NZS Capital Attributes Tyler Technologies (TYL) as AI‑Resilient Investment
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NZS Capital, LLC, an investment management firm, released its first‑quarter 2026 Growth Equity Strategy investor letter. The strategy posted a gross return of 8.75% and a net return of 8.91% in Q1 2026, underperforming the Morningstar Global Target Market Exposure Index, which returned 3.30%. The decline was driven primarily by weakness in growth stocks and a substantial exposure to software. While the materials sector boosted absolute returns and the semiconductor sub‑sector contributed strongly, the Information Technology, Financials, and Healthcare sectors acted as major detractors. The broader market downturn created new investment opportunities amid rising uncertainty and inflation expectations.
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In its first‑quarter 2026 investor letter, NZS Capital highlighted Tyler Technologies, Inc. (NYSE: TYL). Tyler Technologies, Inc. is a leading provider of integrated software and technology solutions for the U.S. public sector. On June 18, 2026, the stock closed at $276.88 per share, marking a one‑month decline of 11.61% and a 51.41% drop over the preceding 52 weeks. The company’s market capitalization was $11.39 billion.
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“New optionality positions in Tyler Technologies, Inc. (NYSE: TYL) and Sabre Corp. were added to the portfolio outside the healthcare sector. Tyler Technologies provides software solutions for public‑sector administration, including government administration, property appraisal, tax assessment, court management, and public safety. Its applications are mission‑critical to customers, delivering value far beyond the cost of the software itself, and typically represent only a small fraction of a customer’s operating budget. While municipal agencies are generally risk‑averse, the high exposure to these services makes it unlikely that an AI‑native startup could replace them without a proven track record. Although Tyler’s share price has fallen more than 40% in the past year, we expect AI agents will interact with, rather than replace, the existing high‑value software platforms. Consequently, the primary risk posed by AI to software is the elimination of labor rather than the displacement of established platforms. Given our view that labor displacement is a credible concern, we have allocated our software exposure primarily to vertical‑market providers, which we believe face lower seat‑risk.”
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<figure data-testid="article-figure-image" class="yf-750ceo"> <amp-img src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==" alt="Is Tyler Technologies, Inc. (TYL) the Best Big Data Stock to Buy According to Analysts?" height="430" width="768" class="yf-lglytj loader amp-wp-enforced-sizes i-amphtml-layout-intrinsic i-amphtml-layout-size-defined" layout="intrinsic" i-amphtml-layout="intrinsic"><i-amphtml-sizer slot="i-amphtml-svc" class="i-amphtml-sizer"><img alt="" aria-hidden="true" class="i-amphtml-intrinsic-sizer" role="presentation" src="data:image/svg+xml;base64,PHN2ZyBoZWlnaHQ9IjQzMCIgd2lkdGg9Ijc2OCIgeG1sbnM9Imh0dHA6Ly93d3cudzMub3JnLzIwMDAvc3ZnIiB2ZXJzaW9uPSIxLjEiLz4="></i-amphtml-sizer><noscript><img loading="lazy" decoding="async" src="data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==" alt="Is Tyler Technologies, Inc. (TYL) the Best Big Data Stock to Buy According to Analysts?" height="430" width="768"></noscript></amp-img><figcaption class="yf-750ceo">Is Tyler Technologies, Inc. (TYL) the Best Big Data Stock to Buy According to Analysts? </figcaption></figure>
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Tyler Technologies, Inc. (NYSE: TYL) does not appear on our list of the 40 most popular hedge fund stocks for 2026. However, our data shows that 42 hedge fund portfolios held Tyler Technologies at the end of the first quarter, an increase from 40 in the prior quarter. While the company remains a viable investment, we consider other AI‑focused stocks to offer higher upside with lower downside risk.
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Previously we covered Tyler Technologies, Inc. (NYSE: TYL) and identified stocks with potential to surge in 2026. In the first quarter of 2026, the TCW Concentrated Large Cap Growth Fund divested its position in Tyler Technologies due to concerns about AI disruption.
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<p><a href="https://finance.yahoo.com/markets/stocks/articles/why-nzs-capital-sees-tyler-134946964.html">Source link </a></p>
