July 2, 2025

NOTE: A couple of things. First, we’re sending this update a day early, as the Friday holiday is pushing up our publishing schedule by a day. And second, I’m actually out of town on vacation, so while we’re sending this update this morning, we’ll follow up with a bulletin tomorrow morning if need be. If we’re not in touch, have a great holiday weekend!

WHAT TO DO NOW: Remain bullish but take things on a stock-by-stock basis. The overall market is in fine shape, but Tuesday saw a lot of selling in growth stocks as investors rotated into stodgy areas (Dow Industrials and defensive stocks). For now, the action is broadly acceptable, but the next few days will be key. Today, we are making some small changes: We’ll place Axon (AXON) and Rubrik (RBRK) on Hold and we’re going to sell one-third of our remaining position of Palantir (PLTR), leaving us with around 23% in cash.

Current Market Environment

The market as a whole continues to act well—our market timing indicators remain broadly positive, and from a big-picture perspective, things like the bullish long-term trend, tame sentiment and the many signs of unusual strength in May/early June tell us that the odds strongly favor the market being nicely higher in the months down the road.

That said, Tuesday was an eyebrow raiser, with a big rotation out of growth stocks and into things like the Dow Industrials and even defensive sectors like consumer staples. For the most part, the selling in growth comes out of strength, which is acceptable, though some names that had been a bit weaker the past three or four weeks are now testing key intermediate-term support.

That’s not a death knell, but it is an alert of sorts—if this rotation into more beaten-down, lagging areas is the start of something that lasts a while, it could usher in a “real” growth stock pullback of sorts where some names crack and others pull in to intermediate-term support over the next few weeks.

That said, this could also be a one- or two-day thing (possibly egged on by some repositioning after quarter-end), so we’re not making any great proclamations—as always, we’ll take it as it comes. Tonight, we do have some changes to reflect what we’ve seen, not just yesterday but the past couple of weeks.

In the Model Portfolio, we’re going to move Axon (AXON) and our half position of Rubrik (RBRK) to Hold, while selling one-third of our remaining position in Palantir (PLTR). That will leave us with around 23% in cash. If growth stabilizes here we’ll likely do some more buying in the days ahead, though if not, we could pare back further.

Model Portfolio

Axon Enterprise (AXON) was hit extremely hard yesterday, falling back to its 25-day line and back into its recent range. To be fair, it was mostly par for the course across the growth complex and even a drop to the 50-day line (near 720 and rising) wouldn’t be intermediate-term abnormal. Still, the failed mini-breakout smells a bit abnormal to us—we’ll move to hold and see how things go from here. HOLD

GE Aerospace (GE) has done a great job by making it all the way back to its highs last week and on Monday before pulling in on Tuesday. Obviously, if the stock cascades lower from here, there could be issues (the 50-day line is near 230; would look like a double top), but at this point, the last few weeks look like a normal retreat after a powerful, persistent liftoff following the market bottom. Hold on if you’re in, and if not, we’re OK with grabbing some shares around here or minor dips. BUY

GE Vernova (GEV) moved nicely out of its tight consolidation of late to new highs late last week and on Monday—but then was hit hard on Tuesday, falling right back into its range as investors sold all things growth. Could this be the start of a big downmove? It’s always possible if growth falls out of favor for a few weeks, but right now (a) the stock is still north of its 25-day line (near 490), and (b) is still well above its lows from the past two to three weeks. Bottom line: We started a small position last week, and we’re OK giving our half-sized stake a chance even if it dips toward its 50-day line (now at 445 and rising quickly; the low of the recent rest period was 458). If you didn’t buy, we’re OK picking up a few shares here as we still view GEV as a liquid leader in the power/electrification trends, but we have a mental stop in the 430 to 440 area in case the selling gets out of hand. BUY A HALF

Palantir (PLTR) saw a little selling near round-number resistance at 150 last week before some heavy selling appeared on Friday. Supposedly, that could have occurred due to the huge rebalancing of the Russell indexes … but after a modest bounce Monday, shares dipped further yesterday. Overall, the action isn’t terribly abnormal (the 50-day line is near 125), and we still think Palantir is relatively rare merchandise fundamentally. However, we’re also mindful that shares are not in the early stages of their advance (big run since last August), which can lead to some potholes and selling (shares haven’t made any net progress since early May). We’re not panicking, but we are going to lighten up—we’ll sell one-third of our remaining stake and hold the rest. SELL ONE THIRD, HOLD THE REST

ProShares Ultra S&P 500 Fund (SSO) continues to act well, as the S&P 500 has pushed to new highs and, yesterday, took the selling in growth in stride. After the recent move, a shake-the-tree event is always possible, but with the trends up and the big-picture outlook bullish, we’re staying on Buy. BUY

