Do You Believe in the Long-Term Growth Potential of Align Technology (ALGN)?

Ruane, Cunniff LP, an investment adviser managing Sequoia Strategy, released its Q4 2025 investor letter. A copy of the letter can be downloaded here. Sequoia Strategy returned 9% in Q4 compared to 2.7% for the S&P 500 Index. The Strategy delivered a return of 21.9% in 2025 versus 17.9% for the Index. In a year characterized by both strength and volatility, the Strategy outperformed the Index. The firm strives to invest in high-quality, fundamentally and financially strong businesses at reasonable prices. The Strategy is concentrated while it covers a wide range of sectors, business styles, and regions. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Sequoia Strategy highlighted Align Technology, Inc. (NASDAQ:ALGN) as a recent addition.  Align Technology, Inc. (NASDAQ:ALGN) is a medical device company known for the Invisalign clear aligner orthodontic system. On February 6, 2026, Align Technology, Inc. (NASDAQ:ALGN) stock closed at $187.60 per share. One-month return of Align Technology, Inc. (NASDAQ:ALGN) was 9.07%, and its shares are down 11.52% over the past twelve months. Align Technology, Inc. (NASDAQ:ALGN) has a market capitalization of $13.598 billion.

Sequoia Strategy stated the following regarding Align Technology, Inc. (NASDAQ:ALGN) in its fourth quarter 2025 investor letter:

"Notable new positions added this past year included MSA Safety, Inc., Accenture Plc, and Align Technology, Inc. (NASDAQ:ALGN). We introduce each of these investments below.

Align Technology, Inc. (“Align”), the third and final of our notable new positions, is the company behind the Invisalign clear aligner orthodontic system. The company was founded in 1997. The idea of using plastic trays to move teeth was not entirely new but Align was the first company to invest in the product and the business in a serious way. In its early years, Invisalign was met with broad-based resistance and even hostility from the orthodontic community. Align was forced to bypass the channel to generate consumer demand, through an aggressive brand advertising campaign that established Invisalign as the first and only real consumer brand in the orthodontic and dental space.

Today, Align’s market capitalization stands at roughly $12 billion. We expect the company will have generated revenues of roughly $4 billion in 2025, with Invisalign accounting for over $3 billion of this total, and intraoral scanners and lab-oriented digital design software accounting for the balance. Align’s operating margins, as we calculate them, are somewhat depressed but still running in the high teens on a percentage of sales basis. The company earns sky-high returns on tangible capital and therefore converts free cash flow in a pleasing manner. The company has no debt and roughly $1 billion of cash on its balance sheet. Align is now a large, global and profitable business. Invisalign is available in over 100 countries and drives roughly 2.5 million orthodontic “case starts” per year..." (Click here to read the full text)

Align Technology, Inc. (NASDAQ:ALGN) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 48 hedge fund portfolios held Align Technology, Inc. (NASDAQ:ALGN) at the end of the third quarter, which was 54 in the previous quarter. In Q4 2025, Align Technology, Inc. (NASDAQ:ALGN) reported revenue of $1048 million, a 5.2% increase from the prior quarter and up 5.3% from the corresponding quarter a year ago. While we acknowledge the potential of Align Technology, Inc. (NASDAQ:ALGN) 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 Align Technology, Inc. (NASDAQ:ALGN) and shared Giverny Capital Asset Management's views on the company. 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.