Alger AI Enablers & Adopters ETF: Capitalizing on Q3 2025 Outperformance and Enterprise AI Momentum

The Alger AI Enablers & Adopters ETF (ALAI) has emerged as a standout performer in the AI-driven investment landscape, delivering a net asset value (NAV) total return of 42.71% year-to-date as of September 30, 2025, significantly outpacing the S&P 500's 14.83% return during the same period according to a recent report. This outperformance underscores the ETF's strategic focus on companies at the forefront of AI development and adoption, leveraging a bottom-up fundamental approach to identify firms undergoing "Positive Dynamic Change" as research shows. As the AI ecosystem continues to evolve, ALAI's overweight in the Information Technology sector and its alignment with high-conviction AI-driven growth stocks position it as a compelling vehicle for investors seeking exposure to the next phase of technological innovation.

Strategic Sector Positioning: Information Technology as the Core Driver

ALAI's portfolio is heavily weighted toward the Information Technology sector, which represented the largest sector overweight in Q3 2025. This strategic allocation reflects the ETF's emphasis on companies poised to benefit from advancements in AI infrastructure, software, and enterprise solutions. The Information Technology sector's dominance in ALAI's holdings aligns with broader market trends, as AI adoption accelerates across industries-from personalized marketing campaigns to automated content creation. By prioritizing this sector, ALAI captures the compounding growth potential of firms developing foundational AI technologies, including cloud computing platforms, machine learning frameworks, and data analytics tools.

While the exact percentage weighting for Information Technology in Q3 2025 remains unspecified, the sector's "dominant" role in the portfolio highlights ALAI's conviction in AI's transformative impact. This focus contrasts with more diversified benchmarks like the S&P 500, where Information Technology typically constitutes a smaller portion of the index. ALAI's concentrated exposure to high-growth AI enablers amplifies its potential for outsized returns, particularly as enterprises increasingly allocate budgets to AI-driven innovation.

High-Conviction AI Stocks and Ecosystem Developments

The ETF's strategy extends beyond sector allocation to include direct exposure to high-conviction AI stocks, though specific holdings remain undisclosed. One notable player in the AI ecosystem is C3.ai, which has deepened its integrations with Microsoft Cloud platforms, including Microsoft Copilot. These partnerships enable C3.ai to streamline AI operations for enterprises, positioning it as a critical player in the development of scalable, industry-specific AI solutions. Despite challenges such as a 19% year-over-year revenue decline and a $117 million net loss in the most recent quarter, C3.ai's strategic alliances with hyperscalers like Microsoft, AWS, and Google Cloud underscore its long-term relevance in the AI landscape.

ALAI's focus on companies like C3.ai-despite their operational hurdles-reflects its emphasis on capturing growth in the AI ecosystem's infrastructure layer. By investing in firms that facilitate AI adoption across industries, the ETF aligns with the broader trend of enterprises prioritizing AI integration to enhance productivity and competitive advantage. C3.ai's Strategic Integrator Program, which allows partners to build industry-specific applications, further illustrates the expanding opportunities for AI-driven innovation.

The Investment Case: Immediate Exposure to AI's Next Phase

The confluence of ALAI's strategic sector positioning, high-conviction AI stocks, and the strengthening AI ecosystem creates a compelling investment case. The ETF's Q3 2025 outperformance against the S&P 500 demonstrates the effectiveness of its focused approach in capitalizing on AI's accelerating adoption. As enterprises continue to invest in AI infrastructure and partnerships-such as C3.ai's collaborations with Microsoft-ALAI's portfolio is well-positioned to benefit from the next wave of innovation.

Moreover, the ETF's emphasis on "Positive Dynamic Change" ensures that it remains agile in identifying companies that are not only adapting to AI trends but actively shaping them. This forward-looking strategy is critical in an environment where AI's applications are rapidly expanding into new domains, from healthcare to finance. For investors seeking to align with the transformative power of AI, ALAI offers a targeted and dynamic vehicle to participate in this evolution.

Conclusion

The Alger AI Enablers & Adopters ETF has demonstrated its ability to outperform broader markets by leveraging strategic sector positioning and high-conviction AI-driven growth stocks. With a significant overweight in Information Technology and exposure to key players like C3.ai, ALAI captures the momentum of the AI ecosystem's expansion. As enterprises increasingly prioritize AI integration, the ETF's focus on foundational technologies and strategic partnerships positions it as a strong candidate for continued outperformance in the coming quarters.