Summary of Brown Advisory’s Q1 2026 Investor Letter
Brown Advisory, an investment management company, released insights from its “Brown Large-Cap Growth Strategy” for Q1 2026. The letter indicated that while the strategy experienced a decline that quarter—trailing the Russell 1000 Growth Index—relative performance improved as the quarter progressed.
Key Points:
- Market Volatility: Initial struggles stemmed from weaknesses in the software sector due to concerns about artificial intelligence (AI) disrupting traditional business models.
- Sector Contributions: Sectors such as Industrials and Consumer Discretionary helped performance, while Information Technology and Health Care detracted the most.
- Portfolio Management: The strategy’s capacity to outperform in a down market speaks to the quality of its holdings. It remains focused on a diversified portfolio of high-quality growth companies for long-term results.
Focus on ServiceNow, Inc. (NYSE: NOW)
In the letter, Brown Advisory highlighted ServiceNow, Inc. (NYSE: NOW):
- Company Overview: A cloud-based software firm that manages digital workflows.
- Stock Performance: As of July 2, 2026, shares closed at $106.32, with a one-month return of -5.45% and a 52-week loss of 49.11%. The market cap stood at $109.65 billion.
Strategic Decision
Brown Advisory stated:
“We exited ServiceNow, Inc. (NYSE:NOW) as part of a broader effort to refine our positioning within software. While the company continues to execute well, we chose to reduce exposure to areas where AI-driven change may weigh on long-term growth.”
The firm redirected capital towards Palo Alto Networks, which it views as more favorable in the long term.
Additional Insights:
- Popularity Among Hedge Funds: ServiceNow ranks 25th among the most popular stocks for hedge funds in 2026, with 108 hedge funds holding shares, down from 118 in the previous quarter.
- Revenue Growth: The company’s subscription revenues increased by 19% year-over-year to $3.67 billion for Q1 2026.
For those seeking promising AI investments, Brown Advisory suggests exploring stocks with greater potential than ServiceNow.
For detailed insights, check out Brown Advisory’s full investor letter.
