Growth Stocks Show Stronger Fundamentals Than Value

Growth stocks are demonstrating stronger fundamentals than value stocks, with growth companies posting higher earnings growth and healthier balance sheets, despite investor concerns about tariffs and deficits.Growth indices currently show 14.4% projected long-term earnings per share growth, according to Alger’s Winter 2026 Capital Markets presentation. Meanwhile, value indices show just 10.2%. The data challenges conventional assumptions about risk. Growth companies have healthier debt levels, with net debt at just 0.4 times earnings before interest, taxes, depreciation and amortization, compared to 2.2 times for value companies. Approximately $10 trillion in announced private fixed investment in the U.S. reinforces these fundamentals. That creates a tailwind for productivity and industrial capacity, according to Alger. The gap in earnings growth reflects how growth companies may be well positioned to benefit from technological shifts and capital spending cycles, according to Alger. Value stocks, traditionally seen as safer during uncertain periods, are carrying higher debt loads that could constrain their ability to invest in innovation. In Alger’s view, the balance sheet advantage is striking. Growth companies have managed to maintain lower leverage while generating faster earnings growth, according to Alger’s research. This combination of stronger growth prospects and healthier financial positions contrasts with the common perception that growth stocks carry more risk.Investment Cycle Takes ShapeThe $10 trillion investment pipeline spans sectors from artificial intelligence infrastructure to manufacturing capacity. Alger believes this capital deployment will lift productivity and expand industrial capacity over the coming years. As this investment cycle accelerates, Alger believes traditional valuation metrics may be less effective in assessing companies whose value is increasingly driven by intangible assets. Software, intellectual property, data, and network effects, which are often central to modern growth businesses, are not fully reflected in balance sheets or legacy measures such as price-to-book ratios. In Alger’s view, this dynamic underscores the importance of a research-driven approach that looks beyond historical accounting measures to identify companies positioned to benefit from long-term innovation-led growth. The Alger 35 ETF (ATFV C+) takes a focused approach to growth investing. It holds 35 companies identified through Alger’s fundamental research process as demonstrating promising growth potential. This CIO-curated portfolio contains what Alger believes are the most innovative and exciting growth companies across all market caps and sectors. The fund carries a 0.55% expense ratio and launched in May 2021, and currently has assets of $124 million. The combination of superior earnings growth, stronger balance sheets, and a building capital investment cycle suggests growth stocks may be better positioned than traditional metrics indicate, according to Alger. Innovation may serve as a potential buffer against economic weakness as the investment cycle unfolds. For more news, information, and analysis, visit the Artificial Intelligence Content Hub.Disclosure Information Click here for more information on the Alger 35 ETF. The views expressed are the views of Fred Alger Management, LLC (“FAM”) and its affiliates as of February 2026. These views are subject to change at any time and may not represent the views of all portfolio management teams. These views should not be interpreted as a guarantee of the future performance of the markets, any security or any funds managed by FAM. These views are not meant to provide investment advice and should not be considered a recommendation to purchase or sell securities. Holdings and sector allocations are subject to change. Past performance is not indicative of future performance. Prior to December 2, 2024, Alger 35 ETF operated as non-transparent ETF and was limited in the types of investments in which it could invest. This is because only exchange traded securities were permitted. Risk Disclosures - Investing in the stock market involves risks, including the potential loss of principal. Growth stocks may be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. A significant portion of assets may be invested in securities of companies in related sectors, and may be similarly affected by economic, political, or market events and conditions and may be more vulnerable to unfavorable sector developments. Investing in companies of small and medium capitalizations involves the risk that such issuers may have limited product lines or financial resources, lack management depth, or have limited liquidity. The Fund is classified as a “non-diversified fund” under federal securities laws because it can invest in fewer individual companies than a diversified fund. Active trading may increase transaction costs, brokerage commissions, and taxes, which can lower the return on investment. At times, cash may be a larger position in the portfolio and may underperform relative to equity securities. ETF shares are based on market price rather than net asset value (“NAV”), as a result, shares may trade at a price greater than NAV (a premium) or less than NAV (a discount). The Fund may also incur brokerage commissions, as well as the cost of the bid/ask spread, when purchasing or selling ETF shares. The Fund faces numerous market trading risks, including the potential lack of an active market for Fund shares, losses from trading in secondary markets, periods of high volatility and disruption in the creation and/or redemption process of the Fund. Any of these factors, among others, may lead to the Fund’s shares trading at a premium or discount to NAV. Thus, you may pay more (or less) than NAV when you buy shares of the Fund in the secondary market, and you may receive less (or more) than NAV when you sell those shares in the secondary market. The Manager cannot predict whether shares will trade above (premium), below (discount) or at NAV. The Fund may affect its creations and redemptions for cash, rather than for in-kind securities. Therefore, it may be required to sell portfolio securities and subsequently recognize gains on such sales that the Fund might not have recognized if it were to distribute portfolio securities in-kind. As such, investments in Fund shares may be less tax-efficient than an investment in an ETF that distributes portfolio securities entirely in-kind. Brokerage fees and taxes will be higher than if the Fund sold and redeemed shares in-kind. Certain shareholders, including other funds advised by the Manager or an affiliate of the Manager, may from time to time own a substantial amount of the shares of the Fund. Redemptions by large shareholders could have a significant negative impact on the Fund. Alger pays compensation to VettaFi to sell various strategies to prospective investors. Before investing, carefully consider a Fund’s investment objective, risks, charges, and expenses. For a prospectus and summary prospectus containing this and other information or for a Fund’s most recent month-end performance data, visit  www.alger.com, call (800) 992-3863 (for a mutual fund) or (800) 223-3810 (for an ETF), or consult your financial advisor. Read the prospectus and summary prospectus carefully before investing. Distributor: Fred Alger & Company, LLC. All underlying series of The Alger ETF Trust listed on NYSE Arca, Inc. NOT FDIC INSURED. NOT BANK GUARANTEED. MAY LOSE VALUE.