Artisan Partners, an investment management company, released its “Artisan Small Cap Fund” fourth quarter 2024 investor letter. A copy of the letter can be downloaded here. US stocks concluded a strong year with strong gains in Q4. In Q4, the portfolio's performance was flat and narrowly trailed the Russell 2000® Growth Index. In 2024, the portfolio produced a robust absolute return that was in line with the Russell 2000® Growth Index but outperformed the Russell 2000 Index. In the quarter, its Investor Class fund ARTSX returned 0.61%, Advisor Class fund APDSX posted a return of 0.66%, and Institutional Class fund APHSX returned 0.67%, compared to a return of 1.70% for the Russell 2000 Growth Index. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2024.

In its fourth quarter 2024 investor letter, Artisan Small Cap Fund emphasized stocks such as Astera Labs, Inc. (NASDAQ:ALAB). Astera Labs, Inc. (NASDAQ:ALAB) engages in the manufacturing of semiconductor-based connectivity solutions for cloud and AI infrastructure. The one-month return of Astera Labs, Inc. (NASDAQ:ALAB) was -35.21%, and YTD its shares lost 49.48% of their value. On March 7, 2025, Astera Labs, Inc. (NASDAQ:ALAB) stock closed at $66.92 per share with a market capitalization of $10.851 billion.

Artisan Small Cap Fund stated the following regarding Astera Labs, Inc. (NASDAQ:ALAB) in its Q4 2024 investor letter:

"Among our top Q4 contributors were Astera Labs, Inc. (NASDAQ:ALAB), Veracyte and Vita Coco. Astera Labs is a fabless provider of connectivity chips designed to address data, network and memory bandwidth bottlenecks in data centers. With increasingly powerful graphics processing units and central processing units—costing $5,000 to $40,000 and depreciating within 3–5 years—often operating at only ~50% utilization due to architectural constraints, Astera’s products play a critical role in enhancing efficiency. As compute architectures become more heterogeneous across graphic processing units, central processing units and custom accelerators, Astera’s solutions enable better collaboration between disparate chips. Recent earnings displayed strong momentum of its core products and benefited from adding new offerings to drive scale within the data center market, driving a strong rally in shares. After the strong rally, we trimmed our position based on valuation."

A technician soldering a semiconductor chip, emphasizing the power of the company's products.

Astera Labs, Inc. (NASDAQ:ALAB) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held Astera Labs, Inc. (NASDAQ:ALAB) at the end of the fourth quarter compared to 39 in the third quarter. Astera Labs, Inc. (NASDAQ:ALAB) reported strong Q4 results with quarterly revenue at $141 million, which was up 25% from previous quarter and up 179% from Q4 2023. While we acknowledge the potential of Astera Labs, Inc. (NASDAQ:ALAB) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Astera Labs, Inc. (NASDAQ:ALAB) and shared the list of AI Stocks that will skyrocket. In addition, please check out our hedge fund investor letters Q4 2024 page for more investor letters from hedge funds and other leading investors.

READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks.

Disclosure: None. This article is originally published at Insider Monkey.