In this article, we take a look at the 9 Best Performing Micro Cap Stocks in 2025.
A Bloomberg report published on January 2, 2026, argues that 2025 was an everything rally. Global stocks, bonds, credit, and commodities all rallied together and delivered the strongest cross‑asset performance since 2009. This also made risk‑taking highly rewarding, said the report. And which is why even companies with the smallest market capitalization, also called micro-caps, saw substantial growth. The Dow Jones US Micro-Cap Total Stock Market Index confirms this assertion; it gained 12.59% in the 12 months between January and December 2025. This is not too far from the nearly 17% achieved by the mega-cap-heavy S&P 500.
But 2025 wasn’t entirely good for micro-caps, notes Kennedy Capital Management. According to their analysis, these stocks lagged larger peers, mostly due to macroeconomic uncertainty and liquidity constraints. However, as the year progressed, a remarkable turnaround took shape. Kennedy Capital Management’s analysis shows that the Russell Micro-Cap Index returned 17.03% in Q3 2025, which was a dramatic recovery from the 14.39% decline experienced in the first quarter of the year. The primary driver behind this resurgence, says the firm, has been the performance of stocks tied to the artificial intelligence (AI) theme.
Interestingly, analysts think investors haven’t seen the best of smaller companies yet. According to Miles Lewis, portfolio manager at Royce Investment Partners, the quality and value of smaller companies are “poised for meaningful rebounds in 2026.” This is because “2025’s returns, particularly since the April lows, have been driven primarily by lower quality, speculative stocks and just about anything that is an obvious beneficiary of the AI boom.”
In the same vein, Nick Sheridan, portfolio manager at Janus Henderson Investors, is convinced that global smaller companies are primed to outgrow the giants in 2026. Sheridan argues that large caps have eclipsed small and micro-caps since 2022 mainly because of macroeconomic shocks. But the conditions are reversing, Sheridan noted. He stated: “Inflation is at more moderate levels, conflicts are easing, energy prices have stabilized, and central banks are re-setting monetary policy, with more interest rates cuts expected.” Sheridan concluded that the stage is set for small and micro-cap resurgence.
Against this backdrop, this article explores 9 micro-cap stocks that won big in 2025.
Our Methodology
We used Finviz to select micro‑cap stocks, which we defined as companies with market capitalization between $50 million and $300 million, and looked for names that posted the strongest year‑to‑date (YTD) performance in 2025. We also considered hedge fund sentiment around each stock based on Q3 2025 13F filing data in Insider Monkey’s database. The stocks are ranked in ascending order of YTD performance.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
Note: The YTD performance data is as of December 31, 2025.
Best Performing Micro Cap Stocks in 2025
9. Duos Technologies Group Inc (NASDAQ:DUOT)
Market Capitalization: $205.17 Million
YTD Performance: 49.20%
Number of Hedge Fund Holders: 9
Duos Technologies Group Inc (NASDAQ:DUOT) is one of the best performing micro cap stocks in 2025. On December 30, Ascendiant Capital raised its price target on Duos Technologies Group Inc (NASDAQ:DUOT) stock from $11.50 to $14.00 and kept a Buy rating. According to Ascendiant, Duos’ recent major contract was the primary reason for this upgraded outlook. The firm also cited Duos’ leadership in train check service; the Railcar Inspection Portal system, which uses optical tech and AI to automate train checks, is Duos’ historical core business, noted Ascendiant. The firm added that this segment set a solid foundation for everything else.
Ascendiant also pointed out that Duos strengthened its finances in Q3 with a $40 million cash raise. The company sold 6.7 million shares at $6 each. However, Ascendiant highlighted high risks and commercialization challenges for Duos’ three newer business lines beyond rail. Yet, the firm argued that the $14 target “appropriately balances out the high risks with large upside opportunities” to reward bold moves.
In a different update, on December 30, Duos Edge AI, Duos’ subsidiary, expanded its Edge Data Centers (EDCs) operations in Texas and Illinois. The EDCs are designed to bring secure, low-latency computing closer to users, typically within 12 miles of end devices for real-time data processing, noted the company. Duos already has multiple EDCs deployed in several locations in Texas, where it serves education, healthcare, and service providers. And the expansion to the Greater Chicagoland Area in Illinois is the first venture outside Texas.
Duos Technologies Group Inc. (NASDAQ:DUOT) is a Jacksonville-based technology company that designs and deploys intelligent machine vision and AI solutions. Its flagship offerings, such as Centraco and truevue360, integrate computer vision, object detection, and deep learning for industries like rail, transportation, and logistics.
8. Journey Medical Corp (NASDAQ:DERM)
Market Capitalization: $150.49 Million
YTD Performance: 80.99%
Number of Hedge Fund Holders: 7
Journey Medical Corp (NASDAQ:DERM) is one of the best performing micro cap stocks in 2025. On January 4, Lake Street analyst Thomas Flaten reaffirmed a Buy rating on Journey Medical Corp (NASDAQ:DERM) with a $13 price target.
Earlier on December 10, Journey Medical Corp published results from a Phase 1 clinical trial, focusing on Emrosi’s impact on microbial flora in healthy adults, in the Journal of Drugs in Dermatology. Emrosi is an FDA-approved oral medication used to treat skin conditions such as papules and pustules in adults.
According to Journey Medical, the trial met all three primary endpoints. That is, there were no significant microbiome changes in skin; no notable antibiotic resistance to minocycline; and no major rise in opportunistic organisms compared to placebo. The data showed that Emrosi is well tolerated with no significant safety concerns. This aligns with its low-dose profile to minimize disruption to normal body flora and support safe, extended use in rosacea patients, Journey Medical noted.
Claude Maraoui, Journey Medical’s co-founder, president, and CEO, noted that this publication reinforces Emrosi’s differentiated benefits as a low-dose option that avoids meaningful microbial disruption or resistance, based on consistent data across trials.
Emrosi received FDA approval in November 2024. This made it the only oral therapy approved for addressing both inflammatory lesions and redness in rosacea. The approval was supported by two Phase 3 clinical trials, MVOR-1 and MVOR-2, conducted from March 2022 to May 2023 in the US and Germany.
Journey Medical Corp (NASDAQ:DERM) is a commercial-stage pharmaceutical company focused on developing and marketing prescription dermatology products. Its portfolio includes treatments for conditions such as acne, rosacea, actinic keratosis, and fungal infections.
