Tetra Tech (TTEK) Shares Sold Off Despite Strong Q1 Results

TimesSquare Capital Management, an equity investment management company, released its “U.S. Small Cap Growth Strategy” first-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the fund returned -9.41% (gross) and -9.64% (net), compared to a -11.12% return for the Russell 2000 Growth Index. There was a broad positive sentiment in the market at the beginning of 2025. Expectations for a pro-business and soft regulatory environment lifted global markets in January. However, delays and uncertainties surrounding U.S. policies led to a significant downturn in March. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its first-quarter 2025 investor letter, TimesSquare Capital U.S. Small Cap Growth Strategy highlighted stocks such as Tetra Tech, Inc. (NASDAQ:TTEK). Tetra Tech, Inc. (NASDAQ:TTEK) is a consulting and engineering services provider that operates through two segments, Government Services Group (GSG) and Commercial/International Services Group (CIG). The one-month return of Tetra Tech, Inc. (NASDAQ:TTEK) was -0.08%, and its shares lost 17.66% of their value over the last 52 weeks. On June 23, 2025, Tetra Tech, Inc. (NASDAQ:TTEK) stock closed at $35.39 per share, with a market capitalization of $9.325 billion.

TimesSquare Capital U.S. Small Cap Growth Strategy stated the following regarding Tetra Tech, Inc. (NASDAQ:TTEK) in its Q1 2025 investor letter:

“Many of our Industrial positions provide necessary business-to-business operational services, highly technical components, equipment enabling automation & efficiency improvements, or essential infrastructure services. Tetra Tech, Inc. (NASDAQ:TTEK) offers consulting and engineering services. Fiscal first quarter results topped Street projections. Revenue growth was highlighted by its state and local business, which surged on disaster response and water infrastructure projects. Despite these positives, forward guidance was only in line with the sell-side and that disappointed investors with the stock selling off by -25%. The newly established Department of Government Efficiency has created uncertainty for U.S. federal government work. On a positive note, Tetra Tech has been called upon to assist in disaster response work from the California wildfires.”

Why Tetra Tech Inc (TTEK) Is Plunging in 2025?

An energy executive observing a wind turbine farm from a remote location.

Tetra Tech, Inc. (NASDAQ:TTEK) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 36 hedge fund portfolios held Tetra Tech, Inc. (NASDAQ:TTEK) at the end of the first quarter, which was 37 in the previous quarter. While we acknowledge the potential of Tetra Tech, Inc. (NASDAQ:TTEK) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the undervalued AI stock set for massive gains.

In another article, we covered Tetra Tech, Inc. (NASDAQ:TTEK) and shared the list of construction stocks plunging in 2025. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. While we acknowledge the potential of TTEK as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you’re looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.