These stocks are getting hit. Evercore ISI says buy them on the dip
Evercore ISI now sees opportunities in several stocks that have suffered deep pullbacks after a recent rotation out of momentum stocks, marked by a slow crash in software issues and a fast crash in bitcoin and precious metals. U.S. equities were volatile in the first week of February as investors panicked over the potential impact of artificial intelligence on software companies and weighed earnings from chipmakers as well as “Magnificent Seven” leaders Amazon and Google . The major indexes rebounded on Friday and again on Monday, with the Dow Jones Industrial Average crossing 50,000 for the first time, as investors grabbed the opportunity to buy stocks like Nvidia and Broadcom at cheaper valuations. Evercore compiled a screen of stocks it called “Falling Knives Out,” saying the companies it found had fallen victim to recent bouts of selling and could now outperform even as bank projects volatility will stay remain elevated, as is typical in the fourth year of a bull market. Strategists led by Julian Emanuel in a report issued Sunday note explained how the firm screened for stocks: Must be rated outperform at Evercore ISI. Must be down more than 10% in 2026 and 30% in the past 12 months. Current short interest is in the 65th percentile or more compared to the past two years. Several software stocks, such as ServiceNow , Salesforce and Workday showed up, all of them hard hit last week amid the slump in the group owing to concerns that artificial intelligence will erode their business. “In our conversations with clients last week, there was near unanimity that Software was worth buying,” Emanuel wrote. Also on the list was Blue Owl Capital , which tumbled more than 21% in three weeks through Friday as investors reassessed private credit providers’ exposure to application software companies. But beyond individual stocks, Evercore maintains a bullish outlook on U.S. equities generally. “The absence of a recession, with a Fed set to cut rates, long end yields remaining subdued, and investor [fear of missing out]/Capital Markets surge still ahead,” Emanuel wrote. ” SPX remains on track for 7,750 at year end.”
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