In recent years, diamonds have lost much of their luster.
Data from the Rapaport Group’s diamond trading platform shows that natural diamonds have depreciated by more than half over the past five years. Today, the average price of a 1-carat diamond is $3,898, a 51% decline from the average price of $8,007 in 2021. The Diamond Standard Index, which tracks the prices of so-called “investment-grade” diamonds, hit a historic low of 2,490 points in early August. This week, the index has hovered just above 2,500 points.
Multiple factors are suppressing diamond prices, including an oversupply of mined diamonds that has flooded the market over the past few years. Although the industry is working to absorb this excess inventory, another trend is exacerbating the issue: the rise of lab-grown diamonds.
Cormac Kinney, CEO of Diamond Standard, told CNBC: "There is a lot of pessimism surrounding natural diamonds. After overproduction during the pandemic, the market was flooded with excess inventory in 2023 and 2024; at the same time, lab-grown diamonds have led to declining sales."
Laboratory-grown diamonds are gemstones created on Earth by applying high temperature and high pressure to carbon seeds, or by using carbon-containing gases in a vacuum chamber. They have the same chemical and physical properties as natural diamonds. Although grown on the surface, they are identical in appearance and feel to diamonds formed deep within the Earth.
The key difference between the two lies in price. A search on CNBC’s online marketplace for Brilliant Earth shows that a lab-grown diamond with near-colorless appearance, “internally flawless” clarity, and an excellent cut can cost as low as $450. In contrast, a natural diamond with the same specifications ranges from approximately $2,800 to $3,200. This price disparity is largely due to the resource-intensive nature of mining natural diamonds, which requires significant amounts of fuel and labor.
According to Brilliant Earth, lab-grown alternatives are cheaper than natural diamonds at every carat weight. The price of synthetic diamonds can be up to 90% lower than that of mined diamonds, though the exact difference depends on the diamond’s size, cut, and color.
This has prompted budget-conscious consumers to turn to more affordable lab-grown diamonds for engagement and fashion jewelry, further pressuring natural diamond prices. The Knot’s 2026 Real Weddings Study shows that in 2025, lab-grown center stones accounted for 61% of all engagement ring sales, a 239% increase since 2020.
Fortune Business Insights predicts that the lab-grown diamond market size will grow to nearly $92 billion by 2034, more than doubling from $29.46 billion in 2025.
You shouldn't buy diamonds thinking of them as a financial investment.
— Cory Schifter, owner of Casale Jewelers
Cory Schifter, owner of Casale Jewelers, based in New York and New Jersey, told CNBC that lab-grown diamonds "give people the opportunity to buy what they want for the amount they want to spend, without needing to surround a one-carat stone with excessive settings just to make it look like a three-carat stone."
“They can redirect the extra money they would have spent on a 5-carat natural diamond toward their wedding, buying a home, or anything else they want to do,” said Schifter.
The shift toward lab-grown alternatives may further depress natural diamond prices.
However, the natural diamond industry has noticed this and has begun taking measures to boost weak diamond prices.
In July, De Beers Group, a subsidiary of Anglo American focused on diamond mining, sorting, and grading, announced it would suspend production at its flagship Venetia mine in South Africa for more than two years, a move that will constrain supply and potentially drive prices higher. Meanwhile, at least two diamond mines have announced plans to permanently close by 2026.
Kinney told CNBC: "There has also been a significant supply disruption, as two of the mines have filed for bankruptcy, and De Beers itself has announced the closure of one of its largest mines. So what we’re now seeing in the wholesale market is that prices for certain qualities of diamonds are rising—I believe this is the beginning of a recovery."
Bet on the lab-grown diamond boom
It is still unclear whether the actions of industry giants can halt the decline of the natural diamond market, but one thing is certain: lab-grown diamonds have become a lasting trend.
Moreover, investors do have ways to participate in this trend.
Raymond James analyst Rick Patel has issued an "Outperform" rating on Signet Jewelers, believing the company stands to benefit from the lab-grown diamond trend.
Patel said, “Lab-grown diamonds have significantly helped Signet’s performance, especially in the fashion jewelry segment. Products featuring lab-grown diamonds have an average retail price per unit about three times higher than other fashion products without lab-grown diamonds. This means that the more lab-grown diamond fashion jewelry they sell, the more they can boost average unit retail price, thereby supporting comparable store sales.”
Signet did not respond to questions regarding the profit margins of its lab-grown and natural diamonds. However, data from global investment firm Gordon Brothers shows that the gross profit margin for lab-grown diamonds typically ranges between 60% and 65%, higher than the 40% to 45% margin for natural diamonds.
Patel noted that brands under Signet, such as Kay Jewelers and Zales, are increasingly incorporating lab-grown diamonds into simpler styles like tennis bracelets to increase revenue per sale. He added that this move could boost the stock price of the parent company of these jewelry brands.
“For example,” Patel said, “if you have a gold-plated tennis bracelet with no gems, adding some lab-grown diamonds can allow you to charge a higher price, and consumers will perceive it as more valuable.”
In addition to Signet, Brilliant Earth is another way to participate in the lab-grown diamond trend. Pandora also has its own line of lab-grown diamond products, offering investors exposure to this gemstone phenomenon.
Since 2026, Signet has risen 21%. On September 9, its stock posted its best single-day performance in nearly four years, surging approximately 24%, after the company raised its annual profit forecast, driven by strong demand for wedding and fashion products. Brilliant Earth has declined 20% year-to-date but has risen 27% over the past three months.
Pandora, listed on the Copenhagen Stock Exchange, has risen nearly 19% since the beginning of this year. Although the stock is not listed on U.S. exchanges, American investors can buy and sell it over-the-counter.
Analysts and industry insiders within the diamond sector recommend considering these stocks instead of investing in physical natural or lab-grown diamonds.
Because diamonds lack a standardized spot market, they are typically difficult to use as an investment. This is because no two diamonds are identical, making it challenging to assess their value on a comparable basis.
The diamond market also faces liquidity issues. According to a February 2026 report by CaratX, a diamond may remain unsold for over a year on the secondary market, depending on its quality. Additionally, according to multiple jewelry retailers’ websites, once sold, diamonds often fetch only half—or even less—of their original retail price.
Schifter of Casale Jewelers told CNBC: "You shouldn't buy diamonds thinking of them as a financial investment. Put your money into silver, or even the S&P 500."