Fred Alger Management, an investment management company, released its “Alger Small Cap Focus 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 level surface. The enthusiasm for AI investment is facing growing doubts due to bottlenecks, financing challenges, and uncertainty over its ability to generate returns. The firm continues to observe secular trends that present attractive investment opportunities for small-cap stocks. In Q4 2025, Class A shares of the Fund outperformed the Russell 2000 Growth Index. The Utilities and Financials sectors contributed to the relative performance of the Fund in the quarter, while the Consumer Discretionary and Information Technology 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 Small Cap Focus Fund highlighted stocks such as Nebius Group N.V. (NASDAQ:NBIS). Headquartered in Amsterdam, the Netherlands, Nebius Group N.V. (NASDAQ:NBIS) is a technology company. The one-month return of Nebius Group N.V. (NASDAQ:NBIS) was 16.63%, and its shares gained 201.69% of their value over the last 52 weeks. On January 16, 2026, Nebius Group N.V. (NASDAQ:NBIS) stock closed at $108.73 per share, with a market capitalization of $27.379 billion.
Alger Small Cap Focus Fund stated the following regarding Nebius Group N.V. (NASDAQ:NBIS) in its fourth quarter 2025 investor letter:
“Nebius Group N.V. (NASDAQ:NBIS) is a provider of AI-focused cloud infrastructure, operating GPU compute capacity across Europe and expanding in the U.S. We view the company as a differentiated “neocloud” beneficiary of accelerating AI adoption, as demand for high-quality GPU compute continues to outstrip available supply of chips, power, and data center capacity. Nebius already operates a first-party data center in Finland and has deployed GPU capacity in Paris, while adding U.S. capacity through a Kansas City, Missouri deployment and a new data center build-out in New Jersey. During the quarter, shares detracted amid a broader selloff in AI infrastructure-related equities as investors grew more concerned about the “circularity” of AI ecosystem financing and the durability of AI infrastructure spending. Despite near-term volatility, Nebius continues to sign large, long-term agreements with tier-one customers, including multi-year AI infrastructure contracts with major cloud service providers, improving revenue visibility as new capacity comes online.”
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Nebius Group N.V. (NASDAQ:NBIS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 65 hedge fund portfolios held Nebius Group N.V. (NASDAQ:NBIS) at the end of the third quarter, up from 45 in the previous quarter. While we acknowledge the risk and potential of Nebius Group N.V. (NASDAQ:NBIS) 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 Nebius Group N.V. (NASDAQ:NBIS) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Nebius Group N.V. (NASDAQ:NBIS) and shared the list of AI stocks making waves on Wall Street. 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.
