Wall Street expects that the riskiest stocks will outperform the market in the coming year.

The Russell 2000 index, which covers some of the highest-risk stocks in the market, has recently shown a strong performance, with several Wall Street strategists indicating that this rally has just begun. This small-cap stock index has risen nearly 10% since the end of July, doubling the increase of the S&P 500 index. According to analysts' bottom-up aggregation of individual stock price targets, they expect the Russell 2000 index to continue outperforming the broader market in the next year. Analysts believe that this index has a 20% upside potential, compared to an expected increase of 11% for the S&P 500 index. Looking at recent history, this forecast is quite bold. Since 2020, small-cap stocks have lagged behind large companies every year, even after the recent surge, their performance from 2025 until now still lags behind the S&P 500 index.