Here’s Why Grid Dynamics (GDYN) Detracted in Q2

Renaissance Investment Management, an investment management company, released its Q2 2025 “Small Cap Growth Strategy” investor letter. A copy of the letter can be downloaded here. The stock market was highly volatile in the second quarter. The unexpected tariff announcement panicked the market, causing stock prices to drop 7% from April 2 to April 7. The market experienced a dramatic recovery following the Trump Administration’s backing away from some of its more extreme tariff proposals. Sound corporate earnings levels and solid economic data suggest positive economic growth ahead. The Russell 2000 Growth Index rallied in the second quarter; the strategy also rallied and outperformed the index. For more information on the fund’s best picks in 2025, please check its top five holdings.

In its second-quarter 2025 investor letter, Renaissance Investment Small Cap Growth Strategy highlighted stocks such as Grid Dynamics Holdings, Inc. (NASDAQ:GDYN). Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) is a technology company that provides technology consulting, platform and product engineering, and analytics services. The one-month return of Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) was -5.28%, and its shares lost 44.63% of their value over the last 52 weeks. On September 19, 2025, Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) stock closed at $7.53 per share, with a market capitalization of $637.565 million.

Renaissance Investment Small Cap Growth Strategy stated the following regarding Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) in its second quarter 2025 investor letter:

“Detracting from performance was Grid Dynamics Holdings, Inc. (NASDAQ:GDYN), a technology consulting and ser vices provider. The company reported in-line results for the first quarter and reiterated its full year revenue guidance, while acknowledging that the macroeconomic outlook had grown more uncertain. Additionally, the company is ramping up its investments in AI which will pressure margins in the short-term. We believe that the company is well positioned to guide its clients through their digital transformations and adoption of AI technologies.”

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Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 12 hedge fund portfolios held Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) at the end of the second quarter, down from 20 in the previous quarter. Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) reported revenue of $101.1 million in the second quarter of 2025, representing an increase of 21.7% compared to Q2 2024. While we acknowledge the risk and potential of Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) 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 Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Grid Dynamics Holdings, Inc. (NASDAQ:GDYN) and shared the list of small cap stocks with high upside potential. 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.