diff --git a/src/vs/workbench/services/suggest/browser/simpleCompletionItem.ts b/src/vs/workbench/services/suggest/browser/simpleCompletionItem.ts
index b1301167f1a..d3590fbf873 100644
--- a/src/vs/workbench/services/suggest/browser/simpleCompletionItem.ts
+++ b/src/vs/workbench/services/suggest/browser/simpleCompletionItem.ts
@@ -101,8 +101,9 @@ export class SimpleCompletionItem {
 			if (isWindows) {
 				this.labelLow = this.labelLow.replaceAll('/', '\\');
 			}
+			// Don't include dotfiles as extensions when sorting
 			const extIndex = this.labelLow.lastIndexOf('.');
-			if (extIndex !== -1) {
+			if (extIndex > 0) {
 				this.labelLowExcludeFileExt = this.labelLow.substring(0, extIndex);
 				this.fileExtLow = this.labelLow.substring(extIndex + 1);
 			}
diff --git a/src/vs/workbench/services/suggest/test/browser/simpleCompletionModel.test.ts b/src/vs/workbench/services/suggest/test/browser/simpleCompletionModel.test.ts
index 92a62738e08..216f8c91b78 100644
--- a/src/vs/workbench/services/suggest/test/browser/simpleCompletionModel.test.ts
+++ b/src/vs/workbench/services/suggest/test/browser/simpleCompletionModel.test.ts
@@ -92,8 +92,7 @@ suite('SimpleCompletionModel', function () {
 			assertItems(createFolderItemsModel(...initial), expected);
 		});
 
-		// #239532 Failing on CI not locally?
-		test.skip('should handle many files and folders correctly', function () {
+		test('should handle many files and folders correctly', function () {
 			// This is VS Code's root directory with some python items added that have special
 			// sorting
 			const items = [
@@ -158,8 +157,6 @@ suite('SimpleCompletionModel', function () {
 				'.configurations',
 				'CONTRIBUTING.md',
 				'.devcontainer',
-				'.npmrc',
-				'.gitignore',
 				'.editorconfig',
 				'eslint.config.js',
 				'.eslint-ignore',
@@ -168,13 +165,15 @@ suite('SimpleCompletionModel', function () {
 				'.gitattributes',
 				'.git-blame-ignore-revs',
 				'.github',
+				'.gitignore',
 				'gulpfile.js',
 				'LICENSE.txt',
 				'.lsifrc.json',
-				'.nvmrc',
 				'.mailmap',
 				'.mention-bot',
 				'node_modules',
+				'.npmrc',
+				'.nvmrc',
 				'out',
 				'package.json',
 				'package-lock.json',