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 AppLovin Corporation (NASDAQ:APP) as a notable contributor. AppLovin Corporation (NASDAQ:APP) is a mobile technology company specializing in developing software-based platforms for advertisers to enhance the marketing and monetization of their content. On April 17, 2026, AppLovin Corporation (NASDAQ:APP) closed at $477.20 per share. One-month return of AppLovin Corporation (NASDAQ:APP) was 6.05%, and its shares gained 113.34% over the past 52 weeks. AppLovin Corporation (NASDAQ:APP) has a market capitalization of $161.27 billion.
Alger Capital Appreciation Fund stated the following regarding AppLovin Corporation (NASDAQ:APP) in its Q1 2026 investor letter:
“AppLovin Corporation (NASDAQ:APP) is an advertising technology company offering a digital platform that helps mobile app developers market, monetize, and analyze their apps. We believe the company is experiencing a positive lifecycle change, driven by its AI-powered software engine. While currently focused on mobile gaming, AppLovin is expanding into other market segments. Its Demand Side Platform (DSP) supports ad placements, user acquisition, inventory matching, and performance analytics. Further, we believe AI is central to AppLovin’s growth, driving a large majority of the company’s revenue through its recommendation and targeting engine. In our view, AppLovin gains a competitive advantage, delivering higher-value app installs by leveraging data from its game portfolio and developer partners. We believe this scale and data advantage enhances its network effect, improving its technology and boosting market share in mobile gaming. As developers use the platform, the company collects data that continuously refines its algorithms. During the quarter, shares detracted from performance despite another strong earnings report that exceeded expectations on both revenue and profitability. Investor sentiment was pressured by short seller reports alleging questionable ad practices — claims we view as a misunderstanding of the company’s business model — coupled with a broad selloff across the software space. Additionally, early channel checks on the company’s e-commerce initiative have been mixed, with some advertisers reporting difficulty scaling spend on the platform. We remain constructive on the company’s long-term trajectory.”
AppLovin Corporation (NASDAQ:APP) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 108 hedge fund portfolios held AppLovin Corporation (NASDAQ:APP) at the end of the fourth quarter, compared to 110 in the previous quarter. While we acknowledge the risk and potential of AppLovin Corporation (NASDAQ:APP) 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 AppLovin Corporation (NASDAQ:APP) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered AppLovin Corporation (NASDAQ:APP) and shared the list of stocks that will double in the next 5 years. In addition, please check out our hedge fund investor letters Q1 2026 page for more investor letters from hedge funds and other leading investors.
READ NEXT: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
Disclosure: None. This article is originally published at Insider Monkey.
