Increasing Demand for AI Computing Power Fuels Nebius Group (NBIS) Performance in Q2

What Is Fred Alger Management and Its Latest Report?

Imagine a company whose job is to help people invest their money wisely. That’s Fred Alger Management—an investment management company. They recently shared a letter for the second quarter of 2026 (April–June) for one of their funds called the Alger Capital Appreciation Fund.

• You can download a copy of that letter here.
• In the letter, they talk about what happened in the stock market and which companies helped or hurt their fund.

What Happened in the Stock Market in Q2 2026?

Think of the US stock market like a big classroom where some kids (sectors) did great and some didn’t.

• US stocks bounced back strongly: the S&P 500 Index (a measuring stick for big US companies) went up 15.2%.
• Why? Two big reasons:
  • Geopolitical tensions eased (countries fought less, people felt calmer).
  • Technology got better, making people hopeful.
• The Information Technology and Industrials sectors moved forward.
• The Energy and Utilities sectors lagged behind because oil and gas prices fell.
• Even though people debated whether AI (smart computer brains) might disrupt jobs, the fund sees chances in areas using AI as it enters its “agentic phase” (AI that can act more on its own).

How Did the Alger Fund Do?

The fund’s Class A shares did better than a comparison group called the Russell 1000 Growth Index.

• Helped by: strong showings in Information Technology and Communication Services.
• Held back by: Industrials and Financials.
• You can check the fund’s top five holdings to see their best picks in 2026.

Important Point: The Alger Capital Appreciation Fund beat its benchmark index in Q2 2026, mainly thanks to tech and communication stocks.

Nebius Group (NBIS): A Star Contributor

In that Q2 letter, the fund highlighted Nebius Group N.V. (NASDAQ: NBIS) as a notable helper to their performance.

• Nebius is a technology company building full-stack infrastructure (all the behind-the-scenes stuff) to serve the global AI industry.
• On July 15, 2026, its share price closed at $199.51.
• One-month return: -30.41% (it dropped in one month).
• Past 52 weeks: shares gained 271.60% (more than tripled over a year).
• Market capitalization (total value of all shares): $50.65 billion.

What the Fund Said About Nebius

Here’s what Alger wrote in their own words (simplified a bit):

"Nebius Group is a specialized AI infrastructure company. It gives a full-stack platform, including GPU-accelerated cloud computing (super-fast computers for AI), to help enterprises build, train, and deploy large AI models. It’s like a next-generation cloud provider built for machine learning. We think it’s appealing because it controls everything itself—from data center design to software—giving better performance and lower costs than old-style GPU cloud providers. Shares helped performance after the company reported better-than-expected revenues because demand for AI computing power surged. Nebius also announced a 1.2 gigawatt data center campus and closed a strategic acquisition that improved its model optimization capabilities."

Hedge Funds and Nebius

• Nebius is not on the list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026.
• At the end of Q1 2026, 60 hedge fund portfolios held Nebius, up from 54 the quarter before.
• Nebius Q1 2026 revenue grew 684% from last year to $399 million.

Important Point: While Nebius shows promise, the article notes some AI stocks may offer more upside and less risk. They mention a free report on the best short-term AI stock that could benefit from tariffs and onshoring.

More Reading and Notes

• Another article covered Nebius as one of the best performing agentic AI stocks to buy.
• You can see more letters at the hedge fund investor letters Q2 2026 page.
• Related reads: 33 Stocks That Should Double in 3 Years and 15 Stocks That Will Make You Rich in 10 Years.
• Disclosure: None. Originally published at Insider Monkey.

Summary

In Q2 2026, US stocks rallied 15.2%, led by tech and industrials. The Alger Capital Appreciation Fund outperformed its growth index, with Nebius Group (NBIS) as a key winner due to soaring AI computing demand. Nebius is a vertically integrated AI infrastructure firm with huge revenue growth, though it’s not among the most popular hedge fund stocks. The original report encourages exploring other AI opportunities with potentially better risk-reward.

FAQ

1. What is Fred Alger Management?
It’s an investment management company that runs funds like the Alger Capital Appreciation Fund and shares regular letters about their performance.

2. Why did Nebius Group’s stock help the fund?
Because demand for AI computing power jumped, Nebius reported better-than-expected revenues and announced big expansions, pushing its shares up and helping the fund’s returns.

3. Is Nebius a popular stock among hedge funds?
Not among the top 40 most popular, but 60 hedge fund portfolios held it at the end of Q1 2026, up from 54 previously.

4. What does “agentic phase” of AI mean here?
It refers to AI moving into a stage where it can act more independently to perform tasks, creating new opportunities for companies adopting it.

5. Where can I read the full investor letter?
You can download the Alger Capital Appreciation Fund Q2 2026 letter here.