Quarterly Reports – Now Posted

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Equity markets continued to rally in the third quarter, with market leadership remaining concentrated in a few select pockets. Technology remains one of these pockets, with market leaders that are profitable, cash-generative, and deeply embedded in the global economy. As the chart below shows, the ten largest U.S. companies (many of which are tech giants) now operate with an average return on equity of 29% and net profit margins of 34%—both materially stronger than the levels seen during prior episodes of peak market concentration, and notably better than in 2000 when the tech bubble burst.

As market leadership has remained relatively narrow, WestEnd has been positioned accordingly—with Technology as our largest allocation. But we’ve also sought to diversify into other areas with structural growth themes, namely in international stocks, industrials, aerospace, and defense. Our current positioning reflects a balanced approach, with an overarching emphasis on Technology as the key driver of earnings and returns.

Performance in the quarter was positive as the market rallied, but also reflected hidden price volatility as markets rotate through short-term themes and narratives. The Core portfolio underperformed the S&P 500 in Q3, but we remain roughly in line with the index for the year.

*Performance values as of September 30, 2025
Please note that these performance figures represent a weighted average of return for each strategy, based on a sampling of actual accounts. The accounts used to measure weighted average performance were generally portfolios that were invested for the entire quarter and were not subject to extraneous factors like scheduled withdrawals, account restrictions, and other factors. The weighted average was based on 131 Core portfolios. Actual performance results may differ from composite returns, depending on the size of the account, investment guidelines and/or restrictions, inception date and other factors. Please see the index disclaimers for the S&P 500 at the end of this review. Past performance is not indicative of future results.

The AI Theme, Revisited

After a very brief mid-year pause in enthusiasm for the AI trade, it has returned in full force. Our current approach maintains exposure to names we’ve liked for a long time—like Palantir and Snowflake—but we’ve also opened positions on new ‘fronts of the AI arms race.’ Namely, with AMD, Alibaba, and Baidu.

Long time investors know we’ve been in the AI trade for years now—holding a substantial position in NVIDIA starting in early 2023 (which we sold a few quarters ago), and also having exposure to names like Taiwan Semiconductor, ASML, Broadcom, Microsoft, Arm Holdings, and more. We’re still invested with hyper-scalers like Alphabet and Meta, but we’ve recently opened positions in what George Bolton refers to as the AI “catch-up” trades. These are companies that are ‘catching-up’ to the major players, and have more runway to gain market share in the process.

Advanced Micro Devices (AMD)

AMD has been positioning for this moment for several years. Under CEO Lisa Su’s leadership, the company has transformed from a cyclical chip supplier into a strategic partner to major cloud and AI firms. Its latest generation of data-center processors, the Instinct MI450, is designed for large-scale AI workloads and is being deployed through partnerships with OpenAI and Oracle. Together, these partnerships could represent multiple gigawatts of computing capacity and tens of billions in potential long-term revenue.

Importantly, these agreements signal that AMD has achieved a level of technological credibility that enables it to compete head-to-head with NVIDIA for major infrastructure contracts. The OpenAI partnership, in particular, includes performance and adoption milestones tied to equity warrants—an arrangement that directly aligns incentives for both companies to scale AMD’s AI deployment footprint.

From our perspective, this is a company approaching a strategic inflection point. Its products are not only cost-competitive and more readily available than peers, but also increasingly integral to global data-center design. With analysts now projecting significant share gains in server CPUs and data-center GPUs through the remainder of the decade, we view AMD as a diversified exposure to both the hardware and software sides of AI growth.

In many ways, AMD today resembles NVIDIA in early 2024—entering a phase of broad market adoption, backed by solid execution and rising demand. For WestEnd, the position fits neatly within our long-term focus on the AI infrastructure value chain, adding balance and valuation discipline to our exposure in this space.

Snowflake (SNOW)

We have owned Snowflake for some time now, and we see the company as a leader in converting the AI technology to a revenue-generating tool for enterprises. At its recent World Tour event in New York, Snowflake emphasized how its latest products—particularly Snowpark ML and new unstructured data capabilities—are helping organizations turn raw data into actionable intelligence. Early adopters across retail, travel, and financial services are already using Snowflake’s tools for tasks such as demand forecasting and customer experience optimization. These practical use cases illustrate why we see Snowflake as a long-term beneficiary of enterprise AI adoption.

Industry analysts have noted that Snowflake’s product innovation is accelerating and that the “AI blizzard,” as one put it, still lies ahead. As enterprises refine their AI strategies, data volumes and processing needs are expected to grow exponentially. We believe Snowflake is well positioned to capture that growth through its flexible cloud architecture, growing ecosystem of partners, and continued leadership in secure, multi-cloud data solutions.

Alibaba (BABA)

Alibaba remains one of Asia’s most strategically important technology platforms. The company recently announced a roughly $50 billion initiative to accelerate development in high-performance computing, proprietary AI models, and custom semiconductors—a scale of investment that places it among the world’s top AI spenders.

