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AI Mania Has Turned Growth Stocks Into Market Heavyweights

Shares of big tech companies are surging this year and racing past value stocks once again, powered by investor optimism about the promise of artificial intelligence.

That is a reversal from last year when value stocks pulled ahead of growth stocks for the first time since 2016.

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The Russell 3000 Value Index has returned just 2.1% this year through Monday, lagging behind the Russell 3000 Growth Index by 31 percentage points.

That is the second-biggest underperformance on record dating back to 2000, according to Dow Jones Market Data.

It has become a familiar refrain for investors: The value index has topped growth just nine times in 23 years.

It’s not unusual for growth stocks to leave value shares in the dust, as has been the case throughout 2023.

The average stock in the Russell 3000 Growth Index sports a market cap of about $956 billion, according to LSEG data. Megacap stocks like Microsoft, Apple and Nvidia help lift that average.

The average company in the Russell 3000 Value Index, by contrast, has a market value of $126 billion.

This year, the growth index has outpaced its value counterpart by 31 percentage points, the second largest disparity on record this century, according to Dow Jones Market Data.


Image: Big Tech