Fred Alger Management, an investment management company, has released the fourth-quarter 2025 investor letter for its Alger Spectra Fund. The U.S. equity market finished the quarter strongly, with the S&P 500 rising 2.7%. Corporate earnings that exceeded expectations, the Federal Reserve's stance on further interest rate easing, and a resilient macroeconomic environment supported investor optimism. Additional support came from improving clarity on trade policy.
During the quarter, divergence increased below the Index's surface. While artificial intelligence remains the market's most significant tailwind, it is being scrutinized for funding, limitations, and potential investment returns. The firm continues to observe secular trends offering attractive investment opportunities. U.S. business spending appears to be rising, driven by demand for AI infrastructure and tax incentives from the One Big Beautiful Bill.
Against this backdrop, the Fund's Class A shares underperformed the Russell 3000 Growth Index in the fourth quarter of 2025. The Information Technology and Utilities sectors contributed to the Fund's relative performance, while the Health Care and Communication Services sectors detracted from it.
The investor letter highlighted stocks including Alphabet Inc. (NASDAQ:GOOG). Alphabet was the strategy's leading performer for the quarter. The parent company of Google operates through Google Services, Google Cloud, and Other Bets segments. On January 16, 2026, Alphabet stock closed at $330.34 per share. Its one-month return was 7.04%, and its shares gained 67.22% over the last 52 weeks. Alphabet has a market capitalization of $3.988 trillion.
In the letter, Alger Spectra Fund stated regarding Alphabet Inc.: "Alphabet Inc. (NASDAQ:GOOG) is the parent of Google and a global leader in digital advertising, cloud computing, and AI-driven consumer services. Shares contributed positively during the quarter as investors increasingly recognized improving execution across the company’s AI strategy, supported by strong engagement trends and rising AI-related workloads. Google Cloud was a key driver, with management highlighting accelerating usage, including increased AI token processing and continued momentum in the Gemini ecosystem. Sentiment was further supported by strengthening cloud demand and new customer wins, as well as reports that Google may broaden access to its TPU capabilities, including potential deployments beyond Google Cloud."