Renaissance Investment Management, an investment management company, released its Q4 2025 “Large Cap Growth Strategy” investor letter. A copy of the letter can be downloaded here. The strategy faced a difficult fourth quarter of 2025, underperforming both the S&P 500, which gained 2.7%, and the Russell 1000 Growth Index as market leadership remained concentrated in a small group of mega-cap technology companies tied to artificial intelligence. Although equities extended their rally for a third consecutive quarter, the broader market remained weak, with nearly 60% of Russell 1000 Growth constituents posting negative returns. Portfolio performance was supported by several holdings that reported solid operating results and benefited from strong demand related to AI infrastructure, semiconductor equipment, and resilient healthcare distribution trends. However, results were weighed down by declines in certain financial technology, cloud software, media streaming, transportation, and communications equipment companies due to factors including lowered guidance, revenue recognition delays, regulatory developments, and strategic acquisition concerns. During the quarter, the strategy added exposure to semiconductor equipment manufacturers benefiting from secular AI-driven demand and exited a travel and leisure holding after strong post-pandemic gains and increasingly stretched valuations. Looking ahead, the firm remains cautiously optimistic, citing improving inflation trends, Federal Reserve rate cuts, and resilient corporate earnings expectations, while warning that elevated valuations among mega-cap stocks and continued market concentration could create volatility but also opportunities among more reasonably valued growth companies. Please review the Strategy’s top five holdings to gain insights into their key selections for 2025.

In its fourth-quarter 2025 investor letter, Renaissance Investment Management highlighted stocks like Royal Caribbean Cruises Ltd. (NYSE:RCL). Royal Caribbean Cruises Ltd. (NYSE:RCL) is a global cruise company operating a fleet of ships offering vacation experiences across international destinations. The one-month return of Royal Caribbean Cruises Ltd. (NYSE:RCL) was -13.87% while its shares traded between $164.01 and $366.50 over the last 52 weeks. On March 24, 2026, Royal Caribbean Cruises Ltd. (NYSE:RCL) stock closed at approximately $273.39 per share, with a market capitalization of about $74.56 billion.

Renaissance Investment Management stated the following regarding Royal Caribbean Cruises Ltd. (NYSE:RCL) in its Q4 2025 investor letter:

"Conversely, we sold Royal Caribbean Group (NYSE:RCL) following a deterioration in our quantitative factor models. Much of our original investment thesis has come to fruition, with the company having benefited from a recovery in pricing power, strong bookings driven by demand for its new ships, and increased on-board spending, while its focus on cost controls has driven operating margin expansion. Looking ahead, after several years of accelerating revenue growth, we expect to see growth decelerate in 2026, while margin expansion has likely peaked. Consequently, we believe the risk-reward is no longer advantageous with valuation multiples at all-time highs."

A Royal Caribbean cruise. Photo from Royal Caribbean website

Royal Caribbean Cruises Ltd. (NYSE:RCL) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. As per our database, 53 hedge fund portfolios held Royal Caribbean Cruises Ltd. (NYSE:RCL) at the end of the fourth quarter, which was 47 in the previous quarter. While we acknowledge the risk and potential of Royal Caribbean Cruises Ltd. (NYSE:RCL) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. 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 Royal Caribbean Cruises Ltd. (NYSE:RCL) and shared the list of best cruise stocks to buy now. 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.