Polar Capital Technology Trust plc (the "Company"): The Company is an investment company with investment trust status and its shares are excluded from the Financial Conduct Authority’s (“FCA”) restrictions on the promotion of non-mainstream investment products. The Company conducts its affairs, and intends to continue to conduct its affairs, so that the exemption will apply.
The Company is an Alternative Investment Fund under the EU's Alternative Investment Fund Managers Directive 2011/61/EU as it forms part of UK law by virtue of the European Union (Withdrawal) Act 2018.
The Investment Manager: Polar Capital LLP is the investment manager of the Company (the "Investment Manager"). The Investment Manager is authorised and regulated by the FCA and is a registered investment adviser with the United States' Securities and Exchange Commission.
Key Risks
- Investors' capital is at risk and there is no guarantee the Company will achieve its objective.
- Past performance is not a reliable guide to future performance.
- The value of investments may go down as well as up.
- Investors might get back less than they originally invested.
- The value of an investment’s assets may be affected by a variety of uncertainties such as (but not limited to): (i) international political developments; (ii) market sentiment; and (iii) economic conditions.
- The shares of the Company may trade at a discount or a premium to Net Asset Value.
- The Company may use derivatives which carry the risk of reduced liquidity, substantial loss and increased volatility in adverse market conditions.
- The Company invests in assets denominated in currencies other than the Company's base currency and changes in exchange rates may have a negative impact on the value of the Company's investments.
- The Company invests in a concentrated number of companies based in one sector. This focused strategy can lead to significant losses. The Company may be less diversified than other investment companies.
- The Company may invest in emerging markets where there is a greater risk of volatility than developed economies, for example due to political and economic uncertainties and restrictions on foreign investment. Emerging markets are typically less liquid than developed economies which may result in large price movements to the Company.
Important Information
Not an offer to buy or sell: This document is not an offer to buy or sell or a solicitation of an offer to buy or sell any security, and under no circumstances is it to be construed as a prospectus or an advertisement. This document does not constitute, and may not be used for the purposes of, an offer of the securities of, or any interests in, the Company by any person in any jurisdiction in which such offer or invitation is not authorised.
Information subject to change: Any opinions expressed in this document may change.
Not Investment Advice: This document does not contain information material to the investment objectives or financial needs of the recipient. This document is not advice on legal, taxation or investment matters. Prospective investors must rely on their own examination of the consequences of an investment in the Company. Investors are advised to consult their own professional advisors concerning the investment.
No reliance: No reliance should be placed upon the contents of this document by any person for any purposes whatsoever. None of the Company, the Investment Manager or any of their respective affiliates accepts any responsibility for providing any investor with access to additional information, for revising or for correcting any inaccuracy in this document.
Performance and Holdings: All data is as at the document date unless indicated otherwise. Company holdings and performance are likely to have changed since the report date. Company information is provided by the Investment Manager.
Benchmark: The Company is actively managed and uses the Dow Jones Global Technology Index (total return, Sterling adjusted) as a performance target. The benchmark is considered to be representative of the investment universe in which the Company invests. The performance of the Company is likely to differ from the performance of the benchmark as the holdings, weightings and asset allocation will be different. Investors should carefully consider these differences when making comparisons. Further information about the benchmark can be found at: https://www.spglobal.com/spdji/en/indices/equity/dow-jones-us-technology-index/#overview.
Third-party Data: Some information contained in this document has been obtained from third party sources and has not been independently verified. Neither the Company nor any other party involved in compiling, computing or creating the data makes any warranties or representations with respect to such data, and all such parties expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained within this document.
Country Specific Disclaimers
United States: The information contained within this document does not constitute or form a part of any offer to sell or issue, or the solicitation of any offer to purchase, subscribe for or otherwise acquire, any securities in the United States or in any jurisdiction in which such an offer or solicitation would be unlawful. The Company has not been and will not be registered under the United States Investment Company Act of 1940, as amended (the “Investment Company Act”) and, as such, the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the “Securities Act”). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Company will be offered and sold only outside the United States to, and for the account or benefit of non-U.S. Persons in “offshore- transactions” within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained in this document, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
Further Information about the Company: Investment in the Company is an investment in the shares of the Company and not in the underlying investments of the Company. Further information about the Company and any risks can be found in the Company’s Key Information Document, the Annual Report and Financial Statements and the Investor Disclosure Document which are available on the Company's website, found at: https://www.polarcapitaltechnologytrust.co.uk.
