In the Russell 2000 index, the small-cap stocks that were losing have risen 154% since mid-2025, while profit-making companies have risen only 34%.

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BlockBeats message, July 16, The Kobeissi Letter posted that among companies in the Russell 2000 Index with negative earnings per share, the cumulative rise since mid-2025 has been 154%; over the same period, companies with positive earnings per share have risen only 34%.

Year to date, the unprofitable companies in the Russell 2000 Index have risen 45% cumulatively, higher than the 18% for profitable companies. Driven by this, the Russell 2000 Index has gained 20% within the year and is poised to achieve its best annual performance since 2003.

Meanwhile, the S&P 500 Index is up 11%, while US stock tech “Magnificent Seven” is up only 4%. The strongest-performing small-cap stocks are mainly technology and infrastructure companies expected to benefit from AI spending. The market is rewarding AI-related exposure regardless of whether the relevant companies are profitable.

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