Following the Growth Opportunity
Investors have long benefited from owning innovative companies as they scale and gain market share. As the landscape of innovation evolves, do public equity markets capture the entire opportunity set?
Investors have long benefited from owning innovative companies as they scale and gain market share. As the landscape of innovation evolves, do public equity markets capture the entire opportunity set?
Source: PitchBook. Data as of 3/31/26. Aggregate valuations are post-money, reflecting each company’s implied value immediately after its most recent funding round, and may not represent current market value.
- As shown in the chart above, the aggregate valuation of global unicorns (private companies valued at $1 billion or more) has increased more than tenfold in the past decade to approximately $8.6 trillion in 2026. This illustrates the rapid expansion of high-growth private companies and the growing value of assets that remain outside public equity markets.
- We believe the rising valuations of private companies partly reflect powerful, accelerating innovation that allows companies to grow more rapidly than they once could. Consider artificial intelligence (AI) lab Anthropic, which went from $1 billion in annualized revenue to $30 billion in under two years, well ahead of the 8 to 11 years it took Alphabet and Amazon to cover the same ground (see
AI’s Escape Velocity?). At the same time, companies are staying private for longer, as ample venture capital funding has reduced the need to tap public equity markets. In fact, the median age of technology companies going public is around 12 to 13 years, significantly longer than the 4 to 5 years in 1999 and 2000 during the dot-com boom.1
- Public growth equities have historically been a powerful source of innovation-driven returns. Yet, with more high-growth companies remaining private for longer and unicorns now representing trillions of dollars in value, we believe selective exposure to private growth companies, alongside public growth equities, may broaden investors’ access to the innovation opportunity set.
1 Ritter, Jay R. IPO Statistics, July 2026 update. University of Florida Warrington College of Business, Table 4a: “Technology Company IPOs, 1980-2025 Including Direct Listings,” p. 14.
The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of September 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.
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. Past performance is not indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments. Private placements are offerings of a company’s securities not registered with the SEC and not offered to the public, for which limited information may be available. Such investments are generally considered to be illiquid. Companies involved in, or exposed to, AI-related businesses may have limited product lines, markets, financial resources or personnel as they face intense competition and potentially rapid product obsolescence, and many depend significantly on retaining and growing their consumer base. These companies may be substantially exposed to the market and business risks of other industries or sectors, and may be adversely affected by negative developments impacting those companies, industries or sectors, as well as by loss or impairment of intellectual property rights or misappropriation of their technology. Companies that utilize AI could face reputational harm, competitive harm, and legal liability, and/or an adverse effect on business operations as content, analyses, or recommendations that AI applications produce may be deficient, inaccurate, biased, misleading or incomplete, may lead to errors, and may be used in negligent or criminal ways. AI companies, especially smaller companies, tend to be more volatile than companies that do not rely heavily on technology. Investing in innovation is not without risk and there is no guarantee that investments in research and development will result in a company gaining market share or achieving enhanced revenue. Companies exploring new technologies may face regulatory, political or legal challenges that may adversely impact their competitive positioning and financial prospects. Developing technologies to displace older technologies or create new markets may not in fact do so, and there may be sector-specific risks. There will be winners and losers that emerge, and investors need to conduct a significant amount of due diligence on individual companies to assess these risks and opportunities.
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The following positions represent firm wide assets under management as of June 30, 2026: Alphabet Inc., 4.7%, Amazon.com, Inc., 4.9%, and Anthropic, 0.6%.
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