Investing.com -- JPMorgan analysts see small- and mid-cap stocks entering a period of significant outperformance relative to large-caps, forecasting gains of up to 60% over the next three years.
“Small-Caps have been underperforming Large-Caps for a long while, which seems fair as they represent a low quality pool of stocks, but one that could perhaps outperform from here if the market turns risk-on with the help of rate cuts from the Fed, right? WRONG,” JPMorgan wrote.
The bank noted that the narrative of weak small-caps is outdated. “Small-Caps in DMs have been doing quite OK vs Large-Caps since Nov 2023, with SMid actually outperforming Large all over the world for the last 6 months (since the end of Feb),” the analysts said.
They added that contrary to perceptions, “>90% of all SMid-Caps in most sectors across most regions are actually profitable businesses.”
While easier monetary policy would boost the group further, JPMorgan argued rate cuts are “only one of many drivers we see today that should continue to drive such alpha generation.”
Based on its analysis, the bank projects “SMid should outperform Large-Caps by 30–60% in DMs over the next 3 years, which means we are just in the second half of the first inning.”
The note highlights the firm’s conviction that the asset class has both profitability and relative value on its side.
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JPMorgan predicts small-caps to lead with 30–60% outperformance vs large-caps
Published 1 month ago
Sep 17, 2025 at 12:19 PM
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