Alger AI Enablers & Adopters ETF Q1 2026 Portfolio Update
The fund lagged the S&P 500 in Q1 2026 as gains in WDC, NBIS and TSMC were offset by weaker MSFT and APP performance.
Intelligence analysis by GPT-5.4 Mini
Alger says its AI Enablers & Adopters ETF trailed the S&P 500 in the first quarter of 2026. Strength in Western Digital, Nebius and TSMC was partly offset by Microsoft and AppLovin, showing how uneven returns can be inside a single AI-themed portfolio.
This fund is like a team made of tech stocks. Some players, like Western Digital and TSMC, played well, but Microsoft and AppLovin slowed the team down. Even with some big wins, the whole team still fell behind the S&P 500.
Analysis
Portfolio snapshot
Alger says its AI Enablers & Adopters ETF underperformed the S&P 500 in the first quarter of 2026. The commentary points to a mixed stretch for the fund’s AI-themed holdings rather than a single broad market move.
What helped
Western Digital was a positive contributor after reporting strong fiscal second-quarter results. Alger highlights revenue growth, record gross margins, favorable pricing in a supply-constrained market, and full-year capacity already committed under long-term agreements. Nebius also helped after announcing a major multi-year infrastructure deal with a large AI hyperscaler. The firm says that agreement expanded contracted backlog and supported the case for its platform at scale. TSMC added to performance as well, with strong fiscal fourth-quarter results and full-year revenue guidance that came in above expectations. Alger says the foundry also benefited from rising AI-related demand, better utilization, and improved cost discipline.
What hurt
Microsoft detracted from returns because Azure cloud revenue growth came in a bit below elevated expectations. Alger attributes part of that shortfall to supply constraints. AppLovin also weighed on performance even though it posted another strong earnings report; the stock was pressured by short-seller commentary and a broader selloff in software names.
Overall, the update shows that an AI-focused ETF can still move unevenly when its holdings sit in different parts of the technology stack. Hardware, foundry capacity, infrastructure demand, cloud growth and investor sentiment are all pulling in different directions at once.
Key points
- The ETF underperformed the S&P 500 in Q1 2026.
- Western Digital benefited from strong revenue growth, record gross margins and tight supply conditions.
- Nebius gained support from a multi-year AI infrastructure deal that expanded backlog.
- TSMC beat expectations with strong results and raised revenue guidance.
- Microsoft and AppLovin were the main detractors for different reasons, including slower Azure growth and weaker sentiment.
If strong demand continues, the fund’s winners could keep benefiting from better pricing, higher margins and large AI infrastructure contracts. TSMC’s stronger guidance and Nebius’s expanded backlog suggest the ETF’s AI exposure can still capture real business growth.
If Azure growth stays below expectations or supply limits remain in place, Microsoft could keep dragging on returns. AppLovin also showed that even solid earnings can be overshadowed by negative sentiment and sector-wide selling.
