Mairs & Power Fund Issues Q1 2025 Letter, Highlights Alphabet’s Stock Performance

MINNEAPOLIS, MN – Mairs & Power, an investment advisor, released its first quarter 2025 investor letter for the Mairs & Power Balanced Fund. In the letter, the firm stated that the stock market reached a record high in February but saw a decline in March due to tariff uncertainties, while fixed income investments gained from perceived safety.

The balanced fund recorded a slight gain of 0.04% by the end of the quarter, outperforming the benchmark composite indexes, which were down 1.48%. Additionally, the fund exceeded the Morningstar Moderate Allocation peer group that saw a reduction of 0.34%.

Among the fund’s top holdings was Alphabet Inc. (NASDAQ: GOOG), which experienced a one-month return of 2.57%. However, Alphabet’s shares fell by 3.48% over the past year. As of May 6, 2025, Alphabet’s stock closed at $165.20 per share with a market capitalization of $1.997 trillion.

The investor letter noted, ‘The Fund’s holdings in the Communications Services sector dragged on portfolio returns during the quarter due primarily to security selection. Alphabet Inc. (NASDAQ: GOOG) led underperformance as it fell in tandem with the other mega cap tech stocks. Additionally, there is increasing concern about the impact of generative AI on Alphabet’s search business and whether it will be able to meaningfully respond.’

As of the fourth quarter of 2024, 174 hedge fund portfolios held Alphabet Inc., a rise from 160 in the previous quarter. In Q1 2025, Alphabet reported $90.2 billion in revenue, reflecting a 12% increase or 14% in constant currency.

Mairs & Power expressed cautious optimism about Alphabet, stating that while they acknowledge its investment potential, their confidence lies in the belief that AI-focused stocks could yield superior returns.

The investor letter also emphasized the increasing significance of generative AI in enhancing monetization and growth, indicating potential shifts in Alphabet’s business model.