The Evolution of Growth Investing
At a recent industry lunch, I had the pleasure of sitting across from Jun Bei Liu from Ten Cap. Her enthusiasm for stock picking was infectious. During our conversation, she compared finding great stocks to treasure hunting: the treasure is out there, but it requires traversing through challenges to uncover it.
This metaphor perfectly encapsulates growth investing in 2026. The treasure still exists, but the old maps no longer guide us effectively. For the past two decades, growth investors have benefited from significant trends such as China’s industrialization and Australia’s resource boom, the rise of smartphones and platform economies, cloud computing, and the post-GFC zero-rate environment. These themes were obvious in hindsight, but at the time, they were where earnings, capital, and attention flowed.
The Era of Easy Growth
Post-GFC, paying a premium for growth was not only acceptable but also rewarding. Investors could buy quality tech stocks, pay up for multiples, and let falling rates and rising narratives do the rest. This strategy worked well for a long time, with large-cap US growth returning an annualized 16.6% over the 10 years to March 31, 2026, compared to 10.4% for large-cap value.
However, when the economic regime shifted, the pain trade emerged. In 2022, growth stocks fell by 29.3%, while value stocks lost 7.7%. Even now, growth stocks carry a meaningful premium, with the iShares Russell 1000 Growth ETF having a portfolio P/E of 37.6 times as of April 24, 2026, versus 22.5 times for its value counterpart.
The Interest-Rate Backdrop
The interest-rate environment plays a crucial role in this shift. In December 2008, the US Federal Reserve cut the fed funds rate to 0-0.25%. It returned to that level in March 2020. As of March 18, 2026, the target range was 3.5%-3.75%. We are no longer in a zero-rate world, which means future cash flows must be scrutinized more carefully.
A Narrower Market
In the US, by mid-2025, the ten largest companies in the S&P 500 accounted for almost 40% of the index, a level of concentration not seen since the mid-1960s. On the ASX, the opposite issue exists: Australian tech is exciting, but small. According to ASX-published analysis, the constituents of the S&P/ASX All Technology Index represented just 4% of the S&P/ASX 300 as at mid-March 2026, and the sector had suffered six drawdowns of 20% or more since 2014.
Why AI Looks Different
My suspicion is that the next dominant theme will still be connected to AI, but likely not in the simplistic way the market first assumed. AI is an infrastructure story, an energy story, a productivity story, and eventually, a sector-by-sector adoption story. It will impact all asset classes in different ways.
The numbers already hint at this breadth. Gartner forecasts worldwide AI spending at US$2.52 trillion in 2026, up 44% year-on-year. IDC expects AI infrastructure spending to reach US$223 billion by 2028, with 82% of that tied to cloud deployments. Meanwhile, the International Energy Agency (IEA) estimates that data centres consumed about 415 terawatt-hours of electricity in 2024 and could reach roughly 945 terawatt-hours by 2030. That is why the opportunity set now extends beyond software and semiconductors to networking, power, cooling, industrials, utilities, and beyond.
The Search for Durable Earnings
Growth investing in 2026 is less about buying a label and more about tracing where the next durable earnings stream will actually emerge. While we all want to find the next 100-bagger, the reality is that growth investors who do it well over sustained periods are looking for quality compounders across multiple sectors, rather than swinging for the fences on a single make-or-break theme.
It is in these moments, which lack a clear dominant theme, that the best growth investors typically deliver the bulk of their performance. It’s when it’s uncomfortable that these investors either avoid being shaken out of themes they know have legs, or are smart enough to pivot to those that do.
The Search Starts Here
Ultimately, this Growth Series will focus on identifying the companies and opportunities with real runway, genuine reinvestment capacity, pricing power, and exposure to structural change that can survive a higher-cost-of-capital world. Some of those names will be in technology. Some will sit adjacent to it. Some will be purely equity stories, and some will sit in private markets, or property, or infrastructure. Some may not look like growth stocks at all until the numbers force the market to pay attention.
The key thing to remember is that the treasure is still out there, but the search has become more selective and, frankly, more interesting. Over the coming weeks, we will speak to the investors doing the hard yards, the ones willing to leave the beaten path, test the prevailing narratives, and hunt for the next great growth opportunities before the rest of the market catches up.
