While skepticism around small caps remains high after years of underperformance, there are growing signs that a reversal could be on the horizon. 

Fundstrat Head of Research Tom Lee believes so. In an appearance on CNBC at the end of last year, Lee said that small caps are poised for a period of significant outperformance, potentially beating the S&P 500 by more than 100% over the next few years. As of writing this in July 2025, he is still bullish on small caps. 

In a market dominated by a handful of mega-cap stocks and driven by narrow narratives, small caps stand out not just for their deep valuation discounts, but for their untapped growth potential. For investors willing to look beyond short-term volatility and lean into long-term opportunity, small caps may represent an underrepresented source of future returns. 

As Lynch says, “Big companies have small moves, small companies have big moves.”