Baron Funds, an investment management company, released its “Baron Technology Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. Market trends are often driven by sentiment in addition to fundamental elements, and the first quarter of 2025 was a clear example of this. January saw a strong performance for the Fund, driven by investor excitement around long-term growth trends in AI. Optimism was fueled by expectations of the new Trump administration’s policies to accelerate economic growth. However, by mid-February, fears of tariffs, a potential trade war, and geopolitical shifts reversed market gains, leading to significant volatility. In the first quarter, the fund fell 14.80% (Institutional Shares), underperforming an 11.64% decline for the MSCI ACWI Information Technology Index (the Benchmark) and a 4.27% decline for the S&P 500 index. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Technology Fund highlighted stocks such as GDS Holdings Limited (NASDAQ:GDS). GDS Holdings Limited (NASDAQ:GDS) is a data center operator in the People’s Republic of China. The one-month return of GDS Holdings Limited (NASDAQ:GDS) was 41.20%, and its shares gained 245.96% of their value over the last 52 weeks. On May 12, 2025, GDS Holdings Limited (NASDAQ:GDS) stock closed at $29.13 per share with a market capitalization of $5.504 billion.
Baron Technology Fund stated the following regarding GDS Holdings Limited (NASDAQ:GDS) in its Q1 2025 investor letter:
“GDS Holdings Limited (NASDAQ:GDS) is a leading data center operator in Tier 1 cities in China, with a growing presence across Asia through its now de-consolidated international business, DayOne. Shares performed well in February, driven by early signs of AI-related demand – highlighted by a major 152-megawatt deal with a leading cloud hyperscaler, Alibaba – and optimism around accelerating growth in its international business. Investor sentiment was further supported by stronger-than-expected capex from Alibaba, signaling a potential rebound in hyperscale demand, and by the monetization of select assets at premium valuations through a REIT transaction anchored by one of China’s largest life insurers. However, shares gave back gains in March as concerns resurfaced around potential elevated capital needs to serve a higher level of demand, as well as broader macro risks. Specifically, investors grew increasingly wary of renewed threats on further NVIDIA chip restrictions, overall tightening trade restrictions, and the uncertain trajectory of U.S. – China geopolitical relations. Despite near-term volatility, we remain constructive on the stock and fundamentals. GDS trades at an undemanding valuation, with clear catalysts ahead: accelerating revenue, progress toward deleveraging, and significant embedded value in its international operations. With durable secular tailwinds in cloud computing and AI infrastructure, and deep relationships with leading technology firms in China and the U.S., GDS remains well positioned for long-term value creation.”
A top level executive looking out of a skyscraper window, symbolizing the strategic decisions taken by the company.
GDS Holdings Limited (NASDAQ:GDS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 32 hedge fund portfolios held GDS Holdings Limited (NASDAQ:GDS) at the end of the fourth quarter which was 32 in the previous quarter. While we acknowledge the potential of GDS Holdings Limited (NASDAQ:GDS) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
In another article, we covered GDS Holdings Limited (NASDAQ:GDS) and shared the list of billionaire Seth Klarman’s stock picks with huge upside potential. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.
