Fred Alger Management, an investment management company, released its “Alger Capital Appreciation Fund” first-quarter 2026 investor letter. A copy of the letter can be downloaded here. In the first quarter of 2026, the Class A shares of the Alger Capital Appreciation Fund underperformed the Russell 1000 Growth Index. The Information Technology and Financials sectors contributed, while Consumer Discretionary and Utilities detracted from the performance. US equities experienced a volatile period in the first quarter of 2026, with the S&P 500 Index declining 4.33%, driven by two distinct forces that transformed the investment landscape. The software industry experienced significant disruption due to the rise of agentic artificial intelligence tools. The second is the U.S.-Iran conflict that began in late February, causing a significant supply shock. This results in a surge in crude oil prices, injecting potential inflationary pressure into the economy. The Fund identifies opportunities for companies that are adopting and facilitating the technology as it evolves into an agentic phase, despite the market’s focus on industries affected by AI advancements. In addition, please check the Fund’s top five holdings to know its best picks in 2026.
In its first-quarter 2026 investor letter, Alger Capital Appreciation Fund highlighted Nebius Group N.V. (NASDAQ:NBIS) as a notable contributor. Nebius Group N.V. (NASDAQ:NBIS) is a technology company that focuses on developing full-stack infrastructure to service the global AI industry. On April 17, 2026, Nebius Group N.V. (NASDAQ:NBIS) closed at $157.14 per share. One-month return of Nebius Group N.V. (NASDAQ:NBIS) was 37.66%, and its shares gained 658.40% over the past 52 weeks. Nebius Group N.V. (NASDAQ:NBIS) has a market capitalization of $39.76 billion.
Alger Capital Appreciation Fund stated the following regarding Nebius Group N.V. (NASDAQ:NBIS) in its Q1 2026 investor letter:
“Nebius Group N.V. (NASDAQ:NBIS) is a specialized AI infrastructure company that provides a full-stack platform, including GPU-accelerated cloud computing, to help enterprises build, train, and deploy large-scale artificial intelligence models. The company has positioned itself as a leading next-generation cloud provider purpose-built for machine learning and high-performance computing workloads. We believe the company is anchored by its vertically integrated approach, which combines proprietary data center design with in house software to deliver superior performance and lower operating costs compared to traditional GPU cloud providers. During the quarter, shares contributed positively to performance driven by several reinforcing catalysts. The company announced a landmark multi-year infrastructure agreement with a major AI hyperscaler, significantly expanding its contracted backlog and validating its platform at scale. Additionally, fiscal fourth-quarter results were exceptionally strong, with revenue increasing dramatically year over year as demand for dedicated AI compute capacity accelerated. Profitability also reached a meaningful milestone, as the company reported positive adjusted earnings at the group level for the first time, reflecting strong pricing power and growing operating leverage within the core AI cloud business. We believe Nebius’s differentiated infrastructure model and rapidly expanding customer base position the company to capitalize on the sustained buildout of AI computing capacity.”
Nebius Group N.V. (NASDAQ:NBIS) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 54 hedge fund portfolios held Nebius Group N.V. (NASDAQ:NBIS) at the end of the fourth quarter, compared to 65 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 unstoppable growth stocks to invest in according to Reddit. 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.
