The Kobeissi Letter said on July 16 that companies in the Russell 2000 with negative earnings per share have climbed 154% since mid-2025, far ahead of the 34% gain posted by companies with positive EPS over the same period. The divergence has also held up this year: unprofitable Russell 2000 companies are up 45% year to date, compared with an 18% rise for profitable firms. According to the post, that strength has helped lift the Russell 2000 by 20% so far this year, putting the index on track for its best annual performance since 2003. Over the same stretch, the S&P 500 has gained 11%, while the Magnificent Seven are up just 4%. The strongest-performing small-cap names are mainly technology and infrastructure companies seen as potential beneficiaries of AI spending. The Kobeissi Letter said the market is rewarding AI exposure regardless of whether those companies are currently profitable.
The Kobeissi Letter said on July 16 that Russell 2000 companies with negative earnings per share have risen 154% since mid-2025, while companies with positive EPS have gained 34% over the same period.
So far this year, unprofitable companies in the Russell 2000 are up 45%, ahead of the 18% increase recorded by profitable companies.
That move has helped push the Russell 2000 up 20% year to date, leaving the index on track for its best annual showing since 2003.
During the same period, the S&P 500 has risen 11%, and the Magnificent Seven have gained 4%.
The best-performing small-cap stocks are mainly technology and infrastructure companies expected to benefit from AI spending. The Kobeissi Letter said the market is rewarding AI exposure regardless of whether the companies are profitable.
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