--- title: "The last time value stocks beat growth by this much was 2022 - the year of the last major bear market" type: "News" locale: "en" url: "https://longbridge.com/en/news/295136043.md" description: "The Russell 1000 Value Index has significantly outperformed the Growth Index, marking the widest performance gap since 2022. Unlike historical trends where value dominance signals market downturns, this occurs during a bull market. The shift is driven by tech giants like Amazon and Apple now classified as value stocks, alongside broad market breadth beyond AI. Experts view this diversification as positive for the ongoing bull market." datetime: "2026-08-06T19:57:26.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/295136043.md) - [en](https://longbridge.com/en/news/295136043.md) - [zh-HK](https://longbridge.com/zh-HK/news/295136043.md) --- # The last time value stocks beat growth by this much was 2022 - the year of the last major bear market By Isabel Wang The time before that was 2001, the year the dot-com bubble burst. But things are looking different this time. Value is leaving growth behind at a pace rarely seen outside major market downturns. The twist: This is a bull market. Historically, when value stocks are having their moment in the sun, it usually means that the broader market is crashing and burning. Not this time. With major stock indexes dancing in record territory and the bull market about to enter its fourth year, one major value index is trouncing its growth-stock rival by a margin that hasn't been seen since the last major bear market, according to data compiled by Nationwide. The Russell 1000 Value Index RLV has outperformed its growth-stock rival, the Russell 1000 Growth Index RLG, by a wide margin over the past year. In that time, the value index is up 31.6%, while the growth index has gained 13.5%. Based on trailing 12-month relative returns, the performance gap between the two recently touched its widest level since 2022. It stood at 22% as of last week. To be sure, the leading value stocks these days look very different from classic examples of this investing style like Coca-Cola (KO) and Comcast (CMCSA). One reason the Russell value index has done so well in 2026 is that many of its top holdings are actually tech stocks - long associated more closely with growth than value. Amazon.com (AMZN) is now the largest constituent of the value index, followed by Apple (AAPL) and Microsoft (MSFT), while the latter two are also the top holdings in the Russell growth index. Earlier in the year, value stocks' strong performance was driven in part by the inclusion of red-hot chip stocks like Micron Technology (MU) in the index. Value investors seemingly caught a lucky break in June, when highflying Micron was removed from the index during the latest rebalancing - just as the semiconductor trade was peaking. None of this changes the fact that value tends to see its best relative performance when growth is struggling. Before 2022, the previous time the Russell value index saw such strong outperformance was right around the peak of the dot-com bubble. The fact that value names are continuing to do well in August is just one sign of how the stock-market rally has started to meaningfully broaden out beyond the artificial-intelligence trade, as a resilient U.S. economy and the promise of broad-based productivity gains from AI have helped to lift all boats. "The breadth that we've seen in the market is highlighted by the value over growth because there are more names \[in the value category\] and they're more diverse," Mark Hackett, chief market strategist at Nationwide, said during an interview with MarketWatch on Wednesday. "It's not just one trade on the value side. You have financials XX:SP500.40 and other cyclicals, you have defensives and bond proxies." Instead of being a potential problem, this actually bodes well for the bull market, Hackett said. Value's past wins make intuitive sense. In market downturns, investors typically rotate out of growth stocks, particularly technology names whose valuations depend heavily on expectations for future profits. When rates spike or sentiment sours, those stocks can be hit hard. By contrast, investors tend to favor value stocks, most of which are concentrated in traditionally defensive areas of the market such as consumer staples XX:SP500.30, utilities XX:SP500.55 and healthcare XX:SP500.35. These companies usually have steadier earnings, predictable cash flows and lower valuations, providing more downside protection when markets weaken. They also tend to enjoy higher dividend yields, making them more attractive to investors seeking regular income. But that's not the case this time around. The stock market is about to enter its fourth year of the bull market, with AI still being the dominant engine behind the rallies and the historic capital expenditures of the massive AI build-out. The U.S. economy, although growing at a more sluggish pace, is still expanding as consumers remain resilient. Now read: Layoffs fall to the lowest level since the U.S. put men on the moon. Here's what that says about the economy. For investors accustomed to seeing a sharp divide between value and growth names, the fact that FTSE Russell now sees many megacap technology stocks as exhibiting features of both value and growth names is one sign of how the value factor is changing. The factor these days has more of a focus on earnings quality, analysts told MarketWatch. "Roughly 35% of the market value of the Russell 1000 is purely growth, roughly 35% is purely value, and then about 30% is not defined clearly. That puts those companies in this middle area, and their shares are distributed based on their style probability," said Catherine Yoshimoto, director of product management for the Russell U.S. indexes at FTSE Russell. Rather than placing a company into a single rigid bucket, FTSE Russell assigns style probabilities based on its price-to-book ratio, two-year forecast earnings growth and five-year historical sales growth, allowing stocks, especially Big Tech stocks, to have their market capitalization split proportionally between the growth and value indexes. That's why rather than growth stocks falling off a cliff, value names are surging while growth stocks are still sitting on double-digit returns. Plus, as the AI trade matures, investor interest is expanding beyond the early leaders to semiconductor companies and other second- and third-order beneficiaries of AI spending. Many of these businesses are smaller, more value-oriented and more attractively valued, said Indrani De, head of global investment research at FTSE Russell. The current investing environment, which features interest rates closer to historical norms than what investors saw during the 2010s, should also help keep value stocks in favor. "We all got used to the world where growth was so consistently ahead of value in the post-\[financial crisis\] world. But remember, that was a world of very low interest rates," De said. "We are entering a normalized rate environment similar to the pre-\[financial crisis\] era with an upward-sloping yield curve. That is a distinct environment that favors value over growth." Technology earnings are exceptionally robust so far this earnings season, but those results will create difficult year-over-year growth next year, particularly for the Magnificent Seven group of megacap names, according to Hackett. In contrast, value sectors such as healthcare and financials face easier earnings comparisons for the second quarter of 2027, supporting the case for their continued relative outperformance. Hackett thinks the strength in value stocks could be extended and not limited to "a couple-of-quarter phenomenon." U.S. stocks were lower on Thursday as the five-day rally in the Dow Jones Industrial Average DJIA came to a pause. The Dow was falling 0.7%, while the S&P 500 SPX and the Nasdaq composite COMP were each dropping around 0.1%, according to FactSet data. \-Isabel Wang This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. 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