Unprofitable Russell 2000 Companies Outperform Profitable Ones Since April
Russell 2000 companies with negative EPS have returned +60% since April 2025, outperforming profitable firms (+38%) and the overall index (+48%). The trend accelerated after the Iran-US ceasefire on April 7th as investors piled into small-cap tech stocks.
Since April 2025, Russell 2000 companies with negative earnings per share (EPS) have surged 60%, far outpacing profitable firms which gained 38%. The broader index rose 48% during this period, making it one of the best-performing major equity benchmarks.
The rally picked up speed in early April following the Iran-US ceasefire announced on April 7th, which triggered a rush into small-cap technology stocks. This shift reflects a market dynamic where investors are prioritizing AI exposure over current profitability—a pattern that has widened the gap between unprofitable and profitable companies.
By comparison, the S&P 500 advanced 38% and the Nasdaq 100 jumped 58% over the same timeframe, highlighting the extra momentum in smaller, riskier names.
Source: The Kobeissi Letter