Prompt seed germination and emergence, along with excellent seedling vigor, are highly desired traits for ensuring optimal crop establishment and subsequent vegetative growth. This study aimed to evaluate the effects of different algal biostimulants derived from the freshwater macroalgae Compsopogon caeruleus (Rhodophyta) and Pithophora roettleri (Chlorophyta) on the germination and seedling vigor of wheat plants (cultivar Mawaddah). Both algal species were identified using a polyphasic approach that combined morphotaxonomy and the nuclear-encoded SSU rRNA gene. The effects of each algal extract, as well as the combined impact of both extracts, were tested at three different concentrations (0.5, 1, and 2%) in conjunction with 2 and 4% hydrogel. Major nutrients, total carbohydrates, and total proteins were estimated. The experiment was conducted under controlled environmental conditions. Our findings revealed that the 2% aqueous extract of C. caeruleus generally improved nutrient levels and biochemical content in wheat plants compared to other treatments. Additionally, applying 2% hydrogel (2g/ kg of soil) showed the most significant positive effects on germination traits and soil properties. The bioactive constituents in both algal biostimulants were characterized using gas chromatography-mass spectrometry (GC-MS), revealing 20 different bioactive compounds in C. caeruleus compared to 13 compounds in P. roettleri. We believe that algal biostimulants, particularly the 2% aqueous extract of C. caeruleus, enhance germination and biochemical content in wheat plants due to their richness in bioactive compounds, which make nutrients more available to the seeds. Furthermore, the 2% hydrogel retained soil moisture and nutrient availability for a longer period, subsequently reducing water drainage—a critical factor under conditions of water scarcity. In conclusion, we recommend the application of algal biostimulants in conjunction with hydrogel as an eco-friendly technique for sustainable agricultural management.