Supply glut, lab-grown alternatives: What's behind the fall of diamond prices to record lows

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Diamonds have lost much of their shine in recent years.
Natural diamonds have lost more than half of their value over the past five years. On average, a 1-carat stone now goes for $3,898, or 51% less than its average price of $8,007 in 2021, data from diamond trading platform Rapaport Group shows. The Diamond Standard Index, which tracks prices of so-called investment-grade diamonds, hit 2,490 in early August — its lowest level ever. This week, it was hovering just north of 2,500.
Several drivers are conspiring against diamonds, including a glut of mined stones that has hit the market over the past few years. And while attempts to clear out that oversupply are underway, another trend is compounding the issue: a rise in lab-grown diamonds.
"There's a lot of doom and gloom about natural diamonds," Diamond Standard CEO Cormac Kinney told CNBC. "There was a very large overhang of excess inventory back in 2023 and 2024 after excess production during Covid, and then [there's been] the falling sales due to the lab-grown [diamonds]."
Lab-grown diamonds are gems with the same chemical and physical properties as natural diamonds that are produced by applying heat and pressure to carbon seeds or from carbon-containing gas in a vacuum chamber. Although they are grown above ground, they look and feel identical to stones that are formed deep within the Earth.
The key difference between the two is price. A nearly colorless lab diamond with very, very slightly included clarity that has an excellent cut can go for $450 on Brilliant Earth's online marketplace, a CNBC search found. By comparison, a natural stone with the same specs falls in the range of $2,800 to $3,200. The price differential is due largely to how resource-intensive mining natural diamonds can be, as the process requires lots of fuel and labor.
Lab-grown alternatives are priced lower than natural diamonds at every carat weight, according to Brilliant Earth. A man-made stone can be priced as much as 90% lower than its mined equivalent, although the exact difference in price depends on the size, cut and color of a stone.
This has led cash-strapped consumers to flock to more affordable human-made diamonds in engagement and fashion jewelry, adding pressure on natural stone prices. Engagement rings with lab-grown center stones made up 61% of all engagement ring sales in 2025, up 239% since 2020, according to The Knot 2026 Real Weddings Study.
And the lab-grown diamond market is projected to grow to nearly $92 billion by 2034, marking a more than 200% increase from the $29.46 billion it was worth in 2025, according to Fortune Business Insights.
You shouldn't be buying a diamond thinking that there's a financial investment [aspect] to it.Cory Schifterowner of Casale Jewelers
Lab-grown diamonds are "opening up opportunity for people to spend what they want and get what they want, as opposed to having to create halos around their center stone because they have a 1-carat and want make it look like a 3[-carat]," Cory Schifter, owner of New York and New Jersey-based Casale Jewelers, told CNBC. "They're able to take the extra money that they didn't spend on the 5-carat natural and put it towards their wedding and maybe buy a house or whatever they want to do."
The shift toward lab-grown alternatives threatens to push natural diamond prices even lower.
But, the natural diamond industry has taken notice, and it's starting to take measures to lift lackluster stone prices.
De Beers Group, an Anglo American subsidiary that focuses on the mining, sorting and grading of diamonds, said in July that it would halt production at its flagship Venetia mine in South Africa for more than two years — a move that will limit supply and potentially push up prices. Meanwhile, at least two diamond mines have announced permanent shutdowns in 2026.
"There's also been a significant disruption in supply because two of the mines have filed for bankruptcy, and De Beers itself has announced the closure of one of its largest mines," Kinney told CNBC. "So what we're seeing now in the wholesale market is price appreciation for certain qualities [of diamonds], and it's, I think, the beginning of a recovery."
Playing the lab diamond boom
It's not entirely clear whether moves by industry giants can stem the bleeding in the natural diamond market, but one thing is clear: Lab-grown diamonds are here to stay.
And there is a way for investors to play the trend.
Raymond James analyst Rick Patel has an outperform rating on Signet Jewelers, which he says offers exposure to the boom in lab-grown diamonds.
"Lab-grown diamonds have actually done well for Signet, particularly on the fashion side" Patel said. "The products with the lab diamond generate about three times the [average unit retail] of other fashion products that do not have a lab diamond. So what that means is the more lab-grown diamond fashion jewelry they sell, the more it helps their AUR, which helps their same-store sales."
Signet did not respond to questions on its margins for lab-grown and natural diamonds. However, data from global investment firm Gordon Brothers shows that lab-grown diamonds generally generate gross margins between 60% and 65%, or higher than the 40% to 45% gross margins on naturals.
Patel noted that Signet brands such as Kay Jewelers and Zales are increasingly adding lab-grown diamonds to simple pieces like tennis bracelets, with the idea of making more money on each sale. It's a move that could boost shares of the jewelry brands owner, he added.
"Let's say you have a gold-plated tennis bracelet without any kind of stones," Patel said. "If you infuse some lab-grown diamonds in there, you're able to charge much higher prices there, and consumers see a lot more value in it."
Aside from Signet, Brilliant Earth is another way to play the lab-grown diamond trend. And Pandora, which has its own lab diamond line, also offers exposure to the boom in the gemstones.
Signet has rallied 21% in 2026. The stock had its best trading day in nearly four years on Sept. 9, surging about 24%, after Signet raised its annual profit forecast on strong demand for its bridal and fashion wares. Brilliant Earth is down 20% year to date, although it has gained 27% over the past three months.
Pandora, which trades on the Copenhagen stock exchange, is up nearly 19% since the beginning of the year. Although the stock isn't listed on a U.S. exchange, U.S. investors can trade it over the counter.
Analysts and diamond industry insiders recommend those stocks rather than investing in actual natural or lab-grown stones.
Diamonds are generally difficult to invest in due to the fact that there is no standardized spot market for them. That's because no two diamonds are alike, making it difficult to assess values on a comparable basis.
The diamond market also struggles from liquidity issues. A diamond may sit on the secondary market for more than a year, depending on its quality, according to a 2026 February report from gemstone marketplace CaratX. And when stones do sell, they often go for less than half of their original retail price, per several jewelers' websites.
"You shouldn't be buying a diamond thinking that there's a financial investment [aspect] to it," Casale Jewelers owner Schifter told CNBC. "Go invest your money in silver or even the S&P 500."

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