We expect market leadership to broaden beyond mega-cap tech in U.S. equity markets. For growth heavy portfolios, the narrowing gap between growth and value signals a potential need to add value investments to reduce concentration risk and improve diversification.
A Turning Point
Since November 2025, growth’s momentum has started to slow, and value has begun to outperform, suggesting a shift in market leadership after years of growth dominance. The recent decline in the growth-to-value ratio reinforces that this rotation into value may already be underway. In January alone, mega-cap tech, as represented by the Magnificent 7, was highly dispersed and no longer moving in lockstep, raising both volatility and return risk. For example, Meta advanced by more than 9% while Microsoft declined by 11% during this period. Given this backdrop, we believe it’s increasingly important to broaden exposure to value while being more selective within growth.
U.S. Growth vs Value
The ratio below 1.0 indicates value outperformance; above 1.0 indicates growth outperformance.
Source: Source: BNY Investment Strategy & Research Group, Macrobond. Data as of January 31, 2026.
Magnificent 7 Year-to-Date Performance
BNY Investment Strategy & Research Group, Macrobond. Data as of January 31, 2026.
Momentum for Value
We believe the shift toward value is driven by improving fundamentals in the large cap value asset class. Looking at profit margins, large-cap growth companies have declined 2.5 percentage points in the last six months. Meanwhile, large-cap value companies, such as those in the financial sector, grew from flat to 1.0% over the same time period, signaling a shift toward positive momentum. We believe the trend into value will continue. Including value stocks alongside growth stocks can help investors navigate a continued rotation toward broader equity leadership while strengthening diversification and return durability.
Yearly Change in Profit Margin
BNY Investment Strategy & Research Group, Macrobond. Data as of January 31, 2026.
This is an extract from Checkpoints, a comprehensive monthly chartbook that provides insights into major themes affecting financial markets. For additional analysis, read the full report.
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GU-802 -28 February 2027