Fund Manager Commentary As at 30 September 2026
Key events
Market review
Global equity markets delivered mixed returns in September, with the MSCI All Country World Net Total Return Index returning +0.7% as a renewed surge in oil prices and the resumption of Federal Reserve (Fed) interest rate hikes pushed bond yields to their highest levels since 2007.
The S&P 500 Index and STOXX Europe 600 Index returned +1.8%** and -2.7%** respectively, while the NASDAQ 100 gained +5.5%**, helped by a +11.9%** rebound in the Philadelphia Semiconductor Index (SOX) of chip makers as memory and AI infrastructure stocks recovered (all returns in sterling terms).
US macroeconomic data pointed to a resilient economy. August job numbers beat expectations and the flash Composite Purchasing Managers’ Index (PMI) for September, where a reading above 50 means growth, jumped to 58.4, the fastest pace of activity growth in more than five years, although input costs rose at their steepest rate in four years. Headline Consumer Price Index (CPI) inflation rose +0.4% month-on-month (m/m) in August, keeping annual inflation at 3.4%, while core CPI, which excludes food and energy, rose +0.3%, slightly ahead of forecasts. Oil prices increased sharply again as the US/Iran conflict re-escalated. Houthi attacks on Saudi energy infrastructure, which forced the temporary closure of the East-West Crude Oil Pipeline, pushed Brent crude back above $100 a barrel. Hopes of a deal faded after President Trump rejected an Iranian proposal, leaving Brent +14% higher on the month at $103.50 a barrel and +42.0% over the quarter.
The Federal Open Market Committee (FOMC), which sets US interest rates, raised rates by 25 basis points (bps), or 0.25 percentage points, to 3.75-4.00%, its first hike since 2023. Sixteen of the eighteen participants expect at least one further increase this year. Fed Chair Kevin Warsh said that, despite solid employment data, inflation remained too high and that the Fed would deliver on price stability. Strong activity data, higher oil prices and heavy corporate debt issuance pushed the 10-year Treasury yield through 5%, closing the month at 5.29%, its seventh consecutive monthly increase. Other central banks followed a similar path; the European Central Bank raised its deposit rate by 25bps to 2.50%, its second hike this year, and the Bank of Japan lifted its policy rate to 1.25%, the highest since 1995.
The month ended more positively. Core personal consumption expenditures (PCE) inflation, another price measure, came in below expectations for August at 3.0% year-on-year (y/y), while the final estimate of Q2 gross domestic product (GDP) was revised higher to 2.2% from 1.5%. Despite rising global bond yields, economic data remains strong and company profits are expected to beat forecasts once again in the upcoming Q3 reporting season. This should support a positive backdrop for equities.
Technology review
The technology sector outperformed the broader market in September, with the Dow Jones Global Technology Net Total Return Index returning +6.6%. Larger technology stocks continued to outperform smaller and medium-sized peers. The Russell 1000 Technology and Russell 2000 Technology indices returned +7.3%** and +3.1%** respectively.
Performance within technology reversed sharply from August as investors began to add to AI-exposed stocks. SOX rallied +11.9%**, while the NASDAQ Internet Index (QNET) and iShares Expanded Tech-Software Sector ETF (IGV), a widely held software exchange-traded fund, declined -1.5%** and -1.1%** respectively (all returns in sterling terms).
During September, debate around the pacing and alignment of the most advanced, or frontier, AI models intensified, with Anthropic’s Dario Amodei, OpenAI’s Sam Altman and xAI’s Elon Musk agreeing that ‘pacing’ of frontier model development is required to ensure safety. Initially, this led to a selloff in hardware and semiconductors on the assumption – erroneous, in our view – that pacing would slow the buildout of AI infrastructure. However, these stocks rebounded strongly as investors recognised that greater scrutiny of model training, post-training and reinforcement learning may require more compute (computing power), not less, and should help drive AI adoption.
Performance was also driven by continued strength in central processing unit (CPU) makers Advanced Micro Devices (AMD) and Intel and related supply-chain stocks, following the successful launch by Meta Platforms (Meta) of Muse, a personal AI agent capable of autonomously completing complex, multi-step tasks such as booking travel, completing forms and shopping. Muse has topped the US App Store since its release and has been described as the “ChatGPT moment” for agentic commerce, where AI agents complete tasks autonomously for people. Rapid early adoption, supported by Meta’s extensive reach, underscored the significant compute opportunity from consumer AI agents.
