Baron Durable Advantage Strategy

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 3.2 billion total daily 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 has significant room to further monetize 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.

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 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, margin-accretive part of the business.

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.

Alphabet Inc. (GOOGL) is the parent of Google, the world's most dominant online search provider. Other services and products include display advertising, Android, Chrome, Google Cloud, Google Maps, Google Play, and YouTube. Its Other Bets segment consists of businesses such as Waymo, CapitalG, and Verily.
Alphabet has been the largest beneficiary of a secular shift in advertising from all other media to online and mobile. It has processed and indexed more data than any other company and can leverage its large datasets to quickly improve its products. Subsidiaries Google Cloud and YouTube give Alphabet exposure to the secular shifts to cloud computing and connected TV. Alphabet has tremendous scale, distribution, and talent. We are monitoring how generative AI could disrupt or offer new opportunities for the core search business.

Taiwan Semiconductor Manufacturing Company Limited (2330.TT) is the world's largest independent semiconductor foundry, manufacturing chips on behalf of other companies.
TSMC is the dominant force in leading-edge semiconductor foundry manufacturing, as it benefits from economies of scale and a superior cost structure. Its successful track record of deploying new technology faster than competitors enables it to maintain its market share and pricing power. We believe TSMC’s investments in advanced nodes will solidify its superior market positioning and profitability in the long run.

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 Broadcom to tap into most of the $75 billion total addressable market in AI across its three largest customers by 2027 and to grow VMware at a high-teens rate over the next few years. The rest of Broadcom’s semiconductor business is recovering, and we expect other software segments to grow at a mid-single-digit rate. The company has best-in-class margins and cash flow, which it returns to shareholders.

NVIDIA Corporation (NVDA) sells semiconductors, systems, and software for accelerated computing, gaming, and generative AI (GenAI).
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 GenAI adoption grows. Given its leading market share in gaming, data centers, and autonomous machines, we believe NVIDIA can grow rapidly for years to come.

Visa Inc. (V) is a leading global payment network. The company authorizes and facilitates electronic payments for consumers, merchants, and banks.
Visa benefits from consumer spending growth and the secular shift from cash to electronic payments. Most of its revenue comes from international markets, where consumer spending and the adoption rate of electronic payments are rising quickly. The company generates significant free cash flow, which is being returned to shareholders through dividends and share repurchases. We believe Visa enjoys high barriers to entry given its well-established brand, ubiquitous merchant acceptance network, and extensive banking relationships.

S&P Global Inc. (SPGI) provides credit ratings, indexes, data, and analytics to the financial, transportation, and commodities markets.
S&P Global benefits from the secular growth of rated bond issuance, the ongoing shift from active to passive investing, and growing demand for data and analytics. The company operates in oligopoly markets, where it enjoys formidable competitive advantages. We expect to see a recovery in rated bond issuance as interest rates stabilize, alongside ongoing benefits from S&P Global’s 2022 merger with IHS Markit. Excess cash flow is being used for accretive acquisitions and is being returned to shareholders through share repurchases and dividends.

Apollo Global Management, Inc. (APO) is one of the world's leading alternative asset managers. The company manages over $700 billion in assets, mostly in credit strategies. It also owns Athene, one of the largest providers of annuities in the U.S.
Apollo has a dominant franchise in private credit, where it has spearheaded the practice of matching insurance liabilities with investment-grade, illiquid credit investments to generate higher returns than peers. We think Apollo will continue to grow in credit and insurance, where it has significant scale and expertise. The company should also see growth in assets, fees, and spread earnings, since it earns management fees on assets as well as excess spread on liabilities following its 2022 merger with Athene.

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