Jensen Investment Management, an asset management company based in the US, released its fourth-quarter investor letter for “Jensen Quality Growth Equity Strategy”. A copy of the letter can be downloaded here. The S&P 500 Index continued its rally in Q4 2025, which started in 2022. The Jensen Quality Growth Equity Composite underperformed the Index in the fourth quarter. The Strategy returned -0.55% (net) in Q4 2025 Vs 2.66% for the Index. At the sector level, the portfolio’s relative underperformance was largely contributed to by the Industrials sector. The outperformance of low-quality stocks added to the relative underperformance from a quality perspective. Market concentration in mega-cap technology characterizes the current investment theme. The portfolio is well-positioned to capitalize on growth from AI and digital transformation, while maintaining its durability. The firm prioritizes holding companies that can generate economic value over multiple cycles, focusing on quality, cash generation, and durability for long-term shareholder returns. Please review the Portfolio’s top five holdings to gain insights into their key selections for 2025.
In its fourth-quarter 2025 investor letter, Jensen Quality Growth Equity Strategy highlighted stocks like Alphabet Inc. (NASDAQ:GOOGL). Alphabet Inc. (NASDAQ:GOOGL), the parent company of Google, offers various platforms and services, including online search and advertising, cloud solutions, and artificial intelligence, and is a significant contributor to the Strategy’s performance in the quarter. On March 05, 2026, Alphabet Inc. (NASDAQ:GOOGL) stock closed at $300.88 per share with a market capitalization of $3.64 trillion. One-month return of Alphabet Inc. (NASDAQ:GOOGL) was -8.49%, and its shares gained 73.06% of their value over the last 52 weeks.
Jensen Quality Growth Equity Strategy stated the following regarding Alphabet Inc. (NASDAQ:GOOGL) in its fourth quarter 2025 investor letter:
“The leading individual contributors during the quarter were Eli Lilly (LLY) and Alphabet Inc. (NASDAQ:GOOGL). Alphabet was another key contributor in Q4 as the market placed greater weight on evidence that its AI strategy is strengthening – rather than threatening – its core franchises, while also improving the medium-term growth profile of Google Cloud. Investors responded to signs of steady advertising fundamentals (Search and YouTube) alongside continued cloud momentum, including better visibility from contracted demand and a clearer path to operating leverage as the business scales. The quarter reinforced Alphabet’s “quality growth” attributes: durable demand, scale advantages, and disciplined cost management that can support attractive earnings power even as the company invests aggressively.
We continue to view Alphabet as unusually well positioned across the AI stack – owning differentiated infrastructure, frontier models, and global distribution – allowing it to monetize AI through multiple channels (ad relevance, consumer features, and enterprise cloud). Near-term results may remain somewhat noisy given elevated capex and depreciation associated with data center and AI build-out, but the strategic logic is intact: fund long-duration opportunities from a highly cash-generative core. Ongoing regulatory scrutiny and competitive dynamics are real but appeared more “known” and less incremental during the quarter, enabling fundamentals and execution to drive the stock’s contribution.”
Alphabet Inc. (NASDAQ:GOOGL) is in third position on our list of 40 Most Popular Stocks Among Hedge Funds. According to our database, 288 hedge fund portfolios held Alphabet Inc. (NASDAQ:GOOGL) at the end of the fourth quarter, up from 243 in the previous quarter. In 2025, Alphabet Inc. (NASDAQ: GOOG) achieved its first-ever $400 billion annual revenue. While we acknowledge the risk and potential of Alphabet Inc. (NASDAQ:GOOG) 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 Alphabet Inc. (NASDAQ:GOOG) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Alphabet Inc. (NASDAQ:GOOG) and shared Patient Opportunity Equity Strategy’s views on the company. 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.
