You will hear the terms growth and value constantly when reading about US equity investing.

Before going further, it is worth saying: these are not categories unique to the US. A company trading at a discount to its fundamental value exists in India, Europe, and Japan too. A company growing revenues at 40% per year exists everywhere. The framework is universal. We cover it here because it is most visible and most actively discussed in the US market, which is where most Indian investors encounter it first.

The growth investor’s theory is this. Find companies growing revenues and earnings significantly faster than average. Accept that you will pay a high price for them today. The bet is that the future earnings will eventually justify that price many times over. The risk is that the growth disappoints or stops. The reward is that a genuinely exceptional compounding business can return more than any other asset class over a long enough period.

Think of NVIDIA. In its fiscal year 2023, it earned about $4 billion in net income. By fiscal year 2025, it earned over $70 billion. No value screen would have caught it at a cheap price. Growth investors who saw the AI chip opportunity early and held through volatility made extraordinary returns.

The value investor’s theory is this. Find companies trading cheaply relative to what they currently earn, own, or generate in cash flow. Maybe the business is in a boring industry that nobody finds exciting. Maybe it faced a setback that scared investors away temporarily. Maybe it is simply being ignored. Pay less per rupee of current earnings, and over time the gap between what you paid and what it is worth closes in your favour.

The interesting tension between the two is that they take turns leading.

Growth had an extraordinary run from 2009 to 2021. The reason comes down to interest rates. When rates are near zero, future earnings are worth a lot in present-value terms. A company expected to earn significantly more ten years from now looks very attractive when you discount those future earnings at a low rate. Growth stocks benefit disproportionately from a low-rate environment.

When rates rose sharply from 2022 onwards, that arithmetic reversed. Future earnings become worth less in present-value terms when you use a higher discount rate. Growth stocks sold off harder than value stocks. Value recovered.

By late 2025, the Russell 1000 Growth index was trading at about 31 times forward earnings. The Russell 1000 Value was trading at about 16 times. That gap is historically wide. Neither camp has a guaranteed advantage from here. The outcome depends heavily on what happens to interest rates and whether today’s growth companies continue delivering on very high expectations.