Here’s How Palantir Technologies (PLTR) Impacted Baron Asset Fund’s Performance

Baron Funds, an investment management company, released its “Baron Asset Fund” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. U.S. stocks rose amid volatility caused by tariff policies and Middle East tensions. Early April risk-off sentiment was fueled by Trump’s “Liberation Day” tariffs, seen as more severe than expected. U.S. equities rose after April 8, driven by favorable trade news, strong earnings, dovish Fed signals, and AI momentum, reaching record highs by quarter’s end. During the second quarter, the fund was up 7.85% (Institutional Shares) compared to an 18.20% gain for the Russell Midcap Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its second-quarter 2025 investor letter, Baron Asset Fund highlighted stocks such as Palantir Technologies Inc. (NASDAQ:PLTR). Palantir Technologies Inc. (NASDAQ:PLTR) builds and deploys software platforms for the intelligence community.  The one-month return of Palantir Technologies Inc. (NASDAQ:PLTR) was 17.86%, and its shares gained 540.06% of their value over the last 52 weeks. On July 31, 2025, Palantir Technologies Inc. (NASDAQ:PLTR) stock closed at $158.35 per share, with a market capitalization of $373.692 billion.

Baron Asset Fund stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its second quarter 2025 investor letter:

“A second key contributor to the Fund’s underperformance stemmed from not owning Palantir Technologies Inc. (NASDAQ:PLTR), a software company focused on big data analytics, which rose 55% during the quarter. Palantir’s impact on relative performance (-239 basis points) was over six times higher than we have seen historically for any single security unique to the Index. The company did not meet our investment criteria. At quarter end, Palantir was valued at approximately 225 times its expected 2025 earnings with a market cap exceeding $300 billion.

After multiple quarters of strong gains, Palantir’s weight exceeded 8% in the Index prior to its removal on June 27 following the conclusion of the latest Index rebalance. No security has approached Palantir’s Index weight over the last 25-plus years – the highest previous weight for a security was 4.2%, achieved by VIAVI Solutions (formerly JDS Uniphase) in early 2000 amidst the dotcom bubble. The company’s share price has since fallen approximately 98%…” (Click here to read the full text)

Palantir Technologies Inc. (PLTR): I Don't Own It, But I Recommend It, Says Jim Cramer

A software engineer manipulating a vast network of code on virtual monitors.

Palantir Technologies Inc. (NASDAQ:PLTR) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 77 hedge fund portfolios held Palantir Technologies Inc. (NASDAQ:PLTR) at the end of the first quarter, which was 64 in the previous quarter. Palantir Technologies Inc.’s (NASDAQ:PLTR) first quarter revenue grew 39% year-over-year and 7% sequentially to $884 million. While we acknowledge the risk and potential of Palantir Technologies Inc. (NASDAQ:PLTR) 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 PALANTIR TECHNOLOGIES INC. (NASDAQ:PLTR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Palantir Technologies Inc. (NASDAQ:PLTR) and shared the list of unstoppable artificial intelligence (AI) stocks to buy. Palantir Technologies Inc. (NASDAQ: PLTR) positively impacted the performance of the Alger Mid Cap Focus Fund in Q2 2025. In addition, please check out our hedge fund investor letters Q2 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.