The Russell 2000 is having a year most investors thought they’d never see again. After more than a decade of trailing large-cap stocks, the small-cap benchmark has turned in its best first-half performance in 35 years, gaining about 22% by the midpoint of 2026 and outperforming the Nasdaq by roughly nine percentage points. For a market that has spent years defined by a handful of mega-cap tech names, that’s a meaningful shift in leadership. Here’s the case for why it may have room to continue.