Oakmark says AI-infrastructure stocks supplied over half of the Russell Value Index's 2026 gain
Oakmark says more than half of the Russell Value Index's 2026 gain came from AI-infrastructure stocks it chose not to own. Its case is a forecast that those earnings are cyclical, and the fund calls the cost so far a big missed opportunity.
The Investor · Invest desk
What happened
- Many of those companies had lower P/Es and could have qualified for the portfolio, but Oakmark was uncomfortable forecasting that their earnings increases were permanent.
- At the end of June, Russell moved most of the AI-infrastructure companies out of its Value Index and into its Growth Index.
- Morningstar classes GM, Delta Air Lines and Nike, and the majority of the fund's portfolio, as mid-cap because those large businesses carry very low P/Es.
- Oakmark's new quantitative team has the fund adding less when results contradict its thesis and trimming less when results track plan but the stock is below target.
Why it matters
- constraint If Oakmark's forecast proves right, the declines are expected to land in the Growth index, so the Value benchmark keeps this year's gain and the gap does not close.
- contradiction The AI-infrastructure explanation covers the value indexes, but the mid-cap shortfall is attributed to a different group, smaller high-valuation businesses, so one cause does not explain both gaps.
- cost Oakmark's own test is earnings durability, and while those earnings hold, holders of the fund keep bearing the gap to value benchmarks.
If AI-infrastructure names supplied more than half of the Russell Value Index's 2026 performance, as Oakmark says [1], the rest of the index supplied less than half [10]. The attribution is the fund's own, offered by a manager explaining why it trails, and the commentary does not include the index's return, the fund's return or the method behind "more than half" [1].
The reasoning is a forecast, and Oakmark states both branches of it. Durable current earnings could keep the stocks good holdings from here; cyclical earnings would probably mean they do not do well [12]. We think that is the right framing, because it says what would prove the fund wrong: earnings that hold. Oakmark wrote, "So far this year, that has been a big missed opportunity." [3]
The June reclassification adds a puzzle. Oakmark's argument is that if it is right to avoid the stocks, any eventual declines will hurt the Russell Growth Index and will not make the Value Index round-trip its gains [13]. Taken literally, being right would not close this year's gap to the Value benchmark, because the gain stays in one index's record while the loss goes to another. Against that, the Value Index holds fewer of these names from the end of June [4], so later comparisons will turn more on what each portfolio owns elsewhere.
The AI-infrastructure story covers the value indexes. The mid-cap shortfall has a different stated cause. Morningstar's mid-cap band runs from roughly $15 billion down from a large-cap line near $90 billion [5], a sixfold range [11], and the strongest performers in it tended to be smaller businesses with exciting potential and therefore high valuations [7]. That is a second group of stocks Oakmark does not own, and the divide there is valuation.
So the outcomes differ in what they do to the gap. Durable earnings turn the abstention into an error, and the gap widens. Cyclical earnings that fall make Oakmark right, and by its own account the loss lands in the Growth index, so the Value benchmark keeps its year. A third branch is cyclical earnings that keep rising before they turn, which would make the fund right on direction and early on timing.
What to watch
- Whether the AI-infrastructure companies' earnings hold or fall, which is the test Oakmark sets for itself.
- Oakmark's next commentary, for the fund's and the Russell Value Index's returns, which the current text does not give.
- Relative performance of the Russell Growth and Value indexes after the end-of-June reclassification.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence35
- Adoption
- Insufficient
- Hype gap
- Insufficient
- Incentives55
- Confidence50
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
More than half of the Russell Value Index's performance this year has come from AI-related names, according to Oakmark's commentary.
- [2]
Many AI-infrastructure companies had lower P/Es and could have qualified for Oakmark's portfolio, but Oakmark was uncomfortable forecasting that their dramatic increases in earnings were permanent rather than cyclical.
- [3]
Oakmark wrote: "So far this year, that has been a big missed opportunity."
- [4]
At the end of June, Russell moved most of the AI infrastructure companies from the Russell Value Index into the Russell Growth Index.
- [5]
Morningstar's large-cap category begins at roughly $90 billion, because companies above that threshold represent about 70% of U.S. market capitalization; the next 20% is mid-cap, which extends down to roughly $15 billion.
- [6]
According to Morningstar, very large businesses Oakmark owns, such as GM, Delta Air Lines and Nike, are classified as mid-cap, as is the majority of Oakmark's portfolio, because those businesses have very low P/Es.
- [7]
The strongest-performing mid-cap stocks have tended to be smaller businesses with exciting potential, and therefore high valuations, which Oakmark says is not what it owns.
- [8]
Oakmark's new quantitative team found that the fund treated its research as though it were directionally right on most stocks it owns, rather than recognizing it is very accurate on some and adds little value on others.
- [9]
Oakmark says it is now less likely to add to positions when fundamental developments have been inconsistent with its thesis, and less likely to trim positions when fundamentals are tracking as expected but the stock has not reached its sell target.
- [10]
If AI-related names supplied more than half of the Russell Value Index's 2026 performance, the remaining constituents supplied less than half.
- [11]
Morningstar's mid-cap band, from roughly $15 billion to roughly $90 billion, spans a sixfold range of market capitalization.
- [12]
Oakmark says that if current earnings prove durable, those stocks may continue to be good investments, and if the earnings prove cyclical, they are unlikely to perform well.
- [13]
Oakmark says that if it is right to avoid those stocks, any eventual declines will hurt the Russell Growth Index rather than causing the Value Index to round-trip its gains.
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Sources
1 independent publisher whose own reporting we read for this story.
- seekingalpha.comOakmark Fund U.S. Equity Market Q3 2026 Commentary
1 article · October 12, 2026
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Topics
- Value InvestingFollow
- AI infrastructure stocksFollow
- Active fund managementFollow
- Equity index constructionFollow
Entities
- Oakmark FundFollow
- Russell Value IndexFollow
- Russell Growth IndexFollow
- MorningstarFollow