--- title: These Tiny Companies Have Doubled the S&P 500's Gain This Year description: Micro-caps have outperformed the 500 largest U.S.-listed stocks in 2026 as market volatility has favored smaller, more nimble companies. authors: - name: Jordan Chussler role: Editor, Investing and Banking url: https://money.com/author/jordan-chussler/ bio: Jordan is an investment editor and CPFC who specializes in traditional equities, gold and other precious metals, retirement savings and income investing. He combines his personal and professional interests in finance and education to help readers increase their financial literacy and make better investment choices. education: Lynn University certifications: Certified Personal Finance Counselor at_money_since: 2023 articles: 131 covers: - Investing - Banking - Credit - Credit Cards - Economy and Politics - Housing - Identity Theft - Insurance - Loans - Mortgages - Personal Finance - Professional Services - Retirement also_seen_in: - Weiss Ratings - 24/7 Wall Street - Better Investing - Yahoo Finance - Nasdaq - Investing.com - Marketbeat - MSN Money social: - https://www.linkedin.com/in/jordan-chussler-b3597811/ editors: - name: Julia Glum role: Managing Editor url: https://money.com/author/julia-glum/ bio: Julia Glum joined Money in 2018 and specializes in covering financial trends that affect everyday Americans' wallets. She also writes Dollar Scholar, a weekly newsletter that teaches young adults how to navigate the messy world of money. education: University of Florida at_money_since: 2018 articles: 453 covers: - Investing - Banking - Business - Career Advice - Credit - Credit Cards - Debt - Economy and Politics - Education - Health and Wellness - Housing - Identity Theft - Insurance - Lifestyle - Loans - Mortgages - Personal Finance - Professional Services - Retirement - Shopping - Taxes - Technology also_seen_in: - Newsweek - International Business Times - CBS News - Good Morning America - WUSA9 - Pix 11 - The New York Times - Mashable - The Washington Post - CNBC - Politico social: - https://x.com/superjulia - https://www.linkedin.com/in/julia-glum published: '2026-05-13T18:30:47.000Z' modified: '2026-05-13T18:30:47.000Z' section: Investing tags: - News word_count: 939 canonical: https://money.com/micro-cap-stocks-performance-sp-500/ type: NewsArticle source: structured-blocks --- > **Disclosure:** We research all brands listed and may earn a fee from our partners. Research and financial considerations may influence how brands are displayed. Not all brands are included. [Learn more](https://money.com/page/disclaimer/). ![Photo-illustration of hand holding phone with S&P stocks on the screen](https://img.money.com/2026/05/News-Tiny-Companies-Doubles-SP.jpg) In the era of [artificial intelligence](https://money.com/ai-stocks-outside-tech/), tech giants with record-breaking market caps continue to dominate the headlines — all while companies a fraction of their size are quietly posting the best performances. Market caps are a measure of the total value of the shares that companies have issued. And so far in 2026, micro caps — those with market caps below $300 million — have more than doubled the return of the 500 largest companies in the United States. In May, the index tracking those tiny firms hit an all-time high. For investors looking to gain exposure and diversify with these under-the-radar stocks, here's what you need to know. ## David and Goliath: a market cap primer Mega caps are well-publicized stocks. They command the most influence over the markets, and their performances are often tied directly to the economy at large. Though figures can vary, mega caps typically boast market caps in excess of $200 billion. That's just the baseline. There are currently 11 U.S.-listed companies whose market caps exceed $1 trillion, with Nvidia — the [world's largest publicly traded company](https://money.com/nvidia-market-cap-ai-bubble/) — valued at $5.36 trillion. In other words, Nvidia's valuation is larger than the GDP of every country on Earth other than the U.S., China and Germany. The S&P 500 is comprised of mega caps and large caps (companies with valuations ranging from $10 billion to $200 billion). By contrast, the Russell Microcap Index tracks the performances of the smallest 1,000 companies in the Russell 2000 (the index of the smallest 2,000 companies in the Russell 3000, which itself is an index of the entire U.S. stock market), and up to 1,000 additional micro-cap companies. This year, the Russell