Navigating Growth Stocks Amid Market Volatility
Mar 31, 2025
Despite recent market fluctuations, growth stocks remain fundamentally strong, driven by compelling and intact secular tailwinds. We view this market correction as a strategic opportunity for long-term growth investors.
There has been a rotation away from growth stocks in 2025, with value stocks outperforming growth by nearly 9% year-to-date.1 This trend has emerged amid growing uncertainty and mounting recession fears, fueled by the economic fallout of Trump’s tariffs, the threat of resurgent inflation, and intensifying geopolitical tensions.
The recent earnings season has revealed an interesting dynamic: markets have responded sharply to forward guidance that fails to exceed expectations, even when underlying fundamentals remain solid. Such reactions underscore the cautious sentiment among investors.
After two consecutive years of returns exceeding 20%, it’s unsurprising to see some profit-taking and a shift toward reduced risk exposure, particularly in today’s volatile environment. While we expect short-term market fluctuations as the broader macroeconomic landscape unfolds, growth stocks remain fundamentally robust, supported by compelling and intact secular tailwinds. We view this market correction as a strategic opportunity for long-term growth investors.
1 Source: Morningstar Direct. YTD data for Russell 1000 Growth Index and Russell 1000 Value Index as of 11/3/2025. Past performance does not guarantee future results.
References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities. The securities referenced may or may not be held in the portfolio at the time of publication and, if such securities are held, no representation is being made that such securities will continue to be held.
The views expressed herein are those of PGIM investment professionals at the time the comments were made, may not be reflective of their current opinions, and are subject to change without notice. Neither the information contained herein nor any opinion expressed shall be construed to constitute investment advice or an offer to sell or a solicitation to buy any securities mentioned herein. Neither PFI, its affiliates, nor their licensed sales professionals render tax or legal advice. Clients should consult with their attorney, accountant, and/or tax professional for advice concerning their particular situation. Certain information in this commentary has been obtained from sources believed to be reliable as of the date presented; however, we cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance (or such earlier date as referenced herein) and is subject to change without notice. The manager has no obligation to update any or all such information; nor do we make any express or implied warranties or representations as to the completeness or accuracy.
Any projections or forecasts presented herein are subject to change without notice. Actual data will vary and may not be reflected here. Projections and forecasts are subject to high levels of uncertainty. Accordingly, any projections or forecasts should be viewed as merely representative of a broad range of possible outcomes. Projections or forecasts are estimated based on assumptions, subject to significant revision, and may change materially as economic and market conditions change.
For compliance use only 4398860