Fred Alger Management, an investment management company, released its “Alger Spectra Fund” fourth-quarter 2025 investor letter. A copy of the letter can be downloaded here. The US equity market ended the fourth quarter on a strong note, with the S&P surging 2.7%, maintaining its steady upward momentum. Investors’ optimism was supported by better-than-expected corporate earnings, the US Federal Reserve’s further interest rate easing stance, and a resilient macroeconomic backdrop. Improving clarity on trade policy provided additional support. Meanwhile, the quarter was characterized by increasing divergence below the Index’s surface. While AI remains the market’s biggest tailwind, it is being scrutinized for funding, limitations, and potential to return investment. The firm continues to observe secular trends that present attractive investment opportunities. Furthermore, U.S. business spending appears to be rising due to rising demand for AI infrastructure and tax incentives from the One Big Beautiful Bill. Against this backdrop, Class A shares of the Fund underperformed the Russell 3000 Growth Index in Q4 2025. The Information Technology and Utilities contributed to the relative performance of the Fund in the quarter, while the Health Care and Communication Services sectors detracted from performance. In addition, please check the Fund’s top five holdings to know its best picks in 2025.
In its fourth-quarter 2025 investor letter, Alger Spectra Fund highlighted stocks such as Microsoft Corporation (NASDAQ:MSFT). Microsoft Corporation (NASDAQ:MSFT) is a multinational software company that develops and supports software, services, devices, and solutions. The one-month return of Microsoft Corporation (NASDAQ:MSFT) was -5.17%, and its shares gained 7.19% of their value over the last 52 weeks. On January 13, 2026, Microsoft Corporation (NASDAQ:MSFT) stock closed at $459.86 per share, with a market capitalization of $3.418 trillion.
Alger Spectra Fund stated the following regarding Microsoft Corporation (NASDAQ:MSFT) in its fourth quarter 2025 investor letter:
“Microsoft Corporation (NASDAQ:MSFT) is a beneficiary of corporate America’s transformative digitization. The company operates through three segments: Productivity and Business Processes (Office365, LinkedIn, and Dynamics), Intelligent Cloud (Server Products and Cloud Services, Azure, and Enterprise Services), and More Personal Computing (Windows, Devices, Gaming, and Search). Shares detracted during the quarter after the company reported Azure cloud growth and forward guidance fell short of elevated investor expectations, in part because revenue recognition lagged strong demand and the company remained capacity constrained. While Azure still grew 39% year-over-year (YoY) and management guided to 37% growth in the current quarter, we believe investors focused on the near-term mismatch between demand and available capacity. Importantly, demand signals improved: commercial bookings surged (reported up approximately 111% YoY) and remaining performance obligations rose 51% compared to 37% from the prior quarter, extending revenue visibility. To address the backlog and support AI/cloud workloads, management signaled a step-up in investment, including roughly $30B of capital expenditures (CapEx) in the current quarter and an expectation that fiscal-2026 CapEx growth will be higher than fiscal-2025.”
Microsoft Corporation (NASDAQ:MSFT) is in the second position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 312 hedge fund portfolios held Microsoft Corporation (NASDAQ:MSFT) at the end of the third quarter compared to 294 in the previous quarter. In the first quarter of fiscal year 2026, Microsoft Corporation (NASDAQ:MSFT) reported revenue of $77.7 billion, representing an 18% and 17% when adjusted for constant currency. While we acknowledge the risk and potential of Microsoft Corporation (NASDAQ:MSFT) 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 Microsoft Corporation (NASDAQ:MSFT) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Microsoft Corporation (NASDAQ:MSFT) and shared the list of best stocks to buy in 2026 for beginners. In addition, please check out our hedge fund investor letters Q4 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.
