Growth stocks faced significant headwinds in the first quarter of 2026, with the Russell 1000 Growth Index declining 9.8% amid geopolitical tensions and rising scrutiny of AI investment returns.
Geopolitical conflict in the Middle East, rising bond yields and heightened scrutiny of AI-related returns all weighed on higher multiple equities throughout the quarter.
ClearBridge Large Cap Growth Portfolios navigated the volatile environment by reshaping its holdings across technology, healthcare and consumer sectors during the three-month period.
Taiwan Semiconductor Manufacturing Company (NYSE: TSM) delivered record-breaking revenue and announced a massive increase in planned capital expenditures to meet continued growth in AI-related demand.
ASML Holding (NASDAQ: ASML) continued to play a key role in the semiconductor supply chain, maintaining its position as a critical enabler of chip production capacity globally.
Netflix (NASDAQ: NFLX) rebounded during the quarter after the streaming provider withdrew from a bidding war for Warner Bros. Discovery (NASDAQ: WBD), a move ClearBridge viewed positively.
ClearBridge described the fundamental setup for Netflix’s Business as robust, expressing encouragement at the stock’s recovery following the company’s decision to step back from the acquisition pursuit.
The investment manager completed a full exit from Salesforce (NYSE: CRM) this quarter, having trimmed the position as part of broader efforts to reduce software exposure over the past year.
ClearBridge added two new positions in the healthcare sector, purchasing stakes in biopharmaceutical companies Roche (OTC: RHHBY) and Alnylam Pharmaceuticals (NASDAQ: ALNY) to improve the quality of its healthcare holdings.
The additions of Roche and Alnylam reflect ClearBridge’s stated intention to raise the overall quality of its healthcare exposure as part of its portfolio repositioning strategy.
The portfolio adjustments came against a backdrop of broad market weakness, with higher multiple growth equities bearing the brunt of investor concern over valuations and AI spending justification.
The combination of macroeconomic pressures and sector-specific scrutiny created a challenging environment for large cap growth strategies throughout the opening months of 2026.