Fred Alger Management, an investment management company, released its “Alger Weatherbie Specialized Growth Fund” second-quarter 2026 investor letter. A copy of the letter can be downloaded here. U.S. equities experienced a strong recovery in Q2 2026, with the S&P 500 Index gaining 15.2%, marking its best quarter since 2020. A ceasefire between the United States and Iran and accelerated investment in artificial intelligence (AI) regained market optimism in the quarter, leading the Information Technology and Industrials sectors upward, and Energy and Utilities lagged because of falling oil and gas prices. In June, the Federal Reserve maintained steady interest rates, but the meeting had a hawkish tone. As AI transitions into its agentic phase, opportunities are identified within sectors adopting the technology. The Weatherbie Specialized Growth Fund’s Class A shares outperformed the Russell 2500 Growth Index in the quarter. The Industrials and Information Technology sectors contributed to the relative performance, whereas Financials and Consumer Discretionary sectors detracted. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Alger Weatherbie Specialized Growth Fund highlighted DigitalOcean Holdings, Inc. (NYSE:DOCN). DigitalOcean Holdings, Inc. (NYSE:DOCN) is a leading cloud infrastructure company that helps AI and Digital Native Enterprises build, run, and scale intelligent applications for growing technology companies. On July 20, 2026, DigitalOcean Holdings, Inc. (NYSE:DOCN) closed at $119.09 per share, reflecting a market capitalization of $13.92 billion. DigitalOcean Holdings, Inc. (NYSE:DOCN) posted a one-month return of -24.23%, while its shares gained 313.79% over the past 52 weeks.
Alger Weatherbie Specialized Growth Fund stated the following regarding DigitalOcean Holdings, Inc. (NYSE:DOCN) in its Q2 2026 investor update:
“DigitalOcean Holdings, Inc. (NYSE:DOCN) is a cloud infrastructure provider that offers computing, storage, networking, and related services to developers, startups, and businesses across multiple geographies. The company has differentiated itself through a simplified, developer-friendly platform and is increasingly positioning itself as a cloud provider purpose-built for inference and agentic AI workloads. We believe DigitalOcean is benefiting from the early stages of this demand cycle, as customers look for cloud infrastructure that is easier to use and better aligned with emerging AI applications. During the quarter, shares contributed positively to performance after the company delivered strong operating results and raised its revenue outlook for both 2026 and 2027. Investor sentiment was further supported by accelerating momentum in AI-related customer demand and the view that stronger fundamentals, rather than multiple expansion alone, helped drive the company’s strong share price appreciation.”
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, 47 hedge fund portfolios held DigitalOcean Holdings, Inc. (NYSE:DOCN) at the end of the first quarter, up from 31 in the previous quarter. In Q1 2026, DigitalOcean Holdings, Inc. (NYSE:DOCN) delivered 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 agentic AI stocks to buy. In addition, please check out our hedge fund investor letters Q2 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.
