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Beyond AI Stocks: As Markets Broaden, Look to Active ETFs

BY | ETF Database
6:38 am ET 09/21/26 | 6 VIEWS
AI headlines are getting spooky, but what about AI stocks? The hyperscalers and megacap tech firms make outsized contributions to market movement. As markets broaden, however, other opportunities can be found, that offer upside without adding AI stocks-driven concentration risk. Active ETFs like the T. Rowe Price Blue Chip Growth (TCHP B-) and the T. Rowe Price Small-Mid Cap ETF (TMSL B+) for example, considers factors like earnings, profitability, and relative valuation to find upside.Key Takeaways: Recent analysis from T. Rowe Price speaks to the case for a broadening opportunity set outside of AI stocks. While AI stocks and hyperscalers have contributed massively to market growth, the cash flow picture has darkened. TMSL’s active approach, leaning on fundamental research to target small- and midcaps, can find earnings performers. TCHP’s active approach can find strong growth performers among blue chip firms. T. Rowe Price portfolio manager Paul Greene recently analyzed the shifting landscape for AI stocks and their place in the broadening equities market. The piece, titled “Why investors should prioritize durable growth when the market does not,” honed in on the difference between earnings growth and earnings durability. “The market may not fully appreciate the potential durability of the hyperscalers’ business models while their free cash flow is under pressure and hardware companies benefiting from bottlenecks offer the prospect of impressive near‑term earnings growth,” he wrote. “In our view, this dislocation creates a favorable risk/reward setup for patient growth investors.” Indeed, while AI stocks have notable tailwinds, they have obfuscated what he called an “excluded middle.” That includes companies offering steady, above-average earnings growth over longer term periods. Active investing, relying on fundamental research and analysis, can help identify firms to leverage that conviction. Both TCHP, managed by Paul Green, and equities outside of large/megacap stocks through small- and midcap exposure with the T. Rowe Price Small/Mid Cap ETF (TMSL), managed by Jodi Love, can appeal. TCHP uses that research to find firms with seasoned management and dividend growth among the top names. TMSL leans on T. Rowe Price’s own research capabilities and seasoned managers to do so, assessing stocks for value and growth metrics. The fund’s bottom-up approach considers earnings quality, profitability, projected growth rates, and more. That has helped TMSL return 18.3% over the last 12 months according to T. Rowe Price data. The fund invests in financials as one of its largest sectors, an area that can offer that steady earnings growth long term. TCHP has returned 3.9% in that time. While AI stocks have great appeal, diversifying into steady earnings performers has a place in portfolios, too. For more news, information, and analysis, visit our Active ETF Content Hub.

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