TCW funds, an investment management company, released its “TCW Concentrated Large Cap Growth Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. Equity markets continued their rally in the third quarter, driven by continued optimism around AI investments and positive corporate earnings. Against this backdrop, the fund (I share) returned +4.11% in the quarter compared to +10.51% for the Russell 1000 Growth Index. In addition, please check the fund’s top five holdings to know its best picks in 2025.
In its third-quarter 2025 investor letter, TCW Concentrated Large Cap Growth Fund highlighted stocks such as Adobe Inc. (NASDAQ:ADBE). Adobe Inc. (NASDAQ:ADBE) is a technology company that operates through Digital Media, Digital Experience, and Publishing and Advertising. The one-month return of Adobe Inc. (NASDAQ:ADBE) was 11.17%, and its shares lost 21.20% of their value over the last 52 weeks. On December 24, 2025, Adobe Inc. (NASDAQ:ADBE) stock closed at $352.98 per share, with a market capitalization of $149.734 billion.
TCW Concentrated Large Cap Growth Fund stated the following regarding Adobe Inc. (NASDAQ:ADBE) in its third quarter 2025 investor letter:
“Adobe Inc. (NASDAQ:ADBE) (ADBE; Information Technology) – Adobe develops and sells software and services for content creation and the measurement of digital advertising and marketing. When we first purchased shares nearly a decade ago, we were attracted to Adobe’s competitive position in creative software, large installed base, and attractive margin and free cash flow profile. Adobe was a successful investment for many years but we have been trimming the position for the last several years as the business matured and their growth rate decelerated. More recently, Gen AI (a secular trend to which we are firmly levered) has become an important factor representing a paradigm shift that we believe will disrupt many industries, including image and video editing tools. We believe third party open-source AI tools as well as increasing competition threaten ADBE’s pricing power and seat growth, potentially further decelerating the growth rate. We therefore decided to exit our remaining position to fund more attractive ideas.”
Adobe Inc. (NASDAQ:ADBE) is in the 13th position on our list of 30 Most Popular Stocks Among Hedge Funds. According to our database, 88 hedge fund portfolios held Adobe Inc. (NASDAQ:ADBE) at the end of the third quarter, compared to 104 in the previous quarter. For the financial year 2025, Adobe Inc. (NASDAQ:ADBE) reported revenue of $23.77 billion, representing a 11% year-over-year growth. While we acknowledge the potential of Adobe Inc. (NASDAQ:ADBE) 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.
