Baron Focused Growth Fund reported a decline in CoStar Group shares in its first-quarter 2026 investor letter. The fund attributed the drop to market fears that artificial intelligence poses an existential risk to information services. Baron characterized the decline as a reactive market dynamic occurring despite a lack of evidence of fundamental damage to the sector.
Heavy investment in the Homes.com marketplace currently impacts CoStar’s near-term cash flow. Baron expects this spending to moderate over the next several years, leading to improved financial results. The fund suggested the company use its cash reserves to repurchase shares at their current valuation.
CoStar Group's shares have declined 55.42% over the past 52 weeks.