In the third quarter of 2025, U.S. large-cap growth stocks experienced a continued resurgence, propelled by strong corporate financial results and growing optimism surrounding artificial intelligence (AI). The S&P 500 Index demonstrated a notable performance with over 12% year-over-year earnings expansion, as a substantial portion of its constituent companies exceeded consensus expectations. This positive momentum underscored a resilient economic environment and robust corporate profitability.
A significant driver of market performance was the exceptional contribution from the "Magnificent 7" technology companies, which collectively reported a 26% increase in earnings. This growth was largely attributed to a reacceleration in key sectors such as cloud services, digital advertising, and e-commerce, signaling strong underlying demand and technological advancement. In this dynamic market, AppLovin stood out with a remarkable 77% year-over-year revenue growth and an impressive 81% EBITDA margin, showcasing robust operational efficiency. Similarly, Broadcom achieved substantial progress in the AI semiconductor space, recording a 63% year-over-year increase in AI-related revenues and securing $10 billion in orders for custom chip designs. Despite these broad market strengths, the Touchstone Sands Capital Select Growth Fund did not keep pace with its comparative index, the Russell 1000® Growth Index, during this period.
The confluence of sustained corporate earnings, technological innovation, and investor confidence paints a promising picture for the future of growth equities. While certain funds may navigate unique challenges, the overall market trajectory suggests a forward-looking environment where strategic investments in high-growth areas continue to yield positive outcomes. This period highlights the transformative power of technological advancements and the importance of adaptable investment strategies in a rapidly evolving economic landscape.
