The 2025 calendar year marked a decisive breakout for Australian small caps – can this momentum extend into 2026? Market earnings growth forecasts favour small caps over large caps across FY26–FY27. The recovery cycle also appears to have further room to run, with historical trough-to-peak comparisons pointing to additional upside in both duration and magnitude. Adding to this strength is an emerging resources renaissance at the smaller end of the market, where companies offer diversity of commodity and greater exposure to both gold and high-growth emerging thematics, including electrification and the energy transition.