Small ball has been a smart investing strategy this year. The Russell 2000 and S&P Small Cap 600 indexes are both up about 20% in 2026, easily topping the S&P 500's 12.7% gain. But experts say it may be time to swing for the fences with some large-cap stocks again.

Lisa Shalett, chief investment officer of Morgan Stanley Wealth Management, argued in a report Monday that small-cap stocks are due to cool off.

Simply put, small stocks are no longer as cheap as they once were. The S&P Small Cap 600 now trades at 16.5 times earnings forecasts for 2026, 23% lower than the S&P 500's multiple of 21.5 times and roughly in line with the average 24% discount the index has fetched over the past five years. And the possibility that interest rates stay higher for longer could hurt earnings.

"Is now the time to add small-caps to portfolios? We remain skeptical," Shalett said, adding that "relative valuations have more than normalized and are now extended" and that "delayed rate cuts are another potential headwind."

Shalett added that small-caps "might only grind in line with the market from here." Her recommendation? Large-cap quality stocks "may better withstand policy volatility and potential economic cooling."

Finnegan Reddan, an analyst at The Leuthold Group, is skeptical too. Pointing out that small-caps tend to be "a speculative corner of the market whose investors are quick to bolt," Reddan noted in a report that when sentiment for small-caps starts to shift, it doesn't even matter if they are cheap or expensive.

"The drawdowns come hard whether valuations are stretched or not," he wrote, noting that the "record is unsentimental" for the 10 prior peaks in the Russell 2000 going back to 1987.

"Each of those tops gave way to a scathing decline, with the median loss near 33%-and the depth of the plunge bore almost no relation to how rich the peak appeared," Reddan wrote.

Others aren't so sure that investors should bail on small-caps just yet, though. Scott Chronert, managing director at Citigroup, pointed out in a recent report that the case for small and midsize companies "remains compelling" thanks to expectations of strong earnings and free cash flow growth for both this year and 2027.

Chronert added that improving net profit margins and a pickup in stock buyback activity, which should boost earnings per share even further, are encouraging.

This could be the beginning of a multiyear cycle of outperformance, added Brandon Nelson, a senior portfolio manager at Calamos. "Small-caps have done well for the past 14 months or so but that's after lagging for nine years in a row," Nelson told Barron's. "It wouldn't shock me if this winning streak had more legs to it-maybe a lot more legs."

That will depend on earnings. It's true that small-cap profit growth is finally starting to pick up steam. But even though earnings for the S&P Small Cap 600 are expected to increase 15% this year, analysts are forecasting 33% growth for the S&P 500. Large-caps still reign supreme.

Savita Subramanian, equity and quant strategist at Bank of America Securities, said in a report Monday that large-cap value stocks in particular have "provided a ballast for investors."

Subramanian added that value-oriented sectors such as energy, metals and miners, banks, insurers, consumer finance and leisure products look attractive as investors seek to broaden their large-cap exposure beyond tech and the artificial-intelligence trade.

So think twice before jumping on the small-cap bandwagon. The stocks are no longer the bargains that they were, macro challenges are mounting, and large-caps still are expected to post stronger earnings growth.