Latest news with #speculative
Yahoo
37 minutes ago
- Business
- Yahoo
AI and momentum trades are getting too crowded, blue chips may be the way to go: JPMorgan
The most speculative corners of the market may be getting too popular, too fast. In a research note published Monday, JPMorgan warned that the rush into high-beta, momentum-driven stocks such as Palantir (PLTR), Coinbase (COIN), and Nvidia (NVDA) has reached "100th percentile" levels of crowding, the most extreme positioning in 30 years. The crowding "not only presents a risk for this segment, but is also a red flag for the broader market, implying there is rising complacency in the short term," strategist Dubravko Lakos-Bujas wrote. Investors may be overly confident that the AI-fueled rally has more room to run, with names like Tesla (TSLA) trading at over 160x forward P/E, compared to around 22x for the S&P 500 (^GSPC). The high-beta crowding, which includes low-value and speculative growth stocks, is happening rapidly. Positioning surged from the 25th to the 100th percentile in three months, the fastest climb since the firm began tracking the data three decades ago. JPMorgan notes that short interest has also dropped sharply, meaning fewer investors are hedging against downside risks. It's the "third-extreme overcrowding" episode this year, according to the firm. In January, investors piled into AI-linked megacaps. In April, they sought safety in low-volatility names amid concerns about tariffs. Now, the hot money is chasing speculative tech and meme-adjacent plays, leaving the market more vulnerable to a pullback. Read more: How to protect your money during turmoil, stock market volatility When April's low-volatility crowding began to unwind, it did so within three months, the fastest unwind on record. Following this reset, Lakos-Bujas' team recommends getting back into lower-volatility names that have lagged the broader market. Their blue chip stock picks have underperformed the market by 19% since April but may be poised to outperform if speculative bets start to unwind. "Low vol once again presents an attractive risk/reward, especially with looming tariff deadlines (Aug. 1), adverse seasonality, and aggressive investor positioning," Lakos-Bujas wrote. Top picks in the group include Coca Cola (KO), Allegion (ALLE), Intercontinental Exchange (ICE), CME Group (CME), and CBOE Global Markets (CBOE). Now may be the time to rotate back into safety, per the note. Investors may be buying into a "Goldilocks" scenario of solid economic growth, falling inflation, and a more dovish Fed. But JPMorgan sees that optimism as fragile, and crowded AI trades could be subject to quick reversals. And risky stocks that are not linked to AI are at even higher risk of reversal, the firm added. The view is gaining traction elsewhere on Wall Street. Apollo Global Management chief economist Torsten Sløk is also sounding the alarm. (Disclosure: Yahoo Finance is owned by Apollo Global Management.) In a research note last week, Sløk pointed to internal data showing that the P/E ratios of the 10 largest companies in the S&P 500, many of them AI standouts like Meta (META) and Nvidia, have surpassed levels seen at the height of the 1999 dot-com bubble. "Yes, AI will do incredible things for all of us," Sløk said on Yahoo Finance's Opening Bid. "But does that mean I should be buying tech companies at any valuation?" Sløk's response increasingly veered toward no. Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Business
- Yahoo
AI and momentum trades are getting too crowded, blue chips may be the way to go: JPMorgan
The most speculative corners of the market may be getting too popular, too fast. In a research note published Monday, JPMorgan warned that the rush into high-beta, momentum-driven stocks such as Palantir (PLTR), Coinbase (COIN), and Nvidia (NVDA) has reached "100th percentile" levels of crowding, the most extreme positioning in 30 years. The crowding "not only presents a risk for this segment, but is also a red flag for the broader market, implying there is rising complacency in the short term," strategist Dubravko Lakos-Bujas wrote. Investors may be overly confident that the AI-fueled rally has more room to run, with names like Tesla (TSLA) trading at over 160x forward P/E, compared to around 22x for the S&P 500 (^GSPC). The high-beta crowding, which includes low-value and speculative growth stocks, is happening rapidly. Positioning surged from the 25th to the 100th percentile in three months, the fastest climb since the firm began tracking the data three decades ago. JPMorgan notes that short interest has also dropped sharply, meaning fewer investors are hedging against downside risks. It's the "third-extreme overcrowding" episode this year, according to the firm. In January, investors piled into AI-linked megacaps. In April, they sought safety in low-volatility names amid concerns about tariffs. Now, the hot money is chasing speculative tech and meme-adjacent plays, leaving the market more vulnerable to a pullback. Read more: How to protect your money during turmoil, stock market volatility When April's low-volatility crowding began to unwind, it did so within three months, the fastest unwind on record. Following this reset, Lakos-Bujas' team recommends getting back into lower-volatility names that have lagged the broader market. Their blue chip stock picks have underperformed the market by 19% since April but may be poised to outperform if speculative bets start to unwind. "Low vol once again presents an attractive risk/reward, especially with looming tariff deadlines (Aug. 1), adverse seasonality, and aggressive investor positioning," Lakos-Bujas wrote. Top picks in the group include Coca Cola (KO), Allegion (ALLE), Intercontinental Exchange (ICE), CME Group (CME), and CBOE Global Markets (CBOE). Now may be the time to rotate back into safety, per the note. Investors may be buying into a "Goldilocks" scenario of solid economic growth, falling inflation, and a more dovish Fed. But JPMorgan sees that optimism as fragile, and crowded AI trades could be subject to quick reversals. And risky stocks that are not linked to AI are at even higher risk of reversal, the firm added. The view is gaining traction elsewhere on Wall Street. Apollo Global Management chief economist Torsten Sløk is also sounding the alarm. (Disclosure: Yahoo Finance is owned by Apollo Global Management.) In a research note last week, Sløk pointed to internal data showing that the P/E ratios of the 10 largest companies in the S&P 500, many of them AI standouts like Meta (META) and Nvidia, have surpassed levels seen at the height of the 1999 dot-com bubble. "Yes, AI will do incredible things for all of us," Sløk said on Yahoo Finance's Opening Bid. "But does that mean I should be buying tech companies at any valuation?" Sløk's response increasingly veered toward no. Francisco Velasquez is a Reporter at Yahoo Finance. He can be reached on LinkedIn and X, or via email at Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Bloomberg
3 days ago
- Business
- Bloomberg
Opendoor's 175% Surge Puts It on Pace for Its Best Week Ever
Opendoor Technologies Inc. shares are on pace to more than double this week following a hedge fund manager's social-media endorsement, making it the latest stock to experience a speculative retail-driven rally. Shares in the online platform for buying and selling US real estate jumped as much as 39% as of 2:15 p.m. in New York. If the gains hold through the session, the stock would gain more than 175% this week. The surge started after Eric Jackson, founder of Toronto-based hedge fund EMJ Capital, started to praise the stock on X late last week, garnering traders' attention.
Bloomberg
02-07-2025
- Business
- Bloomberg
Moody's Cuts Afreximbank Rating on Zambia, Ghana Debt Workouts
Moody's Ratings cut its assessment of African Export-Import Bank 's debt closer to junk status, a month after Fitch Ratings did the same, citing a weaker-than-expected asset performance. The ratings company lowered Afreximbank to Baa2 from Baa1, it said in a statement on Tuesday. That's two steps from being rated speculative, which would limit the pool of funds allowed to invest in the lender's debt.
