Russell 2000: Unprofitable Cos Outperform

Investors are rewarding artificial intelligence exposure over profitability, with unprofitable Russell 2000 companies outperforming profitable peers, according to The Kobeissi Letter.

Companies with negative earnings per share in the Russell 2000 have returned 60% since April 2025, compared with a 38% gain for companies with positive earnings, the market commentator said in a post on X Sunday.

AI Trade Fuels Rally In Riskier Small Caps The outperformance accelerated in April after investors piled into small-cap technology stocks following an Iran-U.S. ceasefire announced on April 7, according to Kobeissi.

The market commentator said investors have increasingly favored companies tied to the AI theme, even when those businesses remain unprofitable. “Investors are rewarding AI exposure over profitability,” Kobeissi wrote.

Unprofitable companies are outperforming the market: Russell 2000 companies with negative earnings per share (EPS) have returned +60% since April 2025.

At the same time, firms with positive EPS have gained +38%.

As a result, the Russell 2000 has rallied +48%, ranking among the… pic.twitter.com/yCfxSfJO19 — The Kobeissi Letter (@KobeissiLetter) June 21, 2026 Read Also: Ro Khanna Says A Nurse's Vote Equals A Billionaire's — Former Google Executive Fires Back: Start With Your Own Family's Money Russell 2000 Keeps Pace With Major Indexes The Russell 2000’s 48% advance has outpaced the S&P 500’s 38% gain and trailed only the Nasdaq 100’s 58% surge since April 2025, according to The Kobeissi Letter.

The performance marks a sharp reversal for smaller companies, which had lagged much of the broader market’s AI-driven rally.

INDEX YTD gain 1 YEAR gain Russell 2000 Index 18.80% 39.72% S&P 500 9.36% 24.49% Nasdaq 100 20.63% 39.12% Small Caps Catch Up To Big Tech The rally has also been reflected in individual Russell 2000 constituents, with stocks such as Bloom Energy Corp   (NYSE: BE ) and Applied Optoelectronics Inc.   (NASDAQ: AAOI ) among the index’s top performers over the past year , significantly outperforming many established semiconductor names.

After a prolonged stretch of losses, Bloom Energy reported earnings per share of $0.43 in the first quarter of 2026.

Shares of Bloom Energy have gained more than 233% year-to-date and over 1,350% over the past year.

Applied Optoelectronics was up over 300% so far this year and gained more than 600% over the past 52 weeks.

Price Action: BE shares rose 15.41% on Thursday to close at $328.91 ahead of the Juneteenth market holiday on Friday.

Benzinga edge rankings indicate BE has a Momentum score in the 99th percentile and Growth score in the 98th percentile.

Read Also: Michael Burry Unlocks Research For Father's Day, Says AI Will Create Software Winners And Losers: Here Are The Stocks He Highlighted Disclaimer :  This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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