Here's How Apple (AAPL) Impacted Baron Opportunity Fund's Performance

Baron Funds, an investment management company, released its “Baron Opportunity Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. The fund posted positive results in the third quarter, returning 5.44% (Institutional Shares), but lagged behind the Russell 3000 Growth Index’s (the Benchmark) 10.41% gain and the S&P 500 Index’s 8.12% return. The magnificent seven were the significant contributors to the performance of the benchmark in the second consecutive quarter. The relative underperformance was due to specific stocks, caused by a mix of disappointing results from certain holdings in the portfolio and the strong performance of mega-cap stocks that the fund did not have. Moreover, the letter included a detailed update on AI. In addition, you can check the fund’s top 5 holdings to determine its best picks for 2025.

In its third-quarter 2025 investor letter, Baron Opportunity Fund highlighted stocks such as Apple Inc. (NASDAQ:AAPL). Apple Inc. (NASDAQ:AAPL) is an American multinational company that designs, manufactures, and markets smartphones, personal computers, tablets, wearables, and accessories. The one-month return of Apple Inc. (NASDAQ:AAPL) was 3.46%, and its shares gained 17.52% of their value over the last 52 weeks. On November 19, 2025, Apple Inc. (NASDAQ:AAPL) stock closed at $268.56 per share, with a market capitalization of $3.986 trillion.

Baron Opportunity Fund stated the following regarding Apple Inc. (NASDAQ:AAPL) in its third quarter 2025 investor letter:

"The Fund’s non-ownership of Apple Inc. (NASDAQ:AAPL), which remained a Magnificent Seven laggard on a year-to-date basis but rebounded sharply during the quarter, accounted for 43% of our IT sector underperformance.

Regarding Apple and Alphabet, both stocks rallied significantly after a U.S. court issued a favorable remedy in the Department of Justice’s antitrust case against Google, alleviating market fears of a worst-case scenario. The ruling was a near best-case outcome for Apple, preserving its more than $25 billion high margin traffic-acquisition revenue stream from Google and other search providers, and leaving the door open for potential future AI-related payments.

Despite this positive legal development, we remain underweight both companies. For Apple, we see continued regulatory risk to its App Store business and await tangible evidence that its AI initiatives can drive a meaningful product upgrade cycle."

Apple Inc. (NASDAQ:AAPL) is in 8th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 156 hedge fund portfolios held Apple Inc. (NASDAQ:AAPL) at the end of the second quarter, which was 159 in the previous quarter. Apple Inc. (NASDAQ:AAPL) reported revenue of $102.5 billion in the September quarter, reflecting an 8% year-over-year increase. While we acknowledge the potential of Apple Inc. (NASDAQ:AAPL) 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 Apple Inc. (NASDAQ:AAPL) and shared the list of stocks Jim Cramer discussed. In its Q3 2025 investor letter, RiverPark Large Growth Fund noted that Apple Inc. rose sharply after strong fiscal Q3 results and positive sentiment around its AI strategy. 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.