Baron Capital, an investment management company, released its Q1 2026 investor letter for the “Baron Asset Fund”. A copy of the letter is available to download here. U.S. equity markets started the year on a positive note. In February, market dynamics changed due to concerns about AI disruption, accelerated by U.S. and Israeli military action in Iran in March, raising fears of higher oil prices. The Fund declined 7.81% (Institutional Shares) for the quarter, versus a 6.35% decline in the Russell Midcap Growth Index. Performance was adversely impacted by overexposure to the software and services sectors and underexposure to the energy industries. Despite this, the Firm remains optimistic about the market recognizing high-quality businesses owned by the Fund, given their resilience against perceived AI threats. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Baron Asset Fund highlighted Quanta Services, Inc. (NYSE:PWR) as a notable contributor. Quanta Services, Inc. (NYSE:PWR) is an infrastructure services company that provides engineering and construction services to utilities, energy infrastructure, and telecommunications projects. On May 13, 2026, Quanta Services, Inc. (NYSE:PWR) closed at $773.72 per share. One-month return of Quanta Services, Inc. (NYSE:PWR) was 31.71%, and its shares gained 127.32% over the past 52 weeks. Quanta Services, Inc. (NYSE:PWR) has a market capitalization of $116.11 billion.
Baron Asset Fund stated the following regarding Quanta Services, Inc. (NYSE:PWR) in its Q1 2026 investor letter:
“Quanta Services, Inc. (NYSE:PWR) is a leading specialty contracting company that provides comprehensive infrastructure solutions for the electric and gas utility, renewable energy, communications, pipeline, and energy industries. Quanta’s shares rose during the quarter, driven by broad optimism for its ongoing work for AI and data-center-related companies, as well as Quanta’s strong quarterly earnings results, which beat Street expectations and demonstrated continued robust demand for its services. Management reiterated its view that the business can grow earnings in the mid-to-high teens or better through at least the end of the decade, supported by secular trends including grid modernization, electrification, transition toward renewable energy sources, industrial reshoring, communications infrastructure upgrades, and more. We believe this level of earnings growth is achievable, and we take further comfort in Quanta’s 25% earnings CAGR since 2015, a period during which the market backdrop was considerably weaker. We remain excited about Quanta’s growth prospects and continue to be long-term shareholders.”
Quanta Services, Inc. (NYSE:PWR) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 90 hedge fund portfolios held Quanta Services, Inc. (NYSE:PWR) at the end of the fourth quarter, up from 73 in the previous quarter. Quanta Services, Inc. (NYSE:PWR) reported Q1 2026 revenue of $7.9 billion, diluted EPS of $1.45 and adjusted diluted earnings per share of $2.68. While we acknowledge the risk and potential of Quanta Services, Inc. (NYSE:PWR) 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 Quanta Services, Inc. (NYSE:PWR) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Quanta Services, Inc. (NYSE:PWR) and shared the list of best grid modernization stocks to buy for AI infrastructure. In addition, please check out our hedge fund investor letters Q1 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.
