Burke Wealth Management credits enterprise AI reassessment for Q3 2026 outperformance

Burke Wealth Management, an investment management company, reported that its Focused Growth Strategy composite returned 10.8% net of fees for the third quarter of 2026, substantially outperforming the S&P 500 Total Return Index, which gained 2.3% over the same period. The firm attributed the quarter's strong results to a sharp recovery in enterprise software and solid corporate earnings, occurring amid continued market volatility. Its year-to-date return reached 20.0%, compared with a 12.7% gain for the benchmark index.

In its Q3 2026 investor letter, Burke stated that part of the fund's strength came from investors reassessing the long-term value of enterprise software platforms. The firm described these platforms as essential AI "harnesses" that can securely connect AI models with proprietary business data by providing permissions, security, and context for enterprise applications. However, the letter cautioned that AI agents could challenge traditional software business models and seat-based pricing structures.

The fund previously highlighted ServiceNow, Inc. (NYSE: NOW) in its second-quarter 2026 investor letter. ServiceNow develops enterprise workflow software that helps organizations automate IT services, employee processes, and customer operations. ServiceNow shares were down 30% during the first quarter of 2026. By October 23, 2026, ServiceNow stock closed at approximately $158.96 per share, with a market capitalization of about $161.07 billion. The stock's one-month return was reported at 18.06%, with shares trading between $81.24 and $192.97 over the last 52 weeks.

Hedge fund interest in ServiceNow has increased slightly; 115 hedge fund portfolios held the stock at the end of the second quarter, up from 108 in the previous quarter. Despite acknowledging the risk and potential of ServiceNow as an investment, Burke noted that its conviction lies in the belief that some other AI stocks hold greater promise for delivering higher returns within a shorter time frame.

Looking ahead to the remainder of 2026, Burke remains optimistic, citing strong corporate earnings growth and a transition from AI infrastructure investment toward practical applications. The firm expects these applications may improve productivity and consumer experiences.