ALAI targets companies positioned to profit from artificial intelligence, splitting its focus between AI infrastructure builders (chipmakers, cloud providers) and companies aggressively implementing AI to transform their operations. This dual approach captures both the picks-and-shovels plays and the productivity winners.
How It Works
The fund actively selects roughly 50-80 stocks based on Alger's proprietary scoring of AI revenue exposure and implementation depth. Unlike passive tech ETFs that overweight mega-caps, ALAI equal-weights positions to avoid NVIDIA/Microsoft concentration while maintaining flexibility to pivot as AI adoption patterns evolve. Quarterly rebalancing keeps pace with this rapidly shifting landscape.
Key Features
- Equal-weight construction prevents mega-cap AI leaders from dominating returns
- Captures both AI infrastructure (semis, cloud) and adoption leaders (retailers using AI for logistics)
- Active selection allows nimble positioning as AI use cases prove out commercially
Risks
- AI hype cycle risk: many 'AI companies' trade at 50-100x earnings on unproven revenue models
- Thematic concentration means 30-40% drawdowns possible if AI sentiment sours
- Early-stage fund with no track record launched into peak AI euphoria
Who Should Own This
Best for growth investors who believe AI will drive the next decade's winners but want broader exposure than just buying NVIDIA. Works as a 5-10% satellite position for those seeking tech exposure beyond the Magnificent Seven. Skip if you think AI valuations already price in a decade of growth.