Baron Opportunity Fund

NVIDIA Corporation (NVDA) sells semiconductors, systems, and software for accelerated computing, gaming, and generative AI (Gen AI).
Computing demand has been doubling every one to two years, driven by electrification, digitization, and recent advancements in AI, yet supply growth has decelerated dramatically due to the slowdown in Moore's law. NVIDIA’s accelerated computing architecture enables continued growth in supply of computing through parallelization. We are at the tipping point of a new era in computing, with NVIDIA at its epicenter as Gen AI adoption grows. Given its leading market share in gaming, data centers, and autonomous machines, we believe NVIDIA can grow rapidly for years to come.

Microsoft Corporation (MSFT) is a software company traditionally known for its Windows and Office products. Over the last five years, it has built a $120 billion-plus annual cloud business, including Office 365, CRM product Dynamics 365, and infrastructure-as-a-service product Azure.
Over the past decade, Microsoft has transformed itself, refocusing the business on cloud computing and AI. Microsoft's commercial cloud business now represents over 56% of revenue and is growing around 25% year-on-year. Its moat is built on the wide reach of its sales channel, its diverse platform of software offerings, its hybrid cloud capabilities, and the high costs of switching away from its solutions, which tend to be mission critical for customers. We believe Microsoft will benefit from the growing adoption of cloud for years to come.

Amazon.com, Inc. (AMZN) is an e-commerce pioneer, innovator, and market share leader with a relentless focus on providing value and convenience to its customers. Amazon also operates the industry-leading cloud infrastructure business Amazon Web Services (AWS).
Amazon's market share of U.S. online retail sales is around 40%, while its share of global online retail sales is less than 5%. Amazon has many avenues for revenue growth, including consumer staples, apparel, international expansion, digital media offerings, private label, pharmacy services, advertising, and a better shopping experience powered by generative AI. Amazon also represents an opportunity to invest in the secular growth of cloud computing through AWS, a large, growing part of the business.

Tesla, Inc. (TSLA) manufactures electric vehicles, including a luxury sedan and CUV (S/X), a mid-sized luxury sedan and hatchback (3/Y), and pickup and semi-trucks. It is also ramping up internal battery cell production, energy solutions, and software offerings such as full self-driving and insurance.
We expect Tesla will continue to grow its automotive business through international production capacity and product expansion. Tesla's vertical integration, technology innovation, brand, profitability, and growing supplier support offer unique and durable growth opportunities that are hard to replicate. In addition, Tesla's energy and software expertise is broadening the industrial opportunity to large and profitable revenue avenues that were previously locked in the legacy vehicle architecture, such as autonomous driving, robotics, insurance, and other AI use cases.

Meta Platforms, Inc. (META) owns Facebook, the world's largest social network, with over 3.0 billion monthly and over 2.1 billion daily active users. Instagram, Messenger, WhatsApp, and Oculus are also part of the Meta Platforms network, with over 3.9 billion total monthly unique users across Meta products.
Meta owns unique social platforms with users that continue to demonstrate stickiness and high engagement. Advertisers want to be where users are, and Meta's ability to analyze, target, and show clear, demonstrable, and rising returns on investment makes the platform particularly attractive to them. We believe the company is still in the middle innings of monetizing its vast customer base, especially internationally. In addition, we see significant positive optionality from monetization opportunities in video, WhatsApp, business messaging, and generative AI features.

Apple Inc. (AAPL) designs, manufactures, and markets consumer electronics, computer software, and online services. Its products include the iPhone, iPad, Mac personal computer, Apple smartwatch, Apple TV, and HomePod. It also offers advertising and app discovery services through its App Store. 
As the creator and owner of one of the largest and most popular consumer electronics platforms, Apple, in our view, is well positioned to benefit from the network effect that typically accrues to platform companies. It has a large and growing ecosystem, a trusted brand, and positive optionality through leveraging its large installed base to expand into additional consumer and enterprise services. We believe Apple trades at a discount to our estimate of its intrinsic value, with capital return and growth alleviating near-term trade and iPhone demand uncertainty.

Broadcom Inc. (AVGO) designs, develops, and supplies a wide range of semiconductor and infrastructure software solutions. Its semiconductor devices serve broadband, networking, wireless, storage, and industrial markets while its software offerings focus on operational efficiency tools for large enterprises.
Broadcom’s semiconductor portfolio is reaching an inflection point, driven by its AI solutions in networking and custom compute. We expect mid-single-digits growth for the rest of the semiconductor portfolio and low-single-digits growth for the legacy software offerings, driven by cost efficiencies, cross-selling, and servicing key enterprise accounts. Broadcom's product simplification and SaaS conversion strategy should drive expansion of its VMWare business as well. The company has best-in-class margins and cash flow, which it returns to shareholders.

Spotify Technology S.A. (SPOT) is the world's leading music streaming service, with approximately 40% market share. The company monetizes through several tiers of subscriptions, advertising, and miscellaneous a la carte pricing.
With over 246 million paying subscribers, Spotify has created a two-sided marketplace where creators can monetize their work and consumers can stream music. Longer term, we expect the company to grow to over one billion total subscribers (from 626 million today) and improve margins materially through advertising, its artist promotions marketplace, and improved cost discipline. On the product side, we expect Spotify to continually improve its value proposition through additional features and expansion into adjacencies such as audiobooks.

Argenx SE (ARGX) is a biotechnology company developing antibodies for the treatment of autoimmune disorders. The company is in the early years of the commercial launch of its drug Vyvgart, which promises to change the treatment paradigm for a host of autoantibody immune disorders.
Argenx's main product, efgartigimod, which treats a rare muscle weakness disorder, has potentially broad applicability in ameliorating overactive antibody-based diseases. Efgartigimod is a true "pipeline in a product," where the product itself is the platform, as it has the potential to be used against a diverse range of diseases – something that is rarely achieved in the biotechnology space. We expect the share price to increase as argenx proves its product’s effectiveness in multiple autoantibody disorders.

CoStar Group, Inc. (CSGP) is the leading provider of information and marketing services to the commercial real estate industry.
CoStar has built a proprietary database through data collection over a 20-year period, creating high barriers to entry. We think CoStar's suite should grow at mid-teens rates, and we believe its Loopnet marketing platform can grow even faster. Its Apartments.com platform is the dominant multi-family internet listing service and should grow revenue by more than 20%. CoStar is starting to expand into residential, creating additional significant growth opportunities. Its balance sheet and cash generation create M&A optionality.

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