Soumya Eswaran
3 min read
In This Article:
Baron Funds, an investment management company, released its “Baron Discovery Fund” first quarter 2025 investor letter. A copy of the letter can be downloaded here. In the first quarter, the fund was down 6.17% (Institutional Shares), outperforming the -11.12% return for the Russell 2000 Growth Index. The market began strong in February but faded due to Trump's serious tariff enactment, which the market perceives as inflationary and slowing economic growth. The decline accelerated after April 2nd, causing fears of a trade war and global recession. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its first-quarter 2025 investor letter, Baron Discovery Fund highlighted stocks such as Tempus AI, Inc. (NASDAQ:TEM) . Tempus AI, Inc. (NASDAQ:TEM) is a healthcare technology company. The one-month return of Tempus AI, Inc. (NASDAQ:TEM) was 59.81%, and YTD its shares gained 93.99% of their value. On May 16, 2025, Tempus AI, Inc. (NASDAQ:TEM) stock closed at $65.49 per share with a market capitalization of $11.337 billion.
Baron Discovery Fund stated the following regarding Tempus AI, Inc. (NASDAQ:TEM) in its Q1 2025 investor letter:
"Tempus AI, Inc. (NASDAQ:TEM). is an intelligent diagnostics and health care data company with two synergistic business units: Genomics and Data. Although shares have been volatile since its June 2024 IPO, we attribute these fluctuations to trading dynamics that do not reflect Tempus’ business fundamentals and have managed our position size accordingly, which was a key reason for the investment’s contribution this quarter. In the long run, we expect the company’s Genomics business (diagnostics for cancer treatment selection) to continue to grow rapidly as the market develops. The data generated from Tempus’ diagnostic tests also enhances its Data business, as Tempus combines its genomics data with clinical patient data from its oncology partners, to generate an enormous proprietary multimodal dataset. We believe that no one will be able to replicate the breadth and depth of this dataset, given Tempus’ enormous proprietary advantages. Tempus licenses its dataset to biopharmaceutical companies for use in designing smarter clinical trials and for identifying new drug targets."
A technician working with genomic sequencing equipment.
Tempus AI, Inc. (NASDAQ:TEM) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 17 hedge fund portfolios held Tempus AI, Inc. (NASDAQ:TEM) at the end of the fourth quarter, compared to 7 in the third quarter. In the first quarter of 2025, Tempus AI, Inc.'s (NASDAQ:TEM) revenue increased 75.4% year-over-year to $255.7 million. While we acknowledge the potential of Tempus AI, Inc. (NASDAQ:TEM) 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 undervalued AI stock set for massive gains.
