Wedgewood Partners, an investment management company, released its first-quarter 2026 investor letter. A copy of the letter can be downloaded here. Wedgewood Composite delivered a net return of 9.4% in the second quarter compared to 15.2% for the Standard & Poor’s 500 Index, 16.7% for the Russell 1000 Growth Index, and 13.9% for the Russell 1000 Value Index. The firm is optimistic about the long-term growth of hyperscalers and has increased its investments in this sector, citing their significant earnings potential and crucial role in AI adoption. Capital has also been redirected towards technology hardware stocks, especially semiconductors, which now make up a larger share of the S&P 500 Index. Semiconductor stocks have benefited from hyperscalers’ spending, but the firm expresses caution about cyclical risk and volatility. However, the momentum-driven market negatively affected the Wedgewood fund’s high-quality stocks, leading to a 25% return over the past 15 months, significantly underperforming the 90% gain of the S&P 500 Momentum ETF (SPMO). In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its Q2 2026 investor letter, Wedgewood Partners highlighted Meta Platforms, Inc. (NASDAQ:META). Meta Platforms, Inc. (NASDAQ:META), the parent company of dominant social media platforms, is a multinational technology company that develops products to connect people. On July 16, 2026, Meta Platforms, Inc. (NASDAQ:META) closed at $664.54 per share, reflecting a market capitalization of $1.68 trillion. Meta Platforms, Inc. (NASDAQ:META) posted a one-month return of 10.12%, while its shares lost 9.75% over the past 52 weeks.
Wedgewood Partners stated the following regarding Meta Platforms, Inc. (NASDAQ:META) in its Q2 2026 investor update:
“Although Microsoft, Amazon, and Meta Platforms, Inc. (NASDAQ:META) have different business models and were not necessarily top drivers of performance during the quarter, we view their investment opportunity set, from both a compounding and returns perspective and a component-cost hedge perspective, as similar to Alphabet’s.
Last but not least in the capex spending bonanza is Meta Platforms. While they have certainly received its share of criticism for recently increasing its 2026 capex plans by around $10 billion, citing DRAM inflation, we’d like to point out that the warrants Meta holds on Advanced Micro Devices (AMD), related to a strategic sourcing arrangement with AMD struck in late February (~5 months ago), are now worth close to $90 billion, by our estimate (a swift nine times more than the incremental DRAM inflation for 2026). Meta’s sourcing advantage from its massive scale gives it the bargaining power to keep commodity cost inflation in check, which investors are so worried about. Although this investment in AMD does not technically qualify as a GAAP-based accounting hedge, it is certainly an economic hedge that we believe investors have completely overlooked, even though it should serve to blunt the effects of DRAM inflation and bolster returns for years to come.”
Meta Platforms, Inc. (NASDAQ:META) holds 5th position on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 262 hedge fund portfolios held Meta Platforms, Inc. (NASDAQ:META) at the end of the first quarter, compared to 256 in the previous quarter. While we acknowledge the risk and potential of Meta Platforms, Inc. (NASDAQ:META) 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 Meta Platforms, Inc. (NASDAQ:META) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Meta Platforms, Inc. (NASDAQ:META) and shared Magellan Global Opportunities Fund’s views on the company. 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.
