Robust Results Lifted Waters (WAT)

Madison Investments , an investment advisor, released its second-quarter 2026 investor letter for the "Madison Mid Cap Fund". You can download a copy of the letter here . U.S. stock market indices posted their strongest second-quarter performance since 2020, driven largely by enthusiasm for Artificial Intelligence. Nine of the ten largest companies in the Russell Midcap Index benefit directly from the AI data-center boom; one rose 257%, while the others gained between 17% and 136%. A small group of AI-related stocks has powered most of the index's year-to-date returns, reversing the broader market participation seen earlier this year. Although AI will reshape society and the economy, today's apparent winners may not remain so, and current valuations may prove unsustainable. Other risks include unpredictable federal policy, partisan gridlock, expanding deficits, inflation, higher interest rates, stretched consumer finances, and geopolitical volatility. The Class Y of the Fund returned 8.58% in the quarter compared to Russell Midcap's 13.83% return. The firm believes its Mid Cap portfolio combines strong long-term growth prospects with resilience amid potential challenges. Please review the Fund's top five holdings to gain insights into its key selections for 2026.

In its second-quarter 2026 investor letter, Madison Mid Cap Fund highlighted Waters Corporation (NYSE: WAT ). Waters Corporation (NYSE:WAT) is a US-based life science and diagnostic company that provides analytical workflow solutions. On September 22, 2026, Waters Corporation (NYSE:WAT) closed at $425.74 per share. Over the past month, Waters Corporation (NYSE:WAT) returned 2.79%, and its shares gained 45.48% over the past 52 weeks. Waters Corporation (NYSE:WAT) has a market capitalization of $41.80 billion.

Madison Mid Cap Fund stated the following regarding Waters Corporation (NYSE:WAT) in its Q2 2026 investor letter:

"The top five contributors for the quarter were MKS, Amphenol, Arista Networks, Bio Techne, and Waters Corporation (NYSE:WAT). In a market highly focused on the stocks of AI beneficiaries, it's no surprise to see the three companies in the portfolio with the most AI infrastructure exposure lead the way this quarter. Waters (WAT), a life sciences tools provider, saw its shares respond favorably to solid results in their legacy Waters business as well as in the recently acquired biosciences and diagnostics businesses from Becton Dickinson."

Waters Corporation (NYSE:WAT) is not on our list of the 40 Most Popular Stocks Among Hedge Funds . As per our database, 64 hedge fund portfolios held Waters Corporation (NYSE:WAT) at the end of the second quarter, which was 52 in the previous quarter. While we acknowledge the potential of Waters Corporation (NYSE:WAT) 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 .