Rubrik (RBRK) has a great story and growth profile, but it’s right on the edge here in terms of breaking down—the post-earnings selling was normal, and even the convertible offering-induced dip was acceptable, but then RBRK wasn’t able to bounce much and, on Tuesday, sunk to new correction lows, testing its 50-day line. Stepping back, we still believe that it would be unusual for a new-ish stock (IPO last April, so it’s not over-owned) with a great story and such a persistent advance coming out of a major market downturn to simply up and die; the recent dip, while tedious, isn’t awful compared to the 50 to 100 advance from the market lows to the recent high. But as we’ve written before, a drop to or below 80 (giving up the entire breakout move) would be iffy. Ideally, yesterday’s shake to the 50-day line brings in the buyers, but we’re switching to Hold here and keeping our half position on a relatively tight leash. HOLD

Snowflake (SNOW) was hit hard along with other growth titles on Tuesday, but this comes after the recent move to new highs on good volume, with shares still above their 25-day (at 212) and especially the 50-day (191) line. Further near-term weakness could come after the strong April-June run, but we still see perception on the upswing as Snowflake should see a pickup in orders as AI becomes adopted by big clients. Hold on if you own some, and if you don’t, we’re OK entering here or on a bit more of a dip. BUY

Take-Two Interactive (TTWO) is still an “on the one hand, on the other hand” type of situation: Shares are within a couple of points from new high ground and above key moving averages, but there’s been little upside power of late and the relative performance line is still well shy of prior highs. We’re happy to give our half-sized stake a chance given the huge earnings power coming a down the road (estimates for next fiscal year are north of $9 per share and likely conservative even at that; mid-June saw orders for the new release Borderlands 4 begin) and we like the fact that TTWO has held up despite many opportunities to give up the ghost—but we’re not pushing the envelope here, either. Sit tight with your small position. HOLD

A week ago, Toast (TOST) looked like a potential failed breakout, prompting us to place shares on Hold—but, very encouragingly, it held its 50-day line and roared right back to its prior highs on good volume before yesterday’s wobble. Given that TOST is still within its range that began in mid-May, we’ll stay on Hold here, but the game plan is simple: A decisive move above 45 to 46 would have us filling out our position, while a dip much below last week’s bottom (near 40) would make the last few weeks look like a top. We’re optimistic the next big move is up—business here is great, and bottom-line metrics are picking up steam—but let’s wait for the stock to declare itself. Hold your half-sized stake. HOLD

Uber (UBER) was another name that tested support at the 50-day line a couple of weeks ago before popping right back to its highs on very good volume, bolstered by Waymo’s move into Atlanta in partnership with the company—prompting us to average up last week (buying another 3% position). There has been some hesitation the past few days, but the action looks normal, and the rising 50-day line (now above 85 and advancing steadily) should offer support if growth stocks take on more water. BUY

Watch List

Amer Sports (AS): Like many growth names, AS’s move to new highs last week has been rejected—but also like many stocks, shares are still in good shape, trading north of their 25-day line. As we wrote last week, the business itself isn’t as sexy as others, but the growth here (earnings up 58% this year and 30% next) is excellent.

CoreWeave (CRWV): CRWV is now seven days into a pullback as the 25-day line (near 150 today) catches up. Despite the wobbles in growth stocks, we’re intrigued, as CRWV seems like a fresh super-liquid leader at the heart of the AI boom. We’re watching for now but could dip a toe in on further weakness or some tightness.

Dutch Bros (BROS): BROS is admittedly lagging the advance, as the group hasn’t been strong—but we think it may be playing possum a bit as it etches out its launching pad. No harm in watching it for signs of life.

Guardant Health (GH): GH has nosed above round-number resistance near 50 … but just by a bit, with shares still in the meat of some resistance. The weekly chart looks great, and if growth stocks hang in there, we could take a swing at it if it truly breaks out.

Life360 (LIF): LIF is living up to its billing with some wild day-to-day volatility, but it’s still trying to come out of a calm five-week shelf as the moving averages (50-day line is nearly 56 and rising) catch up. We like the story and could take a swing at it if growth stocks settle down.

Oracle (ORCL): ORCL clearly isn’t our usual type of pick, but the growth profile here looks to have changed dramatically, and this week’s upping of its long-term view (including a new deal that will pay it $30 billion annually starting in 2028—more than half of the last 12 months of revenue!) backs that up. We think ORCL could be a magnet for institutional money in the quarters to come.

That’s it for now. You’ll receive your next issue of Cabot Growth Investor next Thursday, July 10. As always, we’ll send a Special Bulletin should we have any changes before then.

Model Portfolio

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