The stock market has experienced a significant rally in the current bull market, with AI darlings such as Nvidia leading the way with a remarkable 176% increase this year. However, not all stocks can sustain this upward momentum, as some are expected to fall in the near future. The S & P 500, Dow Jones Industrial Average, and Nasdaq Composite have all reached record highs, but analysts are predicting a potential pullback for certain tickers.
Stocks Facing Potential Selloff
According to data from LSEG, CNBC Pro has identified several stocks in the Nasdaq 100 that analysts anticipate will experience a decline of at least 5% or more in the coming months. One of the prominent names on the list is Nvidia, despite its recent stock split. While the average analyst rating for Nvidia is still a buy, the consensus price target suggests an 11% pullback from its current level. Bespoke Investing Group even labeled Nvidia as a “megacap stock in extreme overbought territory.”
Another stock to watch out for is Lam Research, a semiconductor equipment maker that has seen a 34% increase this year. The company’s announcement of a $10 billion share buyback plan and stock split caused a surge in its stock price, but analysts are wary of a potential pullback in the future. Other semiconductor stocks like KLA, Qualcomm, and Texas Instruments are also on the list of stocks expected to decline, despite their impressive gains in 2024.
Potential Factors Contributing to the Expected Decline
The rally in the market has been largely driven by optimism around artificial intelligence and the potential for sustained growth. However, concerns about overvaluation and extreme price levels have led analysts to predict a correction for certain stocks. With the Federal Reserve planning a series of rate cuts, investors are hopeful that the market will continue to flourish, but it is crucial to be cautious about potentially overvalued stocks.
While the overall outlook for the stock market remains positive, it is essential for investors to be aware of the potential risks associated with certain stocks. The stocks identified by analysts as likely to experience a pullback should be monitored closely, as market conditions can change rapidly. As always, it is important to conduct thorough research and seek advice from financial experts before making investment decisions in order to mitigate risks and maximize returns in the current bull market.