AI stocks are dragging the market down. The names were ‘extremely overextended,’ says Katie Stockton
Stocks are starting to look vulnerable to a pullback if that last few days are any indication. The S & P 500 on Thursday was down for a third day, following another drop in Oracle . It’s the latest decline this week in a major tech company that has raised questions on the future of the artificial intelligence trade that has powered stocks to all-time highs. Thursday’s decline in Oracle is also in part because of a sell rating issued by Rothschild & Co. Redburn, with the firm calling for a 40% sell-off. “We’ve avoided the seasonal pullback so far,” Katie Stockton, founder and managing partner at Fairlead Strategies, told CNBC’s ” Squawk Box ” on Thursday. “And wouldn’t that be a great reset for the markets. If you look around, especially in the AI names, they’re extremely overextended in appearance.” ORCL YTD mountain Oracle, year to date The major averages are higher this month despite this week’s lackluster action. The tech-heavy Nasdaq Composite is the outperformer, advancing more than 4% after a dovish pivot from the central bank galvanized traders. Tech stocks, and cyclical assets such as small caps, tend to be more sensitive to lower interest rates. Month to date, Nvidia has climbed another 3%. Alphabet alone has rallied more than 15%. Apple surged more than 8%. Yet, it’s perhaps time to take some profits off the table as breadth deteriorates, according to Stockton. Seasonally, between now and mid-October, stocks tend to be vulnerable to a drop. Nvidia is down this week, off by 1.6%. Amazon dropped roughly 5%. Alphabet is down by more than 3%. Meta has slid nearly 3%. Microsoft has dropped nearly 2%. Still, there are some tech names that could have further upside, Stockton said. The technical analyst likes Intel, which on Thursday rallied 7%, after Bloomberg reported the chipmaker has approached Apple for investment. The stock is already up more than 66% this year. ( Learn the best 2026 strategies from inside the NYSE with Josh Brown and others at CNBC PRO Live. Tickets and info here . )
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