Natural diamond prices have plummeted to historic lows over the past five years, losing more than half of their value. A 1-carat natural diamond now averages $3,898, down from $8,007 in 2021. This sharp decline reflects a significant market oversupply of mined stones, which surged during the Covid period and continued into 2023 and 2024. Concurrently, the rising popularity of lab-grown diamonds, which are chemically and physically identical to natural diamonds but considerably cheaper, has further pressured natural diamond prices.

Lab-grown diamonds offer a cost-effective alternative, with prices roughly 70% to 90% lower than natural stones, depending on the specifics of cut, clarity, and size. This affordability has led to an increase in consumer adoption, particularly for engagement rings where lab-grown stones accounted for 61% of sales in 2025, according to The Knot’s 2026 Real Weddings Study. The lab-grown segment is expected to grow dramatically, reaching $92 billion by 2034, more than tripling its 2025 value. This shift is changing consumer behavior as buyers prioritize value and flexibility over traditional norms.

The natural diamond industry has responded to these challenges by reducing supply to stabilize prices. De Beers Group announced a suspension of production at its Venetia mine for over two years, and some mines have permanently shut down in 2026 amid financial struggles. These supply cuts are starting to show effects in the market, with some price gains occurring in the wholesale segment. However, industry observers remain cautious about whether these efforts will be sufficient to reverse the ongoing decline in natural diamond values.

Investors looking to engage with diamond trends are advised to consider stocks in companies that are successfully navigating the lab-grown diamond boom, rather than purchasing diamonds directly. Signet Jewelers, which owns Kay and Zales, is benefiting by incorporating lab-grown stones into its jewelry, driving higher average unit prices and stronger sales. Other ways to play the market include brands like Brilliant Earth and Pandora, both of which offer lab-grown lines. Experts warn that diamonds lack liquidity and standardized pricing, making them poor financial investments compared to stocks or other assets.