Align Technology (ALGN) Slid as Demand Rebound Expectations Fell Short

ALGN -0.03%

Meridian Funds, managed by ArrowMark Partners, released its “Meridian Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equities hit a record high in the third quarter, fueled by continued gains in technology and falling bond yields. Easing tariff rhetoric and renewed AI infrastructure investments boosted large tech stocks. In mid-September U.S. Federal Reserve lowered rates by 25 basis points. Against this backdrop, the fund returned -1.78% (net) compared to the Russell 2500 Growth Index’s 10.73% return. Sector positioning and the avoidance of names that do not meet the firm’s strict investment discipline led to the underperformance of the fund in the quarter. In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, Meridian Growth Fund highlighted stocks such as Align Technology, Inc. (NASDAQ:ALGN). Align Technology, Inc. (NASDAQ:ALGN) designs, manufactures, and markets Invisalign clear aligners and iTero intraoral scanners and services. The one-month return of Align Technology, Inc. (NASDAQ:ALGN) was 6.25%, and its shares lost 37.14% of their value over the last 52 weeks. On November 28, 2025, Align Technology, Inc. (NASDAQ:ALGN) stock closed at $147.19 per share, with a market capitalization of $10.669 billion.

Meridian Growth Fund stated the following regarding Align Technology, Inc. (NASDAQ:ALGN) in its third quarter 2025 investor letter:

"Align Technology, Inc. (NASDAQ:ALGN) is a global leader in dental technology and the maker of Invisalign clear aligners. We were initially drawn to Align for its strong competitive position and innovative iTero digital scanning system, which enables clinicians to design more precise treatment plans and enhances the overall patient experience. The stock underperformed during the quarter as expectations for a demand rebound did not materialize. Patient conversion rates softened, most notably within the teen segment, where revenue growth slowed to 3%. In addition, market share gains reversed amid a weaker macroeconomic backdrop for discretionary dental procedures and a shift toward lower-cost wires and brackets. Given these dynamics, we trimmed our position during the period."

Align Technology, Inc. (NASDAQ:ALGN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Align Technology, Inc. (NASDAQ:ALGN) at the end of the third quarter, which was 54 in the previous quarter. In Q3 2025, Align Technology, Inc. (NASDAQ:ALGN) reported revenue of $995.7 million, down 1.7% from the prior quarter and up 1.8% from the corresponding quarter a year ago. While we acknowledge the potential of Align Technology, Inc. (NASDAQ:ALGN) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Align Technology, Inc. (NASDAQ:ALGN) and shared the list of stocks Jim Cramer discussed. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.