Baron Large Cap Growth Strategy

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.

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.

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.

Intuitive Surgical, Inc. (ISRG) manufactures and markets the da Vinci Surgical System, a robotic surgical system used for minimally invasive surgical procedures.
We believe a large number of medical procedures that are currently performed using open surgery will eventually be performed using Intuitive Surgical’s da Vinci System. Robotic surgery is less invasive than open surgery, and patients experience less blood loss, less nerve damage, reduced pain, and faster recovery. Intuitive generates a large and expanding portion of its revenue from recurring procedures. We expect revenue and earnings to grow at attractive rates as procedure volumes increase.

Shopify Inc. (SHOP) is a cloud-based software provider offering an operating system for multi-channel commerce. The company serves over two million merchants that processed $235 billion of gross merchandise volume (GMV) in 2023. Shopify is the second largest e-commerce player in the U.S. as measured by GMV.
Shopify has developed a scalable platform that offers an end-to-end commerce solution to merchants of all sizes, including offline, international, and B2B. Shopify’s aggregate scale, innovation, and ecosystem of partners enable merchants to take payments, receive loans, and sell their products internationally. With less than 2% share of $20 trillion in global commerce, it has a long runway for growth.

ServiceNow, Inc. (NOW) provides cloud-based solutions for workflow management. Its core products support IT Service Management and IT Operations Management. It is expanding its offerings to include business management, performance analytics, customer service management, and security.
ServiceNow's unified flexible platform enables customers to integrate and digitize workflows from different sources, improving the user experience, collaboration, and operational efficiencies. The growing operational complexity driven by digital transformation should allow ServiceNow to leverage its large customer base for further growth. Management is balancing growth and margin expansion to support both acquisitions and shareholder-friendly activities. Its Pro, Pro Plus, AI, and generative AI product lines should offer significant deal expansion opportunities over time.

The Trade Desk (TTD) is a software company that enables advertising agencies to purchase advertising more efficiently and effectively. It provides the leading self-serve, demand-side platform enabling data-driven digital advertising.
The Trade Desk's visionary founder and CEO Jeff Green has built a unique culture of excellence and customer focus, in our view. As advertising becomes increasingly more digital and automated, we expect The Trade Desk to remain the key vendor to ad agencies engaged in such efforts, notably in the rapidly growing Connected TV segment. We remain positive on The Trade Desk given its technology, scale, and estimated 10% share in the $100 billion programmatic advertising market, a small and growing subset of the $700 billion global advertising market.

MercadoLibre, Inc. (MELI) is the largest e-commerce company in Latin America. The company operates the MercadoLibre e-commerce marketplace, the Mercado Pago fintech platform, and the Mercado Envios suite of shipping solutions for sellers on its platform.
MercadoLibre benefits from the emergence of two secular trends: e-commerce and digital payments. The company has a significant first-mover advantage and is investing aggressively in logistics to widen its competitive moat. Latin America is a predominantly cash-based economy with e-commerce penetration under 20%, and MercadoLibre has an attractive, asset-light marketplace business model. We believe its logistics network is a key competitive advantage, and we see a significant opportunity in the growth of its fintech offerings.

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.

Cloudflare, Inc. (NET) offers enhanced security and performance for websites, apps, and SaaS. Its network spans over 100 countries and connects with over 10,000 ISPs, cloud providers, SaaS services, and enterprises. Its edge network operates within 100 milliseconds of 99% of the developed world.
Cloudflare's technology is 30% to 50% cheaper than that of peers, while its gross margins are 1,000 to 2,000 basis points higher. It is widely respected among developers, who migrate it from personal to enterprise use. These advantages allow Cloudflare to service about 25% of global internet traffic. We believe Cloudflare will maintain 30%-plus growth for several years given its unique technology and go-to-market strategy that is disrupting a $40 billion market, along with the potential to attack a nascent Edge Computing market that could grow to $10 billion in four years.

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