AI Spending Pays Off for Major Cloud Providers

The four hyperscalers more than doubled their combined capital expenditures from roughly $150 billion in 2022 to over $360 billion in 2025, according to Alger research. However, during that same period, their average return on invested capital (ROIC) increased by more than 900 basis points.

ROIC tracks how efficiently companies generate profits from the money used to run and grow their business. A higher ROIC means more profit for each dollar of operating capital employed.

The gains come as hyperscalers ramped up spending on graphics processing units and data center equipment following ChatGPT’s November 2022 launch, according to the report. Rather than weighing down profitability, the infrastructure buildout has coincided with improved returns on the capital these companies deploy.

According to the research, hyperscalers’ new compute infrastructure is operating at full utilization, and strong cloud revenue from enterprise customers has helped sustain improving ROIC. AI infrastructure has also supported internal operations, with Meta citing billions in estimated incremental revenue from using AI models to refine ad targeting and placement.

For investors seeking exposure to these efficiency trends, the actively managed Alger 35 ETF (ATFV C+) may be an attractive choice. ATFV holds positions in companies like Nvidia Corp. (NVDA), Microsoft, and Alphabet that are central to AI infrastructure development, according to ETF Database.

The fund invests in approximately 35 holdings of primarily U.S. companies identified through fundamental research as demonstrating promising growth potential, according to the fund’s prospectus. This focused approach targets what Alger describes as some of the most highly disrupted segments of the markets, allowing the portfolio managers to focus on companies where technological change is reshaping competitive dynamics.

ATFV returned 37.46% in 2025, more than double the performance of the S&P 500 Index over the same period and named among the top-performing stock ETFs of the year by Morningstar.

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Disclosure Information

Performance data quoted represents past performance and is no guarantee of future results. DUE TO MARKET VOLATILITY, CURRENT PERFORMANCE MAY BE DIFFERENT THAN THE FIGURES SHOWN. Investment return and principal value will fluctuate so that an investor’s shares, when sold in the secondary market, may be worth more or less than original cost. Returns less than one year are not annualized. Performance does not reflect the deduction of commissions, which a broker may charge to execute a transaction in Fund shares, and an investor may incur the cost of the spread between the price at which a dealer will buy shares and the price at which a dealer will sell shares. Market performance is determined using the official closing price on the New York Stock Exchange. Market performance does not represent the returns you would receive if you traded shares at other times. To obtain performance data current to the most recent month end, please visit www.alger.com. Index performance does not represent the fund’s performance. Investors may not invest directly in an index.

Performance shown is net of fees and expenses.

The following positions represented the noted percentages of ATFV assets as of January 16, 2026: NVIDIA Corporation: 11.29%; Alphabet Inc: 9.52%; Microsoft Corporation: 6.13%; Amazon.com, Inc.: 6.77%; Meta Platforms Inc: 3.90%; OpenAI: 0.00%

The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of January 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.

Prior to December 2, 2024, Alger 35 ETF operated as non-transparent ETF and was limited in the types of investments in which it could invest. This is because only exchange traded securities were permitted.

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. 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. 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 affect 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.

Criteria for Morningstar ranking: ETFs in the Morningstar US equity category that trade within the U.S., excluding exchange-traded notes and ETFs with less than $100 million in total assets. Alger did not pay a fee to be included in the ranking but does pay a subscription fee to Morningstar to access research, ratings, rankings and other investment tools.

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.

S&P 500®: An index of large company stocks considered to be representative of the U.S. stock market.

Alger pays compensation to VettaFi to sell various strategies to prospective investors.

Before investing, carefully consider a Fund’s investment objective, risks, charges, and expenses. For a prospectus and summary prospectus containing this and other information or for a Fund’s most recent month-end performance data, visit  www.alger.com, call (800) 992-3863 (for a mutual fund) or (800) 223-3810 (for an ETF), or consult your financial advisor. Read the prospectus and summary prospectus carefully before investing. Distributor: Fred Alger & Company, LLC. All underlying series of The Alger ETF Trust listed on NYSE Arca, Inc. NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.