US small caps – Reasons to be cheerful
US small-cap stocks had a strong start to 2026 with the Russell 2000 index significantly outperforming the S&P 500 large cap. Geoff Dailey, Head of US Equities, tells Daniel Morris, Chief Market Strategist, that the main driver was the artificial intelligence theme. The AI infrastructure boom has helped semiconductors, tech and hardware engineering names, while rapid product development in agentic AI pressured software stocks.
Geoff’s US equity team is identifying small-cap stocks with material upside and favourable risk/reward profiles, with numerous tailwinds likely re-emerging. “These include open capital markets, healthy mergers & acquisitions pipelines, improving industrial activity, strong domestic capex, and resilient consumer demand.”
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