Value vs growth investing bank of America’s latest equity

Bank of America’s latest equity strategy note projects value stocks to gain 8% by year-end 2024, driven by robust earnings in energy and manufacturing. Growth stock forecasts remain muted at 3–4% gains, factoring in margin compression in semiconductor and SaaS segments. In the value vs growth investing debate, rising commodity prices reinforce value’s defensive advantage during inflationary periods. The AI business already has a $123 billion run rate, and CEO Andy Jassy pointed out, "How often do you have an opportunity that's $123 billion of annual revenue run rate where you say it's still early?" with their long-term potential. But it has fallen out of favour since the 2007-09 financial crisis, and the market has been dominated by “growth” oriented firms, often trading at higher prices relative to their earnings (such as Apple, Amazon and Microsoft). Could the tide be turning? Recent market data shows value stocks outperforming growth peers in early 2024, with the Russell 1000 Value Index up 6.3% YTD while the Russell 1000 Growth gained just 4.1%. Rising interest rates have pressured high-P/E growth names, whereas value plays in financials and energy benefit from stronger cash flows. Analysts note that price-to-book ratios in value sectors remain below historical averages, suggesting more upside potential for disciplined value investing strategies.