Alibaba is also a diversified tech company. Its cloud division continues to deliver strong growth, reporting 26% year-over-year revenue gains in Q2 2025, driven by triple-digit increases in AI-related business. The firm is expanding regionally with new data-center capacity in Dubai to serve pan-Asian clients seeking secure, scalable infrastructure. Combined with its leading position in Chinese e-commerce, these investments provide a healthy balance between growth and cash-flow generation.

We view Alibaba as more than an e-commerce company—it is becoming a strategic infrastructure provider for the digital transformation of Asia, with its platforms expected to play a central role as China pursues its goal of integrating AI into the majority of its economy by 2030.

Baidu (BIDU)

Baidu represents a complementary exposure—a pure play on AI innovation and autonomous mobility. Its Apollo Go platform has completed more than nine million paid rides, operating fully driverless taxis in multiple major Chinese cities. The company’s latest sixth-generation robo-vehicles, produced at scale and at costs below $30,000 per unit, mark an industry breakthrough that could make commercial autonomy economically viable.

Beyond mobility, Baidu’s AI capabilities extend across enterprise software, cloud services, and language model development, aligning the company with government and industrial partners seeking secure, domestically developed AI solutions. The company’s expansion into Southeast Asia and Australia further supports its evolution from a search-engine origin into a diversified global technology platform.

Conclusion

As we enter the final quarter of the year, we continue to look beyond short-term policy noise—including the ongoing U.S. government shutdown—and focus instead on the durable growth drivers underpinning this market cycle: artificial intelligence, infrastructure investment, and easing financial conditions.

Corporate earnings have proven resilient, and global capital investment in technology and defense continues to expand. Within this environment, we believe the Core Strategy’s diversified exposure to U.S. industrial and technology leaders, global innovators, and select international opportunities positions portfolios well for continued long-term growth.

As always, we appreciate your continued confidence in WestEnd Capital Management and encourage you to contact us with any questions regarding this review or your portfolio.

Notes and Disclaimers

i Important Account Minimum Reminder: Per our management agreement, WestEnd Capital maintains a minimum account size of $500,000. If the Rheinmetall trade was not executed in your account, it is likely due to your account not meeting this minimum threshold. We remain committed to providing tailored guidance and appropriate opportunities based on each client’s individual portfolio. If you have any questions about your account or how this may apply to you, please contact us.

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This newsletter has been prepared solely for the client to whom it was directed and may not be sent to any other party. Further, it contains highly confidential and proprietary information and trade secrets that are of independent, economic value to us. Any disclosure of this information could cause us competitive harm. By accepting this newsletter, you agree to keep strictly confidential all of its contents and may not reproduce, distribute, share or publish in any manner without our prior written consent. This letter is not, and is not intended to be, an advertisement within the meaning of Advisers Act Rule 206(4)-1.

Further, a substantial part of this newsletter contains forward-looking statements within the meaning of the federal securities laws, including in particular statements appearing on page 3. Forward-looking statements are those that predict or describe future events or trends and that do not relate solely to historical matters. For example, forward-looking statements may predict future economic performance, describe plans and objectives of management for future operations and make projections of revenue, investment returns or other financial items. A prospective investor can generally identify forward-looking statements as statements containing the words “will,” “believe,” “expect,” “anticipate,” “intend,” “contemplate,” “estimate,” “assume” or other similar expressions. Such forward-looking statements are inherently uncertain, because the matters they describe are subject to known (and unknown) risks, uncertainties and other unpredictable factors that are beyond our control. Actual results could and likely will differ, sometimes materially, from those projected or anticipated. We are not undertaking any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. You should not take any statements regarding past trends as a representation those trends or activities will continue in the future. Accordingly, you should not put undue reliance on these statements.

In preparing this newsletter, we have relied upon information provided by the custodian(s) and other third-party sources we believe to be reliable and accurate.

Past performance does not guarantee future results. Different types of investments involve varying degrees of risk and there can be no assurance that the future performance of any specific investment or investment strategy will be profitable. Changes in investment strategies, contributions or withdrawals, and economic and market conditions will materially alter the performance of your account. All investing involves risk of loss including the possible loss of all amounts invested.

Index Disclaimers

The benchmarks referenced are included to reflect the general trend of the markets during the periods indicated and are not intended to imply that the underlying returns were comparable to the market indices either in composition or element of risk. There are significant differences between client accounts and the indices herein including, but not limited to, risk profile, liquidity, volatility, and asset composition.

The S&P 500 Index is a capitalization-weighted index comprised of 500 stocks chosen for market size, liquidity and broad industry group representation within the U.S. economy. Index returns represent gross returns, and are provided to represent the investment environment during the time periods shown and are not covered by the report of the independent verifiers.

Q3 2025 / Strategy Update & Market Overview