While Big Tech has dominated the stock market storyline over the past 18 months, basking in the glow of artificial intelligence (AI), small-caps are finally stepping into the limelight as well. Driven by rising hopes for interest rate cuts this September, these smaller players are ready to take the lead - particularly after Wednesday's unimpressive Q2 earnings from the likes of Tesla (TSLA) and Alphabet (GOOGL) dragged the Nasdaq Composite ($NASX) to its worst session since 2022.
Tom Lee, head of research at Fundstrat, sees big potential in small-cap stocks, thanks to June's surprisingly low CPI. The analyst believes this is the “green light” for small caps to keep rallying, forecasting a near 50% rally in 2024. Supported by several positive drivers, Lee views small caps as presenting the most compelling investment opportunity in the near term.
