The L2 Micro Strategy rose 8.46% in Q1 2026 while the benchmark Russell Micro-Cap ETF rose 1.36%¹.
January 1 seems like a long time ago, which seems appropriate, given that a decade’s worth of disruptions was squeezed into this quarter. AI simultaneously created fears about its own economic viability and that of a wide variety of industries that may be harmed by it. Concerns that hyper-scalers were spending too much on AI development for an uncertain payoff impacted members of the Mag7 (which impacted the S&P500), while the threat of AI impacted industries ranging from real estate to insurance to logistics brokers. For example, as recently as February 12 (which is old news now), an obscure $5mm market cap manufacturer of karaoke/pinball hardware, Algorythhm Holdings, triggered intra-day declines of up to 24% for logistics brokers (C.H. Robinson, Landstar Systems, RXO, etc) with its announcement of an AI platform solution that it suggested would create 300-400% productivity gains for transportation equipment, while displacing traditional freight brokerage. However, the most prominent victim of AI was software. The “SAASpocalypse” came for companies that had until very recently been considered among the highest quality, most durable, and thus most expensively priced businesses. As the narrative began to change from greed to fear, software focused ETF’s, such as the iShares Expanded Tech-Software Sector ETF (symbol IGV), declined nearly 25% in Q1. With investors questioning previous assumptions about SAAS company terminal values (or even viability in certain circumstances), traders are not waiting for clarity to sell these stocks.
L2 Micro Cap Strategy – March Q1 2026
Table of contents
When
April 2, 2026
Who
Matthew Malgari
Dr. Sanjeev Bhojraj
Nathan Przybylo
Q1 2026 STRATEGY PERFORMANCE:
The L2 Micro Strategy rose 8.46% in Q1 2026 while the benchmark Russell Micro-Cap ETF rose 1.36%¹.
MARKET COMMENTARY
January 1 seems like a long time ago, which seems appropriate, given that a decade’s worth of disruptions was squeezed into this quarter. AI simultaneously created fears about its own economic viability and that of a wide variety of industries that may be harmed by it. Concerns that hyper-scalers were spending too much on AI development for an uncertain payoff impacted members of the Mag7 (which impacted the S&P500), while the threat of AI impacted industries ranging from real estate to insurance to logistics brokers. For example, as recently as February 12 (which is old news now), an obscure $5mm market cap manufacturer of karaoke/pinball hardware, Algorythhm Holdings, triggered intra-day declines of up to 24% for logistics brokers (C.H. Robinson, Landstar Systems, RXO, etc) with its announcement of an AI platform solution that it suggested would create 300-400% productivity gains for transportation equipment, while displacing traditional freight brokerage. However, the most prominent victim of AI was software. The “SAASpocalypse” came for companies that had until very recently been considered among the highest quality, most durable, and thus most expensively priced businesses. As the narrative began to change from greed to fear, software focused ETF’s, such as the iShares Expanded Tech-Software Sector ETF (symbol IGV), declined nearly 25% in Q1. With investors questioning previous assumptions about SAAS company terminal values (or even viability in certain circumstances), traders are not waiting for clarity to sell these stocks.