to like Datadog's position at the infrastructure and orchestration layer as it becomes the dashboard and warning-light system for the increasingly complicated infrastructure behind AI.

Astera Labs (ALAB), a hyper growth name, makes products that amongst other things, help all the pieces inside an AI data center communicate quickly with one another. Resolving bottlenecks within the datacenter is in critical demand and Astera's products make this possible. Revenue growth in the March quarter exceeded 90% and a new product cycle is just getting started.

The wave of investment behind the exploding demand for AI is driving revenue and pricing power through the memory, server, and semiconductor companies we own. We also saw strength in infrastructure and security software. Markets will tend to conflate near-term macro-economic concerns and positioning unwind with the durable, multi-year earnings power ahead. The important part of navigating these markets is staying focused on a time-tested investment process of owning companies whose revenues and margins are real and compounding and treating the volatility around them as opportunity against a much longer secular opportunity. It is a view that this quarter's results validated.