Remember when everyone said “size matters” in the stock market? Well, plot twist: the little guys are finally stealing the show.
While everyone’s been obsessing over whether NVIDIA’s going to hit another record high (spoiler: it probably will, but that’s not the point), something way more interesting has been happening in the background. Small-cap stocks – you know, those scrappy companies that your uncle probably never heard of – just hit a milestone that’s got Wall Street doing double-takes.
The Russell 2000, which is basically the popularity contest for small companies, just broke above 2,500 for the first time ever. That’s like your local coffee shop suddenly outselling Starbucks – unexpected, but absolutely beautiful to watch.
Here’s the thing: while the big tech giants have been hogging all the attention (looking at you, Magnificent 7), they’ve also been hogging all the risk. When your entire market rally depends on seven companies, that’s not diversification – that’s putting all your eggs in a very expensive, AI-powered basket.
But small-caps? They’re the opposite of that. Think of them as the indie band that’s about to go mainstream, except instead of selling out, they’re just finally getting the recognition they deserve.
The numbers don’t lie: since April’s market hiccup, the Russell 2000 has gained 35% compared to the S&P 500’s 30%. That gap is widening, and it’s not by accident. When interest rates were sky-high, these smaller companies got squeezed harder than a tube of toothpaste. But now that the Fed’s playing nice with rates again, suddenly everyone remembers that growth doesn’t always come in XXXL sizes.
Speaking of AI (because apparently we legally have to mention it in every market article now), AMD just scored a massive deal with OpenAI that sent its stock up 24%. Cool story, but here’s the plot twist nobody’s talking about: these AI deals are getting a bit… circular. AMD and NVIDIA are essentially paying their customers to buy their chips. It’s like if McDonald’s paid you to eat their burgers and then celebrated record sales. Technically true, but also kind of weird when you think about it.
Meanwhile, gold just casually strolled past $3,900 an ounce like it’s window shopping for the $4,000 club. Bitcoin’s chilling above $125,000 (because apparently 2025 is the year crypto decided to be boring and just go up). When people are parking money in gold and crypto, that’s usually code for “maybe these sky-high stock valuations are making me nervous.”
The bottom line? After years of playing second fiddle to their bigger, flashier cousins, small-cap stocks are having their main character moment. And honestly, it’s about time. When the market’s been running on the fumes of seven mega-cap stocks, a little diversification never hurt anybody.
So while everyone else is still arguing about whether AI is going to take over the world, smart money might want to pay attention to the companies that have been quietly building real businesses without needing a ChatGPT partnership to justify their existence.
The revolution will be small-cap sized, apparently.