Large-cap investing has been shaped in recent years by the so-called Magnificent Seven – Apple, Microsoft, Amazon, Nvidia, Alphabet, Meta, and Tesla. These companies have been central to growth-oriented strategies, contributing significantly to the S&P 500's performance.
As 2025 draws to a close, a notable development has emerged: three of these names – Alphabet (GOOGL and GOOG), Amazon (AMZN), and Meta (META) – now appear in the Russell 1000 Value Index, reflecting a shift in valuation metrics rather than a fundamental change in business models.
The Russell Shuffle: When growth meets value
The Russell 1000 Value Index represents the value segment of the U.S. large-cap universe, selecting stocks based on metrics such as price-to-book and forward earnings-to-price ratios. Historically, this has favoured financials, energy, and consumer staples – sectors trading at discounts to intrinsic value.
The annual Russell reconstitution in June 2025 introduced a material change. Moderating valuations and market rotations brought Alphabet, Amazon, and Meta across the style boundary from growth to value. Alphabet and Meta were added on the strength of advertising revenues and AI integration, while Amazon's inclusion reflects compressed valuations in its e-commerce business.
At the June 2025 reconstitution, these names represented approximately 5.5% of the index. By December 1, 2025, their combined weight had grown to 6.87%, with Alphabet's two share classes now accounting for nearly 4%, making it the largest single weight in the index.
Here's a snapshot of the top holdings:
| Rank | Company | Sector | Weight % |
|---|---|---|---|
| 1 | Berkshire Hathaway Inc. (BRK.B) | Financials | 3.15 |
| 2 | JPMorgan Chase & Co. (JPM) | Financials | 2.88 |
| 3 | Alphabet Inc. Class A (GOOGL) | Communication Services | 2.18 |
| 4 | Amazon.com Inc. (AMZN) | Consumer Discretionary | 2.07 |
| 5 | Alphabet Inc. Class C (GOOG) | Communication Services | 1.78 |
| 6 | Exxon Mobil Corp. (XOM) | Energy | 1.70 |
| 7 | Johnson & Johnson (JNJ) | Health Care | 1.66 |
| 8 | Walmart Inc. (WMT) | Consumer Staples | 1.47 |
| 9 | Procter & Gamble Co. (PG) | Consumer Staples | 1.16 |
| 10 | Bank of America Corp. (BAC) | Financials | 1.11 |
Implications for Value Investors: Opportunity or risk?
On the surface, these additions may appear to offer value portfolios exposure to companies with strong competitive positions at relatively lower valuations. However, index methodologies are rules-based and backward-looking, often capturing style shifts after momentum has peaked.
These inclusions are driven by relative valuation metrics, not absolute bargains – Amazon still trades at roughly 35x forward earnings, which is elevated for a value mandate. This blending introduces style drift: what was once a haven for cyclicals now carries nearly 7% in stocks prone to growth-like volatility, potentially amplifying drawdowns during tech corrections.
Alphabet, Amazon, and Meta remain top holdings in the Russell 1000 Growth Index, totaling over 14%. Investors with exposure to both indices may need to reassess portfolio balance. Given that Russell indices rebalance annually, these positions will remain until June 2026.
The active edge: River Road's Absolute Value® discipline
Active management offers an alternative to index-driven style drift. River Road Asset Management's Large Cap Value Select strategy applies an Absolute Value® framework, targeting securities trading at ≥20% discounts to intrinsic value, with an emphasis on strong balance sheets and sustainable cash flows.
Unlike the Russell's mechanical inclusions, River Road's concentrated portfolio of 20–30 holdings reflects rigorous fundamental analysis. As of September 30, 2025, its top positions include Berkshire Hathaway Inc., CRH plc, BJ's Wholesale Club Holdings Inc., Willis Towers Watson plc, and GE Healthcare Technologies Inc. – none of which belong to the Magnificent Seven. This exclusion is deliberate, based on a view that these mega-caps remain richly priced relative to risk-adjusted return potential.
Charting a course forward
The 2025 Russell rebalancing illustrates how passive value indices can blur traditional style boundaries. For investors seeking true value exposure, disciplined security selection remains essential.
River Road's Large Cap Value Select strategy combines quantitative and qualitative screening with bottom-up, fundamental analysis, seeking to deliver long-term capital appreciation with controlled volatility, free from the distortions of index drift.
