Diamond Hill Capital's Q4 2025 investor letter highlights Wix.com (WIX) as a new long-term position, acknowledging its strong core capabilities, robust partner ecosystem, and critical back-end functionality, which are expected to ensure its resilience despite market concerns surrounding generative AI. The investment firm believes these factors position Wix.com for sustained growth, making it an attractive opportunity in the evolving tech landscape.
This analysis delves into Diamond Hill Capital’s rationale for investing in Wix.com, particularly in the context of increasing market enthusiasm for artificial intelligence. It explores how the company's foundational strengths and strategic market positioning are seen as key drivers for long-term value, even as competitors gain attention for AI-driven advancements. The discussion further considers Wix.com’s performance against broader market trends and its standing within the competitive landscape of cloud-based web services.
Wix.com's Strategic Edge Amid AI Enthusiasm
Diamond Hill Capital initiated a position in Wix.com, emphasizing that despite widespread market concerns about generative AI impacting the web development sector, these anxieties are largely unfounded for Wix.com. The investment firm points to the company's robust core capabilities, its well-established partner ecosystem, and critical back-end functionalities as factors that will ensure its strong long-term position. These elements are seen as providing a durable competitive advantage that transcends the immediate hype around AI, allowing Wix.com to continue thriving by supporting a diverse range of clients and partners with essential web services.
Wix.com's strategic approach involves continuously enhancing its platform to meet evolving user needs while maintaining a focus on stability and comprehensive service offerings. This includes empowering small businesses and individual users with intuitive web creation tools, as well as providing sophisticated solutions for larger enterprises through its partner network. By concentrating on these fundamental strengths, Wix.com aims to mitigate risks associated with rapid technological shifts and capitalize on its proven business model, positioning itself as a resilient player in the dynamic digital landscape.
Investment Performance and Market Standing
In Q4 2025, while equity markets saw upward momentum, particularly in information technology and communication services driven by AI optimism, the Russell 1000 Value Index increased by 3.8%. The Diamond Hill Large Cap Fund, however, returned 1.41%, lagging the index. This performance context is crucial for understanding the firm’s investment in Wix.com, which, despite a recent 17.93% monthly decline and a 63.46% drop over the past year, holds a market capitalization of $4.628 billion.
Diamond Hill Capital maintains a cautious stance on AI-driven market enthusiasm, favoring fundamentally stable, high-quality, cash-generative businesses. This philosophy underpins their decision to invest in Wix.com. Although Wix.com is not among the top 30 most popular stocks among hedge funds, with 71 hedge fund portfolios holding it at the end of Q3—an increase from 42 in the previous quarter—Diamond Hill Capital believes that Wix.com’s inherent value and long-term potential outweigh short-term market fluctuations and the hype surrounding certain AI stocks, which they consider to have greater upside but also higher downside risk.