Chaos in the first half of 2025 has reignited an age-old debate about investing styles on Wall Street: value vs growth. 

Growth stocks attract investors with their likelihood for rapid growth and outsize returns, achieved by focusing on innovation and future potential. In contrast, value stocks take a bread-and-butter approach to investing—identifying undervalued companies that boast strong fundamentals and steady returns. But one problem with this investing strategy is that bread and butter doesn’t always satiate the appetite. Often investors like to reach for the steak, sushi, or lobster.

For much of the past decade, growth stocks have been the clear winner, led by an exorbitant rally in tech shares. Value stocks have lagged, but to be clear, they haven’t necessarily underperformed—rather, they’ve been overshadowed by the decade’s exceptional gains in tech. 

Since 2010, the Russell 1000 growth index has posted a blowout 755% gain through the first half of 2025, outpacing the Russell 1000 value index’s comparatively lukewarm 238% increase. 

However, there are reasons to believe this familiar investing playbook is showing signs of flipping. Through the first half of 2025, the value index has added 5.82%, almost on par with the growth index’s 5.75% gain. 

The switch up has some investors betting that value stocks may finally be poised for a comeback. But any gains from here on out won’t be easy to sustain. 

Growth stocks’ success is heavily intertwined with the fate of tech companies. Nine out of the growth index’s top 10 holdings are tech companies, including Nvidia and Meta Platforms. Visa is the 10th-largest constituent. Ultra-low interest rates during the early pandemic also played a large role, encouraging investors to make riskier investments in high-growth stocks. 

However, these trends took a turn in 2022 when the Fed began one of its most aggressive tightening cycles in history. As rates climbed, growth stocks faced increasing pressure. Since they depend heavily on future cash flows, higher discount rates eroded their valuations. Value took the lead that year, and things were finally looking up —until the AI boom in 2023 reignited enthusiasm for Big Tech. Growth stocks soared once again, and the Russell 1000 Value Index fell behind the Russell 1000 Growth Index by a whopping 33 percentage points, the largest gap since 2020. 

By the end of 2024, the AI-driven rally pushed market concentration to one of its highest points in history, with the top 10 stocks comprising about 40% of the S&P 500. Now, with investors raising questions about the skyhigh multiples commanded by AI companies and interest rates at more normal levels, the environment could once again be turning favorable for value stocks. The Trump administration’s recent trade policies have further emboldened that narrative. 

History shows that value stocks have done well in the aftermath of speculative excess. This played out following the Nifty Fifty crash of the early 1970s and the dot-com bubble at the turn of the millennium, as unreasonably high expectations ultimately gave way to company fundamentals. 

Value investing, rooted in the intrinsic worth of companies, might offer more consistent returns in the long run, and its recent resurgence serves as a reminder that discipline and fundamentals could often stand to win. 

Coming soon: What are Value Stocks?