Commercial momentum was also strong, with Meta announcing integrations or partnerships with Walmart*, Best Buy*, Shopify, Expedia*, Instacart*, Gap*, Wayfair* and Fanatics*. However, Muse also highlighted the potential disruption to internet advertising and e-commerce as AI agents increasingly step in between companies and customers. Amazon’s decision to block Muse from its marketplace underscored emerging tensions around ownership of customer relationships and the potential impact on advertising revenues.
September featured several notable company results published outside the usual reporting schedule. In semiconductors, Broadcom delivered solid results, with revenue up +86% y/y and AI semiconductor sales rising +221% y/y, partly offset by slightly weaker-than-expected infrastructure software and non-AI semiconductor demand. Management raised its FY27 (financial year 2027) AI revenue forecast from more than $100bn to $115bn, but below the $120bn analysts expected, although supply constraints leave room to go higher. The company also forecast AI semiconductor sales doubling to $230bn in FY28 – a positive sign for broader AI infrastructure demand. We expect growth to increasingly come from custom chips for Anthropic* and OpenAI*, which are set to become Broadcom’s two largest customers.
Micron Technology delivered another exceptional quarter that met elevated expectations: data centre revenue quadrupled y/y, helped by strong pricing across DRAM and NAND, two types of memory chip. Management expects supply to be even scarcer relative to demand in FY27 and FY28 than in FY26, supporting further price and margin rises. FY27 capital expenditure (capex) is expected to rise to more than $50bn, primarily to accelerate cleanroom construction, although we believe meaningful additional supply will not arrive until late calendar 2028.
Results from infrastructure software companies were also encouraging, with AI adoption supporting stronger growth. Snowflake delivered a strong quarter, with product revenue growth accelerating to +37% y/y. The company’s forecast points to a further acceleration next quarter, supported by what management expects to be a “meaningful step up” in AI revenue. Cortex Code, the company’s AI coding assistant, was adopted by more than 9,100 accounts in the quarter, while AI-driven migrations are increasing use of Snowflake’s core platform.
In cybersecurity, Palo Alto Networks reported a solid quarter, with revenue up +34% y/y and next-generation security annual recurring revenue (ARR) rising +63%. AI adoption is increasing demand for stronger business security as companies deploy autonomous AI agents.
Cybersecurity stocks also benefited from Amodei’s call for a more measured pace of AI development following several security incidents, including the OpenAI/Hugging Face breach and reports of AI agents compromising government systems. Rather than halting progress, he advocated stronger testing, monitoring and alignment before advanced models are deployed, particularly as the industry approaches recursive self-improvement (RSI), when AI systems may begin accelerating the development of more capable successors.
A more sceptical interpretation is that tighter regulation could reinforce the competitive position of the frontier AI labs. Leading labs possess the compute, capital and compliance infrastructure to absorb stringent oversight, while licensing, auditing and safety requirements could disproportionately burden smaller and open-source competitors. Regulation may therefore address legitimate safety risks while making it harder for newcomers to enter and entrenching today’s market leaders. OpenAI subsequently held back the model it had intended to release as GPT-6.1 Astra after it fell short on safety tests, saying “it didn’t quite meet the bar in terms of staying within scope and authorization”.
Outlook
The macroeconomic backdrop remains an overhang on market sentiment. Strong growth and persistent inflation are putting upward pressure on long-term yields - 10-year Treasury yields have increased for seven consecutive months. Historically, an unusually large rise in 10-year yields within a single month (around 50bps; September’s move was 53bps) has put the market under some strain, but the strength of AI fundamentals and earnings power has so far proved supportive to indices weighted by company size.
The AI investment boom is driving nearly half of S&P 500 earnings growth this year (excluding other income) and is expected to continue to make a similar – if moderating – contribution to 2027 and 2028, according to Goldman Sachs. Profit forecasts have risen over the course of the year, in stark contrast to most years, when they tend to decline as the year progresses. However, market breadth has deteriorated, with the median stock trading around 16% below its 52-week high even as the S&P 500 itself sits close to record highs. Interest rate-sensitive sectors have unsurprisingly struggled, with biotech, small caps, real estate investment trusts (REITs), homebuilders and utilities suffering falls.
Encouragingly, the most recent move higher in rates has been driven by an increase in real yields rather than breakevens (expected inflation), “consistent with markets repricing the strength and persistence of growth…and the real rates required to accommodate it”, according to Citadel. Stable breakevens indicate the market has confidence in the Fed’s capacity and willingness to hike rates to control inflation as required. Higher yields have, however, compressed valuation multiples: the S&P 500’s forward price/earnings (P/E) ratio has fallen from 22x to 19x this year and the NASDAQ 100’s from 27x to 22x. The S&P 500 information technology sector’s multiple is down by almost one-third, according to Goldman Sachs.
