Cognex Corporation (CGNX) Fell on Weaker-Than-Expected Guidance

Baron Fund, an investment management company, released its Q4 2025 letter for “Baron Small Cap Fund”. A copy of the letter can be downloaded here. The market extended its positive trends in the fourth quarter. The Baron Small Cap Fund was down 1.56% in the quarter compared to 1.22% gain for the Russell 2000 Growth Index. The fund returned (0.66)% in 2025, trailing the index by 13.67 percentage points. The yearly performance was weak both on an absolute and a relative basis. Large-cap growth stocks led the market for the third consecutive year, with concentrated leadership. Heading into 2026, the firm expects better growth ahead for small caps given the solid setup. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Baron Small Cap Fund highlighted stocks such as Cognex Corporation (NASDAQ:CGNX). The machine vision solutions provider, Cognex Corporation (NASDAQ:CGNX) weighed on the fund's performance during the quarter. On February 6, 2026, Cognex Corporation (NASDAQ:CGNX) stock closed at $42.37 per share. One-month return of Cognex Corporation (NASDAQ:CGNX) was 7.46%, and its shares are up 7.37% over the past twelve months. Cognex Corporation (NASDAQ:CGNX) has a market capitalization of $7.101 billion.

Baron Small Cap Fund stated the following regarding Cognex Corporation (NASDAQ:CGNX) in its fourth quarter 2025 investor letter:

"Cognex Corporation (NASDAQ:CGNX) is a leading provider of machine vision solutions. Shares declined during the quarter following weaker than-expected forward guidance that suggested continued growth but less acceleration than investors had anticipated. Cognex is an especially short-cycle player that is sensitive to changes in the broader industrial economy, which is currently operating below normalized levels. We expect the CAPEX cycle to continue in its Logistics segment, improve across Consumer Electronics, and management to spur growth with its “Emerging Customer Initiative.” Cognex’s competitive moat remains strong, the business has a stellar balance sheet, and margins are improving. We continue to like stock."

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 third quarter, up from 41 in the previous quarter. 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 a list of best mid-cap dividend stocks to invest in. In addition, please check out our hedge fund investor letters Q4 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.