What Makes Figma (FIG) a Good Investment Choice?

Baron Funds, an investment management company, released its “Baron Fifth Avenue Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In Q3 2025, the fund gained 5.7% (Institutional Shares) compared to the Russell 1000 Growth Index’s (R1KG) 10.5% gain and the S&P 500 Index’s (SPX) 8.1% return. The fund is up 14.4% YTD compared to 17.2% and 14.8% for the indexes. 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 Fifth Avenue Growth Fund highlighted stocks such as Figma, Inc. (NYSE:FIG). Figma, Inc. (NYSE:FIG) is a leading technology company that develops digital design tools. The one-month return of Figma, Inc. (NYSE:FIG) was -22.09%, and its shares lost 45.57% of their value over the last three months. On December 1, 2025, Figma, Inc. (NYSE:FIG) stock closed at $35.69 per share, with a market capitalization of $17.688 billion.

Baron Fifth Avenue Growth Fund stated the following regarding Figma, Inc. (NYSE:FIG) in its third quarter 2025 investor letter:

"We initiated a small position in Figma, Inc. (NYSE:FIG), a software business that offers both designers and non-designers (designers work alongside developers, product managers, researchers, marketers, writers, and other non-designers) a collaborative product to ideate, visualize, build, and ship software – to help companies deliver the best possible user interface in order to optimize user experience and overall customer satisfaction. With the expansion of its product portfolio over the last few years, the company has broadened its focus from traditional designers to non-designers creating a platform that helps teams across companies of all sizes share and explore ideas, align on a vision, visualize concepts, and translate them into coded products – all on a single, connected, AI-powered platform that collaborators around the world can access with a web browser (think "Google Docs" for everything that comprises software design)."

Figma, Inc. (NYSE:FIG) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 38 hedge fund portfolios held Figma, Inc. (NYSE:FIG) at the end of the third quarter, which was 0 in the previous quarter. Figma, Inc. (NYSE:FIG) delivered revenue of $274 million in Q3 2025, marking a 38% increase from Q3 2024. While we acknowledge the potential of Figma, Inc. (NYSE:FIG) 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 Figma, Inc. (NYSE:FIG) and shared Sands Capital Technology Innovators Fund's views on the company. 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.