Is Value Making a Comeback, or Is It Becoming Harder to Find?

Investors are rediscovering Value, but genuine Value Investing opportunities are not always found in the market’s cheapest stocks.

Since peaking in October 2025, the MSCI World Growth / MSCI World Value ratio has gradually shifted in favour of Value. Capital is flowing back into discounted strategies, while several sectors that had long been overlooked are once again attracting investors’ attention.

A Rebalancing Towards Value, Not a Regime Change

Calling this a genuine regime shift, however, still feels premature. Market conversations remain dominated by artificial intelligence, digital infrastructure and the major US technology platforms. Even discussions around Value often circle back to the same question: who stands to benefit most from the next wave of AI-related investment?

That is precisely what makes the current environment so interesting.

The data point to a rebalancing, not an abandonment of Growth. Earnings, meanwhile, continue to tell a very different story from the one typically associated with a classic style rotation.

Across the United States, as well as in several regions that had previously lagged behind, earnings expectations continue to improve. Behind markets trading near record highs, investors find not only elevated valuations but also profits that are still being revised upward.

Much has been said about a potential artificial intelligence bubble. Yet a significant part of the recent market rally appears to reflect a steady improvement in earnings expectations rather than an uncontrolled expansion of valuation multiples. What markets may be rewarding today is not simply the promise of a technological revolution, but the reality of an earnings revolution.

Looking Beyond the Headlines

This distinction becomes clearer when looking beneath the surface of the indices.

Financials provide perhaps the most compelling example of a sector whose performance is rooted in a genuine improvement in fundamentals. Rising share prices have been accompanied by robust earnings growth, suggesting that the market is gradually correcting an overly pessimistic view of the sector.

Energy and several defensive sectors tell a different story. Their performance has been driven more by multiple expansion than by a comparable improvement in earnings. Returns in these areas reflect changing perceptions more than strengthening fundamentals.

The situation therefore becomes somewhat paradoxical.

Some sectors traditionally associated with Value are increasingly benefiting from higher valuation multiples. At the same time, several areas commonly classified as Growth continue to deliver strong earnings growth, even as valuations gradually normalise.

Technology provides perhaps the clearest illustration of this trend. Despite still demanding valuations, an increasing share of the sector’s performance is now supported by realised earnings growth. Investments linked to artificial intelligence are benefiting an ecosystem far broader than the mega-cap technology companies alone.

In other words, the debate is probably no longer about Value versus Growth. The more relevant question is: what expectations are already reflected in market prices?

Value Factor vs Value Investing

This is where the distinction between the Value Factor and Value Investing becomes particularly important.

The Value Factor systematically targets stocks that appear inexpensive according to a range of standardised valuation metrics. Value Investing, by contrast, seeks businesses whose intrinsic value exceeds their market price. The distinction may appear subtle, but it is critical. A bank trading at nine times earnings is not necessarily a bargain if those earnings represent the peak of the cycle. Conversely, a company trading at twenty-five times earnings may still be undervalued if the market underestimates its long-term ability to generate cash flows.

A stock can look cheap without actually being undervalued.

Why Value Investing Is Becoming More Challenging

This is perhaps the most interesting paradox in today’s market. Early signs of renewed interest in Value make the search for value more demanding, not less. As capital concentrates in the same sectors and the same securities, part of the available discount inevitably disappears.

The risk is therefore no longer simply missing a relative comeback in Value. It is assuming that everything labelled “Value” still represents a genuine Value Investing opportunity.

If the years ahead are driven more by earnings growth than by multiple expansion, investors may no longer need to choose between Growth and Value. The real challenge will be identifying which expectations are already reflected in prices and which remain underestimated. If that assessment is correct, the most compelling Value Investing opportunities may no longer be found within the Value factor itself, but in areas where the market continues to misjudge future earnings power.

Written by MAXIMILIEN MESTELAN

Read the original French article published in AllNews:
Le value revient-il… ou devient-il plus difficile à trouver?

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