AI Mania Dominates Stock Market: How Tech Stocks are Outshining Value Stocks in 2023

Anticipations for value stocks to take center stage in 2023 were swiftly overshadowed by the unexpected rise of tech stocks, fueled by the promising landscape of Artificial Intelligence (AI). This sudden shift has led to a significant disparity between the performance of growth stocks (primarily tech stocks) and value stocks, a trend that was last seen in 2016.

1. Comparative Analysis: Value Stocks and Growth Stocks

The performance of the Russell 3000 Value Index and the Russell 3000 Growth Index offers a clear picture of this trend. As per Dow Jones Market Data, the former has managed a modest return of 2.1% this year, lagging behind the latter by a staggering 31 percentage points. This underperformance is the second largest in the index’s history since 2000.

As Liz Young, head of investment strategy at SoFi, explains, “For investors, there is this muscle memory” for buying tech stocks.

2. The Stars of the Growth Index

The significant gap between the two indexes can be attributed to the performance of the largest companies listed. The 10 biggest companies in the Russell growth index have gained an average of 82% this year, with the chip…