Small-Cap Stocks Outpace S&P 500 in H1 2026 as AI and Valuation Gap Narrow
The Russell 2000 has surged over 20% YTD, its strongest first‑half showing since 1991, while the S&P 500 lags. A closing valuation gap—18× forward earnings versus 26× for the S&P—and AI tailwinds pushing earnings growth forecasts to 38% fuel the rally. Investors may want to add broad small‑cap ETFs such as VTWO or VBR.