In the first quarter of 2026, the Artisan Mid Cap Fund reported a decrease in its holdings of Astera Labs, Inc. (ALAB), a key provider of semiconductor-based connectivity solutions for cloud and artificial intelligence infrastructure. This decision was communicated in the fund's investor letter for the period, which also noted the fund's overall negative absolute returns despite slightly outperforming the Russell Midcap® Growth Index. The market environment during this quarter favored equities with lower volatility and income generation, leading to value stocks surpassing growth stocks in performance. Despite these challenges for growth-oriented strategies, specific investments in industrial and healthcare sectors provided stability for the fund.

Astera Labs (ALAB), which closed at $199.79 per share on May 8, 2026, demonstrated a one-month return of 19.78% and a significant 148.87% gain over the preceding 52 weeks, achieving a market capitalization of $34.25 billion. Artisan Mid Cap Fund acknowledged Astera Labs' potential to capitalize on the ongoing growth in AI-driven infrastructure, given its specialized chips designed to alleviate data, network, and memory bottlenecks in data centers. However, the fund tempered its conviction due to concerns about customer concentration risk and the escalating capital requirements for the company, opting to trim its position while still preserving some exposure to Astera Labs' long-term prospects. This adjustment reflects a strategic re-evaluation within a dynamic market landscape.

Despite its favorable long-term outlook, Astera Labs was not included in a list of the 40 most popular stocks among hedge funds at the close of the fourth quarter. Data indicates that 52 hedge funds held Astera Labs in their portfolios at that time, a slight decrease from 57 in the previous quarter. This suggests that while Astera Labs possesses strong fundamental qualities, some investors might be seeking alternative AI opportunities with potentially higher upside and reduced risk profiles. The careful management of portfolio positions, such as the Artisan Mid Cap Fund's adjustment, underscores a commitment to balancing growth potential with prudent risk assessment, ultimately aiming for sustainable long-term value creation in an ever-evolving technological and economic environment.