Last updated: September 2026. Editorial Team — researched using analysis from J.P. Morgan Asset Management, StoneX, WisdomTree, and reporting from InvestmentNews. See “Sources & Methodology” for our full source list.
Quick Answer
For six years starting in March 2020, growth stocks dominated US equity markets so consistently that many investors stopped seriously considering value stocks at all. That run ended decisively in 2026: large value stocks outperformed large growth by more than 11 percentage points in the opening seven weeks of the year alone, according to StoneX’s February 2026 analysis, with value leading in six of those first seven weeks. As of late June, the Vanguard Value ETF (VTV) was up 14.4% year-to-date while the Vanguard Growth ETF (VUG) had returned just 1.8%. J.P. Morgan Asset Management frames the rotation as being underpinned by heightened market volatility, a shift away from mega-cap concentration, and a broadening of AI investment into infrastructure-related sectors like industrials — though whether this marks a genuine multi-year regime change or a shorter-term correction remains a live, unresolved question.
The Scale of the Reversal, in Numbers
InvestmentNews’s January 2026 reporting captures the early-year divergence in concrete ETF terms: the iShares Russell 1000 Growth ETF (IWF) was down 2.5% for 2026 at the time of writing, while the iShares Russell 1000 Value ETF (IWD) was up 4% over the same period — and up 11% over the trailing six months. StoneX’s Chief Investment Officer Michael Lytle, who has overseen portfolio strategy across multiple market cycles, offered a direct read on the shift: “maybe investors are finally seeing value and valuation again,” he said, adding that “there just isn’t much tolerance for anything that deviates from expectations” — a dynamic he notes places disproportionate pressure specifically on higher-multiple growth stocks, where any earnings disappointment carries an outsized valuation penalty relative to a similar miss at a lower-multiple value stock.
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Don’t Get Too Excited: The Longer-Term Picture Still Favors Growth
InvestmentNews’s reporting is careful to include an important caveat that value bulls shouldn’t skip past: over the trailing five years, growth-focused IWF is still up 90% compared to a 60% return for value-based IWD — meaning 2026’s rotation, however sharp, has so far reversed only a modest fraction of growth’s multi-year cumulative outperformance. Eric Starkey, wealth advisor and investment analyst at Tova Wealth, points to several specific tailwinds genuinely supporting value’s 2026 run: cheaper relative valuations compared to growth, pockets of strong earnings growth within value-classified companies, and stable cash flows — alongside broader macro tailwinds including interest rate cuts and expectations for further rate reductions ahead, which tend to disproportionately benefit value sectors like financials and industrials.
A Broader Rotation, Not Just Value Versus Growth
J.P. Morgan Asset Management’s analysis situates the value-growth rotation within a wider pattern of leadership change across multiple market dimensions simultaneously. The firm’s framing is direct: “the biggest are no longer the best.” In 2023, all seven “Magnificent 7” stocks easily beat the S&P 500; in 2024, six did; then in 2025, just two did, with the magnitude of outperformance shrinking considerably each year — a gradual narrowing that set the stage for 2026’s more dramatic reversal. J.P. Morgan notes International Value stocks specifically show particularly strong momentum, with relative valuations remaining attractive even after recent gains, suggesting the rotation extends meaningfully beyond just domestic US markets.
Sector-Level Evidence: Which Groups Are Actually Winning
Investing.com’s February 2026 analysis of the “reflation trade” identifies the specific sectors driving value’s outperformance in granular detail: since the beginning of 2026, Staples (up 15%), Industrials (up 12%), Energy (up 21%), and Materials (up 17%) had all vastly outperformed a broader market that was effectively flat over the same period. The analysis flags a genuine risk worth taking seriously, though: these same sectors had moved into “very overbought” territory on a short-term technical basis, with the piece explicitly warning that “a rotation back to growth seems increasingly obvious” given how extended the move had become — a reminder that even a genuine, fundamentally-supported rotation can still run ahead of itself in the short term and become vulnerable to a reversal.
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The Classification Problem: What Even Counts as “Value” Anymore
WisdomTree’s analysis raises a genuinely important methodological complication that investors should understand before assuming they know exactly what “value” exposure they’re buying: traditional value indices are, in the firm’s words, “increasingly distorted by methodology — where expensive mega-cap stocks like Apple and Tesla still receive ‘value’ weight.” That’s a real structural issue: as AI-driven concentration has pushed the Magnificent Seven above one-third of the S&P 500’s total weight, some of those same mega-cap growth names have mechanically qualified for inclusion in traditional value indices under certain valuation-metric screens, even though most investors would intuitively think of them as growth stocks. InvestmentNews’s reporting echoes this same concern directly, noting Amazon and Alphabet specifically carry heavy weightings in both growth and value indices simultaneously — a genuine complication for any investor trying to make a clean, intentional bet on one style over the other.
The Historical Base Rate
For investors trying to size up whether 2026’s rotation could persist, it’s worth grounding expectations in the long-run historical record. Research from Dimensional Fund Advisors, dating back to 1927, shows value stocks have outperformed growth by an average of 4.0% annually in the United States over the full period — and in years when value specifically outperformed, the average premium has been nearly 15%, suggesting 2026’s move, while significant, hasn’t yet reached the scale of a historically strong value year. Neither style wins permanently; a genuinely balanced approach combining exposure to both, through individual stock selection or paired ETFs, captures upside from whichever style leads next without requiring an investor to correctly predict the timing of the next rotation in advance.
Frequently Asked Questions
How much have value stocks outperformed growth stocks in 2026?
Large value outperformed large growth by more than 11 percentage points in the first seven weeks of 2026, and as of late June, Vanguard Value ETF was up 14.4% year-to-date versus just 1.8% for Vanguard Growth ETF.
Why are value stocks outperforming in 2026?
J.P. Morgan Asset Management cites heightened market volatility, a shift away from mega-cap concentration, and a broadening of AI investment into infrastructure sectors like industrials as the primary drivers.
Is growth still ahead of value over the longer term?
Yes. Over the trailing five years, the growth-focused Vanguard Growth ETF is still up roughly 90% compared to about 60% for the value-focused Vanguard Value ETF, meaning 2026’s rotation has reversed only a modest fraction of growth’s longer-term outperformance.
What’s wrong with traditional value index classifications?
WisdomTree notes that expensive mega-cap growth stocks like Apple and Tesla still qualify for “value” weighting in traditional value indices under certain valuation screens, complicating the classification and making some “value” funds less differentiated from growth than investors might assume.
Sources & Methodology
This article draws on analysis and reporting from: J.P. Morgan Asset Management’s “Are Value stocks staging a comeback in 2026?” market update; StoneX’s February 19, 2026 analysis, including quoted commentary from CIO Michael Lytle; WisdomTree’s analysis of value index methodology distortions; InvestmentNews’s January 30, 2026 reporting, including commentary from Tova Wealth’s Eric Starkey and Perigon Wealth Management’s Rafia Hasan; Investing.com’s February 2026 sector rotation analysis; and SeaGlobalFX’s July 2026 summary of Dimensional Fund Advisors’ historical value-versus-growth premium research. Figures reflect the most recently published data as of this article’s last-updated date.
This article is for informational purposes and does not constitute investment advice.
