Aristotle Capital cites Advanced Energy as key driver in small-cap outperformance
Boston-based manager notes semiconductor and data centre demand underpinning stock rally, though it flags better risk-adjusted opportunities elsewhere in the sector.
Aristotle Capital Boston, LLC has identified Advanced Energy Industries (AEIS) as a primary contributor to its Small Cap Equity Fund’s performance in the first quarter of 2026. In its investor letter, the Boston-based investment advisor reported that the fund achieved a total return of 1.50%, outpacing the Russell 2000 Index, which returned 0.89% during the same period.
The broader U.S. small-cap equity market delivered strong results amid macroeconomic and geopolitical volatility, supported by improving earnings, attractive relative valuations, and a strategic focus on domestic sectors. Aristotle Capital attributed its outperformance to security selection within the information technology and financials sectors, while maintaining underweight allocations to healthcare and industrials.
Advanced Energy Industries, a provider of precision power conversion, measurement, and control solutions for semiconductor equipment and data centres, saw its shares extend a multi-quarter rally. The fund cited earnings revisions, artificial intelligence-related infrastructure spending, and improving semiconductor capital expenditure trends as key catalysts for the stock’s movement.
As of May 21, 2026, AEIS shares closed at $313.05, valuing the company at a market capitalisation of $12.52 billion. The stock has gained 170.01% over the past 52 weeks, although it experienced a one-month return of -18.15% leading up to the letter’s reporting date. Aristotle Capital stated it maintains its position in the company, believing that exposure to AI-driven semiconductor and data centre demand will continue to drive shareholder value.
Despite the positive outlook for AEIS, the fund noted that it believes certain other artificial intelligence stocks offer greater upside potential with less downside risk. Data from the fund’s research indicates that 27 hedge fund portfolios held AEIS at the end of the fourth quarter of 2025, a slight decrease from the 28 portfolios that held the stock in the previous quarter.
