As in 2024, 2025 has seen a handful of companies continue to dominate market performance. The so-called Magnificent Seven remain crucial considerations, dominating many investor portfolios. Market leadership includes those firms and a few others, either AI hyperscalers or firms benefitting from the AI revolution. Within the last few weeks, however, those companies have seen some turbulence. Whether those firms can deliver is a question of rising importance, but preparing for market broadening now may be prudent.
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Recent analysis from T. Rowe Price explored the question of broadening market leadership and opportunities. T. Rowe Price Head of Global Equity Josh Nelson and Head of T. Rowe Price Investment Management Stephon Jackson spoke to the topic in a piece focusing on GARP investing.
Market Leadership to Broaden? Active Can Help
“It doesn’t need to be a full market reversal that will bring GARP back into favor,” the duo wrote. “We expect broadening to occur going forward, with the spread of earnings growth between the Tech+ and ex‑tech sectors of the S&P 500 Index at the end of September at its narrowest since the first quarter of 2023.”
If the market does broaden out from just those megacap tech firms and AI hyperscalers, active investing could help investors take advantage. By adding active strategies now, investors can get exposure to fundamental research-driven, bottom-up portfolio construction.
That can help investors get exposure to companies poised to perform amid a market transition into broader leadership, rather than simply lean on the current leaders for performance. Fundamental metrics like cash flow and profitability can lead funds to stocks poised for growth from multiple sectors, not just technology.
A strategy like the+ T. Rowe Price U.S. Equity Research ETF+ (TSPA ) provides a notable example. Charging a competitive 34 basis points, the fund leans heavily on fundamental research to help guide its investment approach. For those looking to prepare for a broader set of market opportunities, an active ETF may provide a helpful option.
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