Broad-Based Growth Drivers Lifted nLIGHT (LASR) in Q1

Prosper Stars & Stripes, a long/short equity fund, recently released its first-quarter 2026 investor letter. A copy of the letter is available to download here. In Q1 2026, the portfolio underperformed with a net return of (-5.6%) compared to the Russell 2000 Index’s +0.9% return and the HFRX Equity Hedge Index’s -1.5% return. Long book performance was negative, while the short book contributed positively. Geopolitics significantly influenced the first quarter, contributing to increased inflation pressures and elevated energy prices. Additionally, you can review the Portfolio’s top 5 holdings to see its best picks for 2026.

In its first-quarter 2026 investor letter, Prosper Stars & Stripes highlighted NLIGHT, Inc. (NASDAQ:LASR). NLIGHT, Inc. (NASDAQ:LASR) is a technology company that focuses on the design and development of semiconductor and fiber lasers for aerospace and defense, industrial, and microfabrication applications. On June 17, 2026, NLIGHT, Inc. (NASDAQ:LASR) closed at $64.55 per share. One-month return of NLIGHT, Inc. (NASDAQ:LASR) was -15.54%, and its shares gained 251.39% over the past 52 weeks. NLIGHT, Inc. (NASDAQ:LASR) has a market capitalization of $3.74 billion.

Prosper Stars & Stripes stated the following regarding NLIGHT, Inc. (NASDAQ:LASR) in its Q1 2026 investor letter:

“NLIGHT, Inc. (NASDAQ:LASR) was the second-largest contributor in our long book in the quarter. The company is one of the leading providers of high-power lasers for mission-critical directed energy (DE) and optical sensing applications. We have found success identifying industry inflection points and investing in differentiated companies we believe are positioned to benefit. The U.S. Department of War has made directed energy a strategic priority, supporting sustained investment in both research and deployment. With more than 450 patents and a U.S.-based semiconductor fabrication facility, nLIGHT is a vertically integrated supplier of semiconductor and fiber lasers to the DoW. This positioning has driven a meaningful shift in its revenue mix: defense has grown from 18% of sales in FY2018 to 70% today. The company’s defense segment delivered 60% year-over-year growth in FY2025. Competition remains limited due to the technical complexity of coherent beam combination (CBC) technology. Notably, nLIGHT has demonstrated a 300kW-class high-energy laser under the DoD’s HELSI program, exceeding program performance objectives. Directed energy systems offer compelling economics for the DoW. The cost per use is estimated to be between $1 and $10 compared to $13 million for a THAAD interceptor or $4 million for a Patriot missile.10 Recent legislative support further reinforces the opportunity. We initiated our position in May 2025 and exited in early April upon hitting our price target.”

NLIGHT, Inc. (NASDAQ:LASR) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 46 hedge fund portfolios held NLIGHT, Inc. (NASDAQ:LASR) at the end of the first quarter, up from 36 in the previous quarter. While we acknowledge the potential of NLIGHT, Inc. (NASDAQ:LASR) 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 NLIGHT, Inc. (NASDAQ:LASR) and shared the list of hot tech stocks to buy according to analysts. In addition, please check out our hedge fund investor letters Q1 2026 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.