The stimulated emission spectra of photoexcited AlxGa1−xAs, 0.42≤x≤0.46 (near the direct‐indirect gap crossoverxc=0.435) were measured at low temperatures as a function of the illuminated stripe length and excitation intensity. Based on these data, the gain spectra and gain saturation behavior were obtained. The observed gain spectra are explained by calculating the radiative recombination of an electron‐hole plasma of constant density with fair agreement between theory and experiment. It is found that abovexcthe gain spectrum is due to electrons in the indirect‐gap minima (X) whose wave function is strongly admixed with the (&Ggr;) minimum by alloy disorder. The saturation of the stimulated emission at higher excitation intensity and at larger stripe length could be explained qualitatively for the direct‐gap samples by a model based on electron and hole relaxation within their respective Fermi seas. This model yields the stimulated emission shift towards lower energy with increased excitation intensity or stripe length. The behavior of the indirect‐gap samples is different: both ends of the gain spectrum saturate. This behavior cannot be explained by the proposed model.