U.S. small-cap equities have concluded their strongest first-half performance in 35 years, cementing a significant shift in market leadership away from large-cap growth stocks.
The rally represents a decisive break from the prolonged underperformance that has characterized the segment relative to its larger peers in recent years.
This resurgence is not being driven by traditional economic cycle plays.
Instead, the momentum stems from the expansion of the artificial intelligence trade into smaller companies, which are increasingly benefiting from the broader tech infrastructure build-out.
Capital is flowing into these firms as investors seek exposure to the AI value chain beyond the mega-cap leaders.
The performance underscores a broadening of the equity market rally, with smaller companies drawing fresh interest as the AI narrative deepens.