T. Rowe Price Midyear Outlook Signals Small-Cap Shift as AI Spending Broadens

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Summary · why it matters

T. Rowe Price's 2026 midyear market outlook signals a broad shift in market leadership away from the largest technology companies, renewing attention on small-cap stocks. The firm argues that massive AI infrastructure spending is pressuring free cash flow and altering return profiles for mega-cap tech, while small-cap and value stocks have outperformed year-to-date through May 29 as earnings growth spreads beyond the benchmark's largest names. AI spending is now moving into power, data center infrastructure, electrical equipment, and cooling systems, making it less a technology story and more a broad industrial investment cycle. Two T. Rowe Price ETFs offer exposure to this shift: the T. Rowe Price Small-Mid Cap ETF, with $2.43 billion in assets, returned 20.1% year-to-date, while the T. Rowe Price Active Core U.S. Equity ETF, holding $14.2 million in assets, returned 10.2% year-to-date.

Impact on stocks 1

Financials▲ · 1 stocks
T. Rowe Price Group Inc
TROW
▲ PositiveCapitalrelevance

T. Rowe Price's own midyear outlook highlights a shift to small-cap and value stocks, which could drive inflows into its small-mid cap ETF (up 20.1% YTD) and active core ETF, benefiting its asset management business.

Theme Impact 5

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