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 stocks like Western Digital Corporation (NASDAQ:WDC) as a notable contributor. Western Digital Corporation (NASDAQ:WDC) is a data storage company engages in the manufacturing and distribution of data storage devices and solutions. On April 17, 2026, Western Digital Corporation (NASDAQ:WDC) closed at $372.52 per share. One-month return of Western Digital Corporation (NASDAQ:WDC) was 26.37%, and its shares gained 935.93% over the past 52 weeks. Western Digital Corporation (NASDAQ:WDC) has a market capitalization of $127.36 billion.
Alger Capital Appreciation Fund stated the following regarding Western Digital Corporation (NASDAQ:WDC) in its Q1 2026 investor letter:
“Western Digital Corporation (NASDAQ:WDC) is a hard disk drive (HDD) storage company benefiting from rising hyperscaler data-center investment and the continued proliferation of data. The HDD industry is highly consolidated, with only two scaled manufacturers, and Western Digital holds a leading market position. The business has structurally shifted toward cloud customers as consumer exposure has declined, with cloud representing the majority of Western Digital’s revenue. Importantly, industry participants have emphasized capital discipline—prioritizing higher areal density (i.e., more terabytes per drive) rather than adding significant unit capacity—which supports a healthier supply/demand balance and improved profitability.
During the quarter, shares contributed positively to performance after the company delivered strong fiscal second-quarter results highlighted by robust revenue growth, record gross margins, and favorable pricing dynamics in a tightly supplied market. Notably, the company’s full-year production capacity is committed under long-term agreements, providing strong revenue visibility. We believe Western Digital’s leadership in high-capacity drive technology and its essential role within the AI data infrastructure ecosystem support a durable long-term growth trajectory.”
Western Digital Corporation (NASDAQ:WDC) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 79 hedge fund portfolios held Western Digital Corporation (NASDAQ:WDC) at the end of the fourth quarter, compared to 84 in the previous quarter. While we acknowledge the risk and potential of Western Digital Corporation (NASDAQ:WDC) 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 Western Digital Corporation (NASDAQ:WDC) and that has 10,000% upside potential, check out our report about this cheapest AI stock.
In another article, we covered Western Digital Corporation (NASDAQ:WDC) and shared the list of best performing AI stocks to buy. 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.
