T. Rowe Price counts AI as nearly 60% of the Russell 1000 Growth Index

By T. Rowe Price's count, nearly 60% of the Russell 1000 Growth Index now belongs to hyperscale computing and AI infrastructure companies, a figure capital markets strategist Timothy Murray reached by running the index's holdings through ChatGPT and FactSet. The finding lands alongside a cash-flow warning: hyperscaler free cash flow is declining, and more AI spending is being funded with debt.

The value half of the Russell 1000 is supposed to be the ballast, but Murray's arithmetic puts hyperscalers at 12% of the Russell 1000 Value Index and AI infrastructure at another 7%, leaving nearly a fifth of a benchmark sold as value exposure tied to the same trade.

Only at the small end does the exposure thin: T. Rowe Price found no hyperscaler exposure in the S&P 600 Small Cap Index and only 5% AI infrastructure. The index's distance from AI is an artifact of eligibility, not of anyone's judgment about the theme. The same mechanism, running the other way, is what leaves the Russell 1000 Growth so concentrated. The T. Rowe Price Small-Mid Cap ETF (TMSL), a $3 billion active fund charging 0.55%, targets that segment.

Outside the U.S., the theme splits: the MSCI EAFE Value Index has almost no direct AI infrastructure exposure, while the MSCI Emerging Markets Index carries 36% AI infrastructure exposure through memory chips, foundries and hardware and holds the Chinese hyperscalers Alibaba Group Holding, Tencent Holdings and Baidu.

For the year ended Aug. 24, the lighter-exposure options returned close to the same pace, with MSCI EAFE Value up about 29% and the S&P 600 roughly 27%, according to the firm. The valuation and growth cases point opposite ways: EAFE Value trades near 12.7 times forward earnings against roughly 15 times for the S&P 600, while the S&P 600 carries the higher forecast, about 18.5% projected earnings growth over the next year against 9.2%. The T. Rowe Price Active Core International Equity ETF (TACN) holds 400 to 500 large- and midcap stocks against the MSCI EAFE Index Net.

In August, T. Rowe Price's portfolio managers made the same case in sector terms, pointing to healthcare, robotics, financials and industrials as the next AI beneficiaries, a shift in where the earnings are expected to land rather than in how the benchmarks are built.

The result is a large-cap universe whose growth and value halves share one dominant exposure, with the meaningful alternatives sitting in smaller companies and other countries. Murray points to U.S. small-caps and international developed value, the two areas his analysis shows with the least AI exposure. Whether that gap persists is a question about index rules as much as markets: the eligibility thresholds that pushed the largest AI names out of the small-cap benchmark are the same rules holding the growth benchmark near 60%.