Wasatch Global Investors, an asset management company, released its “Small Cap Growth Strategy” Q2 2026 investor letter. A copy of the letter can be downloaded here. Small-cap equities experienced strong gains in the second quarter, primarily driven by companies associated with artificial intelligence (AI). However, the leadership within this sector remains narrow. Unprofitable companies and those benefiting from rapid AI-driven demand performed well. As a result, the strategy underperformed compared to the Russell 2000® Growth Index, which gained 25.71%. The strategy’s disciplined focus on higher-quality businesses caused it to trail the benchmark, though several AI-related holdings contributed positively. The strategy prioritizes companies with sustainable growth potential, emphasizing the importance of quality investments. Overall, the strategy seeks to balance the transformative potential of AI with a commitment to long-term, quality investments. In addition, please check the Strategy’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, the Wasatch Small Cap Growth Strategy highlighted JFrog Ltd. (NASDAQ:FROG) as a notable contributor. Incorporated in 2008, JFrog Ltd. (NASDAQ:FROG) is a technology company that provides a software supply chain platform to enable secure software delivery and management across teams. On July 24, 2026, JFrog Ltd. (NASDAQ:FROG) closed at $80.16 per share. One-month return of JFrog Ltd. (NASDAQ:FROG) was -11.02%, and its shares gained 87.95% over the past 52 weeks. JFrog Ltd. (NASDAQ:FROG) has a market capitalization of $9.70 billion.
Wasatch Small Cap Growth Strategy stated the following regarding JFrog Ltd. (NASDAQ:FROG) in its Q2 2026 investor update:
“The top contributor to strategy performance was JFrog Ltd. (NASDAQ:FROG). The company provides a software supply chain platform, delivering tools like package repositories, continuous-delivery pipelines and security scanning that help companies manage, build and secure their software delivery lifecycle. Prior to the second quarter, the company was caught in a broader selloff of software stocks due to concerns about how AI might affect the industry. Our feeling at the time was that there are moats around JFrog’s business model that make it quite defensible. And we continue to feel that way—in fact, we believe JFrog will benefit from AI. As AI speeds up code generation, it also increases the number of dependencies, artifacts and releases moving through the development pipeline. We believe JFrog has a crucial role to play in governing these issues. This month, JFrog provided more evidence that its business remains strong as the company reported quarterly earnings and revenue that topped consensus estimates and as management raised earnings guidance for 2026. Management also noted that quarterly cloud revenue rose 50% year over year in the first quarter, driven by demand from customers leveraging AI coding agents.”
JFrog Ltd. (NASDAQ:FROG) 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 JFrog Ltd. (NASDAQ:FROG) at the end of the first quarter, compared to 50 in the previous quarter. JFrog Ltd. (NASDAQ:FROG) reported revenue of $154 million in Q1 2026, representing 26% year-over-year growth. While we acknowledge the risk and potential of JFrog Ltd. (NASDAQ:FROG) 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 JFrog Ltd. (NASDAQ:FROG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered JFrog Ltd. (NASDAQ:FROG) and shared a list of best stocks to buy from Glen Kacher’s Light Street Portfolio. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
