Here's What Drove Mairs & Power Growth Fund to Pick Cognex Corporation (CGNX)

Mairs & Power, an investment advisor, released the third-quarter 2025 investor letter for the “Mairs & Power Growth Fund.” A copy of the letter can be downloaded here. In 2025, the market dominance continues to concentrate on a small group of mega-cap stocks associated with artificial intelligence (AI). The fund gained 7.99% in the third quarter, broadly consistent with the S&P 500 Total Return (TR) Index’s 8.12% return and ahead of its peer group, the Morningstar Large Blend index’s 6.93% gain. YTD, the fund is up 10.12% trailing the S&P 500 TR at 14.83% and the peer group at 13.06%. In addition, you can check the fund’s top 5 holdings to find out its best picks for 2025.

In its third-quarter 2025 investor letter, Mairs & Power Growth Fund highlighted stocks such as Cognex Corporation (NASDAQ:CGNX). Cognex Corporation (NASDAQ:CGNX) provides machine vision products that capture and analyze visual information to automate manufacturing and distribution tasks. The one-month return of Cognex Corporation (NASDAQ:CGNX) was 2.32%, and its shares gained 0.53% of their value over the last 52 weeks. On December 10, 2025, Cognex Corporation (NASDAQ:CGNX) stock closed at $37.91 per share, with a market capitalization of $6.354 billion.

Mairs & Power Growth Fund stated the following regarding Cognex Corporation (NASDAQ:CGNX) in its third quarter 2025 investor letter:

"During the third quarter, we added two new positions to the portfolio: Cognex Corporation (NASDAQ:CGNX) and Palo Alto Networks. Cognex is a global leader in machine vision technology, serving logistics, automotive, packaging, consumer electronics, and semiconductor end markets. In our view, the field of machine vision appears to have progressed more in the past six months than in the prior two decades, thanks to AI. Historically, machine vision systems functioned only in tightly controlled environments, where even minor deviations could cause errors or shutdowns. AI has fundamentally changed that dynamic, enabling these systems to adapt and operate reliably in real-world conditions. As a result, we expect machine vision adoption to accelerate meaningfully in the years ahead, and Cognex appears well-positioned at the forefront of this technological revolution. In addition, the company stands to benefit from the broader trend of manufacturing onshoring in the United States and the growing demand for factory automation."

Cognex Corporation (NASDAQ:CGNX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 43 hedge fund portfolios held Cognex Corporation (NASDAQ:CGNX) at the end of the second quarter, up from 41 in the previous quarter.  In the third quarter of 2025, Cognex Corporation (NASDAQ:CGNX) reported revenue of $277 million increased by 18% year-over-year or by 16% on a constant currency basis. While we acknowledge the potential of Cognex Corporation (NASDAQ:CGNX) 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 Cognex Corporation (NASDAQ:CGNX) and shared Artisan Small Cap 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.