The cost of capital is becoming an increasingly important input as AI investment expands to support greater capability and rapid adoption. Interest expense is today a small portion of hyperscaler earnings, although it will grow. Goldman Sachs expects around $250bn of bond issuance this year (almost all of it already completed) and around $420bn of total issuance in 2027. Despite this significant step-up, only 35% of 2027 hyperscaler capex is expected to be funded by debt.
AI evidence remains encouraging. Model progress – the driving force behind AI stocks – continued at breakneck speed and emphasised the falling cost of intelligence rather than headline capability alone. OpenAI launched GPT-6 Astra on 3 September as its most powerful model for professional work, coding and reasoning. Google followed with Gemini 4 Argon, which has a one million token output limit, tokens being chunks of text, and targets coding, cybersecurity defence and knowledge work such as financial research and legal drafting. Anthropic’s Claude Opus 5.5 offered performance comparable to its recently released Claude Fable 5.1 on most tasks, while costing around 40% less to run than its predecessor.
OpenAI has also re-established itself at the frontier. The company is growing rapidly and should be approaching $70bn in annualised revenue by year end. OpenAI also generated more consumer revenue in Q3 2026 than in the whole of 2025, and ChatGPT has 1.2 billion weekly active users, up from 900 million in February.
In another sign of widening AI supply/demand imbalance, the price of compute continues to rise. CoreWeave* announced plans to raise hosting prices for Graphics Processing Units (GPU), the chips behind AI, by a further 10% over the coming months, on top of a +25% increase in July. Nebius* lifted selected NVIDIA GPU-hour rates by +16.9-21.0% on its 1 October on-demand price list, including last-generation H100s.
Recent comments from AI leaders – Amodei’s essay We Must Pace the Frontier, backed by Musk and Altman, alongside warnings about RSI and the risk of AI escaping human control – have become an increasingly important dimension of the AI narrative. The timing of this step-up in safety concerns may reflect genuine alarm, given how close some of the latest models appear to be to artificial general intelligence (AGI), meaning AI matching human ability, or the arrival of RSI. It may also reflect a desire by the labs to insulate themselves from blame and indemnify themselves in the event something goes wrong, an inevitable and growing risk with increasingly powerful models. The timing may also be linked to Anthropic’s rumoured IPO, given the challenges of filing for a public listing shortly after warning that its own product could pose an existential risk.
The safety debate has also highlighted the potential for greater future scrutiny of AI model progress – an upside risk we have flagged previously. Returning to our aviation parallel, the safety debate is probably best understood as ‘greater turbulence’ to the narrative the faster that AI models progress. While the range of outcomes could be wider, it does not change our conviction in the AI cycle. We remain ‘AI maximalists’, with the Trust relatively fully invested and positioned in a strongly pro-AI manner.
Put simply, we think near-term safety fears, broader macro concerns and unfavourable seasonality (September and pre-midterm election weakness) are keeping investors on the sidelines. We also expect seasonality to turn more supportive soon: since 1980, the S&P 500 has risen in Q4 roughly four years in five. It has averaged +6.1% after a negative Q3 and +3.7% after a positive one (up 82% and 83% of the time, respectively), according to Macquarie. Investor positioning is cleaner too: US hedge fund net leverage, a measure of borrowing to invest, has fallen to its lowest level since Liberation Day in April 2025 and sits in the second percentile of its five-year range.
Most importantly, the underlying performance of AI companies appears to be strengthening, while AI stocks are beginning to respond better to positive news. We expect upbeat comments from management, strong underlying growth and earnings revisions to provide further support during Q3 earnings season. US midterm elections and the long-awaited Anthropic IPO (if it happens in November) could also act as clearing events.
* not held
** Returns are for the period 31 August to 30 September 2026. All other returns are for the period 28 August to 30 September 2026
Ben Rogoff
Ben joined Polar Capital in May 2003. He is lead manager of Polar Capital Technology Trust plc and is a Fund Manager of the Polar Capital Global Technology Fund and Polar Capital Artificial Intelligence Fund.
Alastair Unwin
Alastair joined Polar Capital in June 2019 as a Fund Manager. Prior to joining Polar Capital, Alastair co-managed the Arbrook American Equities Fund. Between 2014 and 2018 he launched and then managed the Neptune Global Technology Fund and managed the Neptune US Opportunities Fund. Prior to Neptune, Alastair was a technology analyst at Herald Investment Management.
Historical Fact Sheets