Fred Alger Management, an investment management company, released its “Alger Weatherbie Specialized Growth Fund” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2026, the Class A shares of the Alger Weatherbie Specialized Growth Fund underperformed the Russell 2500 Growth Index. The Information Technology and Consumer Staples sectors contributed to the relative performance, while Health Care and Financials detracted. US equities experienced volatility in the first quarter of 2026, with the S&P 500 Index falling 4.33%. The AI disruption and the U.S.-Iran conflict altered the economic landscape during this period. The Fund focuses on identifying companies that are leveraging AI technology for task automation and workflow management. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Alger Weatherbie Specialized Growth Fund highlighted DigitalOcean Holdings, Inc. (NYSE:DOCN). DigitalOcean Holdings, Inc. (NYSE:DOCN) is an agentic inference cloud platform enabling AI and Digital Native Enterprises to build, run, and scale intelligent applications. On May 22, 2026, DigitalOcean Holdings, Inc. (NYSE:DOCN) closed at $158.46 per share. One-month return of DigitalOcean Holdings, Inc. (NYSE:DOCN) was 60.14%, and its shares gained 466.13% over the past 52 weeks. DigitalOcean Holdings, Inc. (NYSE:DOCN) has a market capitalization of $16.54 billion.
Alger Weatherbie Specialized Growth Fund stated the following regarding DigitalOcean Holdings, Inc. (NYSE:DOCN) in its Q1 2026 investor letter:
“DigitalOcean Holdings, Inc. (NYSE:DOCN) is a cloud infrastructure provider that offers scalable computing, storage, and networking solutions tailored to startups, small and mid-sized businesses, and individual developers. The company has differentiated itself by delivering a simplified, developer-friendly platform that lowers the barrier to cloud adoption for customers who may be underserved by the larger hyperscale providers. During the quarter, shares contributed positively to performance after the company delivered a strong fiscal fourth-quarter report that exceeded expectations on both revenue and profitability. Net new annual recurring revenue reached a record level, net revenue retention accelerated, and the company’s largest customers emerged as an increasingly meaningful growth driver — reinforcing a business that we believe is steadily moving up the quality curve. Additionally, management outlined an encouraging multi-year growth framework.”
DigitalOcean Holdings, Inc. (NYSE:DOCN) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 31 hedge fund portfolios held DigitalOcean Holdings, Inc. (NYSE:DOCN) at the end of the fourth quarter, up from 30 in the previous quarter. In Q1 2026, DigitalOcean Holdings, Inc. (NYSE:DOCN) reported revenue of $258 million, up 22% year-over-year. While we acknowledge the risk and potential of DigitalOcean Holdings, Inc. (NYSE:DOCN) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DigitalOcean Holdings, Inc. (NYSE:DOCN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered DigitalOcean Holdings, Inc. (NYSE:DOCN) and shared the list of best performing NYSE stocks so far in 2026. In addition, please check out our hedge fund investor letters Q1 2026 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.
