Nebius Group reported strong Q1 performance with multiple positive business drivers.
Fred Alger Management's Alger Capital Appreciation Fund released its first-quarter 2026 investor letter, noting that Class A shares underperformed the Russell 1000 Growth Index during the period. Information Technology and Financials sectors contributed positively to performance, while Consumer Discretionary and Utilities detracted. The broader market experienced significant volatility, with the S&P 500 Index declining 4.33% in the first quarter. Two distinct forces shaped the investment landscape: the software industry experienced significant disruption due to the rise of agentic artificial intelligence tools, and a U.S.-Iran conflict that began in late February caused a significant supply shock, resulting in a surge in crude oil prices and injecting potential inflationary pressure into the economy. Despite these headwinds, the Fund identified opportunities for companies adopting and facilitating agentic AI technology as it evolves.
Nebius Group N.V. (NASDAQ:NBIS) emerged as a notable contributor to fund performance during the quarter. The technology company develops full-stack infrastructure to service the global AI industry. On April 17, 2026, shares closed at $157.14 per share, with a one-month return of 37.66% and a 52-week gain of 658.40%. The company carries a market capitalization of $39.76 billion.
The Fund provided detailed commentary on Nebius's performance, stating: "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, the company announced a landmark multi-year infrastructure agreement with a major AI hyperscaler, significantly expanding its contracted backlog. Fiscal fourth-quarter results proved exceptionally strong, with revenue increasing dramatically year over year as demand for dedicated AI compute capacity accelerated. Notably, 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.
According to the Fund's analysis, Nebius's differentiated infrastructure model and rapidly expanding customer base position the company to capitalize on the sustained buildout of AI computing capacity. However, hedge fund positioning reflects more cautious sentiment, with 54 hedge fund portfolios holding the stock at the end of the fourth quarter, compared to 65 in the previous quarter.