Microcap Index has gained 17.55%, compared to the S&P 500's year-to-date gain of 8.72%. ## Micro caps are shielded from tariff and concentration risks Because they have grown so massive, mega caps dominate the S&P 500. Today, the top 10 companies in that index account for approximately 40% of its weighting, meaning investors who own shares of [funds tracking the S&P 500](https://money.com/why-etf-investing-popular-stocks/) are allocating 40 cents out of every $1 to just 10 of the index's 500 companies. That presents considerable concentration risk. When these mega-cap companies see big gains and losses, it can have an outsized impact on the indices tracking them. Last October, a notable selloff that dragged down mega caps carried into the first quarter of 2026. That tech slump led to the [Nasdaq briefly entering a correction](https://money.com/nasdaq-correction-tech-stocks-iran-war/), which was directly attributed to sizable losses for [members of the Magnificent Seven](https://money.com/magnificent-seven-tech-slump/) and leading software stocks**,** as well as a broader flight to safety as investors looked to avoid additional downside risk. That market rotation helped micro caps outperform the major domestic large-cap indices for four consecutive quarters, according to investment management firm [Franklin Templeton](https://www.franklintempleton.lu/articles/2026/royce-investment-partners/us-small-caps-have-shown-their-resilience-amid-the-fog-of-war). Over the past year, the Russell Microcap Index has gained more than 57%; the S&P 500 has gained about 27%. While the S&P 500 has performed far better in the second quarter of 2026, concentration risk remains. The index's winning streak is now up to six consecutive weeks. But just five companies — Nvidia, Micron, Apple, Advanced Micro Devices and Intel — accounted for 75% of its gain last week. With investors increasingly wary of large- and mega-cap stocks' elevated valuations, the flight to safety didn't just result in an exodus from tech and into slow-and-steady S&P 500 sectors. It also saw massive inflows into small caps (companies with valuations of $250 million to $2 billion) and micro caps. The outperformance for that cohort of stocks is expected to continue, as the market environment is rife with catalysts that favor smaller companies. One tailwind is micro caps' limited international exposure. "Most smaller companies generate the bulk of their revenue domestically, reducing [sensitivity to tariffs](https://money.com/companies-giving-tariff-refunds/) and slowing global growth," Adam Turnquist, chief technical strategist for LPL Financial, writes in an email to Money. According to Turnquist, micro caps are expected to return to earnings growth this year for the first time since 2021, with revenue projections trending higher through 2027. He notes that since April 2025, charts comparing the Russell Microcap Index with the S&P 500 show the former breaking out, with "sustained improvement in relative strength \[suggesting\] the trend may still have further room to run." ## Micro caps carry macro caveats Research from Franklin Templeton indicates that since 1978, when small- and micro-cap stocks' annualized five-year returns were 5% or less — as they have been since 2021 — subsequent three- and five-year returns were positive 100% of the time. But for investors who are considering adding exposure to micro caps, it's important to understand that they are inherently more volatile than their large- and mega-cap counterparts. The S&P 500 represents the largest and most stable publicly traded U.S. companies. Conversely, micro caps lack the competitive moats that companies like Nvidia and Walmart have established over decades. That can lead to relative financial instability. It also makes micro caps more susceptible to headline risk, or the danger of news events negatively impacting stock prices. Liquidity is another issue. Micro caps routinely have much lower floats (the number of shares available to the public for buying and selling on the open market). That results in lower average daily trading volume, which in turn makes those stocks considerably illiquid. In the event that investors want to sell shares, there's no guarantee of a buyer. Together, this makes micro caps highly speculative investments. Investors should be aware of the risks before allocating funds toward them. "Mega-cap stocks continue to dominate investor attention," Turnquist says. 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