AI Investment Still Underestimated, Fund Manager Says

Patrick Kelly , who manages the five-star Morningstar-rated Alger Focus Equity Fund (ALAFX) , said on April 1, 2026 that investors are still not fully pricing in the direction and speed of advances in artificial intelligence (AI) . He described AI development as accelerating, and said that the trend continues to create meaningful opportunities for additional investment across the sector.

Kelly’s comments came as the fund posted a notable setback in the near term despite what he characterized as strong long-term results. ALAFX is down more than 9% so far this year, a move he linked to wider market stress tied to the ongoing conflict in the Middle East . He said those pressures have weighed on markets broadly, affecting even funds with strong track records and concentrated strategies.

In outlining his view, Kelly pointed to what he sees as a gap between current market pricing and the longer-run growth path implied by AI’s rapid progress. His argument is that the market’s near-term focus can leave investors underexposed to structural technology shifts, even as the underlying pace of innovation increases.

At the same time, he framed the fund’s year-to-date decline as an example of how macro and geopolitical shocks can temporarily dominate performance, regardless of a portfolio’s thematic focus.

For global investors, the juxtaposition is central: a fast-moving technology theme on one side, and a risk-off environment shaped by geopolitical uncertainty on the other. Kelly’s remarks underscore that AI-related investment narratives can be influenced by broader market conditions, including conflict-driven volatility that can pressure valuations across sectors.

The fund’s experience also illustrates how market drawdowns can occur even when a manager maintains conviction in a long-term technology trajectory.

Key uncertainties remain around timing and market behavior rather than the existence of the theme described by Kelly. His statement did not specify which parts of the AI ecosystem he expects to benefit most, nor did it quantify how quickly investor expectations might adjust. What is clear from his comments is the tension between near-term market repricing linked to geopolitical events and the longer-term investment case he associates with accelerating AI development.