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Last year’s market surge wasn’t built on hype. New research from Alger shows that AI spending and the accompanying infrastructure buildout drove corporate earnings higher, with fundamentals doing the heavy lifting rather than investor sentiment alone.
The data tells a compelling story about what actually moved markets higher. Of the S&P 500 Index’s 17.9% return in 2025, earnings growth contributed 13.6 percentage points while changes in the price-to-earnings ratio added just 2.4 percentage points, according to Alger’s analysis. In other words, companies made more money rather than investors simply paying higher prices for the same level of profits.
That earnings growth reflects a broader transformation in corporate capital allocation. Alger identifies approximately $4.2 trillion in annual private nonresidential fixed investment, representing roughly 14% of U.S. GDP, with companies deploying capital across everything from data centers to power infrastructure, according to the firm’s “An American Business Spending Boom” commentary.
In Alger’s view, the breadth of this investment cycle creates opportunities beyond traditional technology names. The Alger AI Enablers & Adopters ETF (ALAI) targets companies across the AI infrastructure ecosystem, from chipmakers to power providers, offering investors access to what Alger describes as a multi-trillion dollar spending wave.
ALAI’s portfolio includes exposure to names like Nvidia Corp. (NVDA), Microsoft Corp. (MSFT), and Meta Platforms Inc. (META) alongside lesser-known infrastructure players such as Nebius Group (NBIS) and Talen Energy Corp. (TLN).
Infrastructure Beneficiaries Broaden
The scale of projected U.S. AI infrastructure investment draws comparisons to major historical buildouts. Announced investment plans have reached approximately $10 trillion, with major initiatives from companies like Apple Inc. (AAPL) and the Project Stargate collaboration deploying capital over the next four years, according to Alger.
Power generation and electrical components represent critical elements as companies build out AI data centers and computing capacity. A simple AI query requires roughly ten times more computing power than a traditional search, driving exponential demand for electricity and cooling systems, according to the commentary.
The fund holds positions across the supply chain, including Taiwan Semiconductor Manufacturing Co. (TSM), Broadcom Inc. (AVGO), and Talen Energy Corp (TLN) , while also capturing companies supplying the physical infrastructure necessary to support AI workloads, according to ETF Database.
Communication services and information technology led sector performance in the S&P 500 Index for the third consecutive year, but industrials also outperformed, suggesting the market rewarded companies levered to capital spending themes beyond pure AI, according to Alger.
For more news, information, and analysis, visit the Artificial Intelligence Content Hub.
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The following positions represented the noted percentages of ALAI assets as of February 2, 2026: NVIDIA Corporation: 13.33%; Microsoft Corporation: 8.51%; Meta Platforms Inc: 4.74%; Talen Energy Corp: 2.02%; Taiwan Semiconductor Manufacturing Co., Ltd.: 6.02%; Broadcom Inc.: 3.41%; Apple Inc.: 3.92%; Nebius Group N.V.: 4.18%
The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of February 2026. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. Holdings and sector allocations are subject to change. Past performance is not indicative of future performance.
Risk Disclosures: Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources or personnel as they face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing their consumer base. These companies may be substantially exposed to the market and business risks of other industries or sectors, and may be adversely affected by negative developments impacting those companies, industries or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. AI technology could face increasing regulatory scrutiny in the future, which may limit the development of this technology and impede the future growth. AI companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology. A significant portion of assets will be concentrated in securities in related industries, and may be similarly affected by adverse developments and price movements in such industries. A significant portion of assets may be invested in securities of companies in related sectors, and may be similarly affected by economic, political, or market events and conditions and may be more vulnerable to unfavorable sector developments. Investing in companies of small and medium capitalizations involves the risk that such issuers may have limited product lines or financial resources, lack management depth, or have limited liquidity. The Fund is classified as a “non-diversified fund” under federal securities laws because it can invest in fewer individual companies than a diversified fund. Private placements are offerings of a company’s securities not registered with the SEC and not offered to the public, for which limited information may be available. Such investments are generally considered to be illiquid. Foreign securities involve special risks including currency fluctuations, inefficient trading, political and economic instability, and increased volatility. ADRs and GDRs may be subject to international trade, currency, political, regulatory and diplomatic risks. Active trading may increase transaction costs, brokerage commissions, and taxes, which can lower the return on investment. At times, cash may be a larger position in the portfolio and may underperform relative to equity securities.
ETF shares are based on market price rather than net asset value (“NAV”), as a result, shares may trade at a price greater than NAV (a premium) or less than NAV (a discount). The Fund may also incur brokerage commissions, as well as the cost of the bid/ask spread, when purchasing or selling ETF shares. The Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses from trading in secondary markets, periods of high volatility and disruption in the creation and/or redemption process of the Fund. Any of these factors, among others, may lead to the Fund’s shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than NAV when you buy shares of the Fund in the secondary market, and you may receive less (or more) than NAV when you sell those shares in the secondary market. The Manager cannot predict whether shares will trade above (premium), below (discount) or at NAV. The Fund may effect its creations and redemptions for cash, rather than for in-kind securities. Therefore, it may be required to sell portfolio securities and subsequently recognize gains on such sales that the Fund might not have recognized if it were to distribute portfolio securities in-kind. As such, investments in Fund shares may be less tax-efficient than an investment in an ETF that distributes portfolio securities entirely in-kind. Brokerage fees and taxes will be higher than if the Fund sold and redeemed shares in-kind. Certain shareholders, including other funds advised by the Manager or an affiliate of the Manager, may from time to time own a substantial amount of the shares of the Fund. Redemptions by large shareholders could have a significant negative impact on the Fund.
S&P 500® Index: An index of large company stocks considered to be representative of the U.S. stock market. Index performance does not reflect deductions for fees, expenses, or taxes.
The S&P indexes are a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Fred Alger Management, LLC and its affiliates. Copyright 2026 S&P Dow Jones Indices LLC, a subsidiary of S&P Global Inc. and/or its affiliates. All rights reserved. Redistribution or reproduction in whole or in part are prohibited without written permission of S&P Dow Jones Indices LLC. S&P® is a registered trademark of Standard & Poor’s Financial Services LLC and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC. Neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors make any representation or warranty, express or implied, as to the ability of any index to accurately represent the asset class or market sector that it purports to represent and neither S&P Dow Jones Indices LLC, Dow Jones Trademark Holdings LLC, their affiliates nor their third party licensors shall have any liability for any errors, omissions, or interruptions of any index or the data included therein.
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