In the simplest terms, growth stocks are companies expected to grow earnings and revenue at a more substantial rate as compared to the broader market. These growth stocks generally do not pay any dividends, as the company reinvests all its earnings to boost its growth. Investors buying growth stocks typically anticipate making money by selling them at a profit after substantial share price appreciation.
Some growth stocks have outperformed considerably in 2023, driven sharply higher by expectations for artificial intelligence (AI)-fueled growth. However, market breadth has been uneven, and many smaller growth names in industries like clean energy and electric vehicles (EVs) have struggled in the face of rising inflation and high interest rates.
