The artificial-intelligence stock market boom has further to go, but that may pose additional problems in coming weeks for recent underperforming shares.
That’s the message from Evercore ISI strategists led by Julian Emanuel, who said elements to end the bull market are not present, though a seasonal tax factor in conjunction with possible initial public offerings from OpenAI and Anthropic could spell trouble for one equity cohort.
It may be tempting, the Evercore team said, to think that the IPO of SpaceX in June marked the peak of a technology craze, just like the AOL and Time Warner merger in January 2001 was considered a “bell ringer” for the top of the dotcom bubble.
After all, they add in their note published Sunday, the tech-heavy Nasdaq 100 has yet to top its June peak, while other major equity benchmarks, the Dow Jones Industrial Average, S&P 500 and Russell 2000 all made fresh highs in August.
However, Evercore views the SpaceX IPO akin to the 1995 listing of Netscape, as the internet, like AI now, was seen “unlocking an era of increasing productivity from an as yet to be ‘fully proven’ technology.”
In other words, the AI rally has further to run, particularly as the factors that can end the bull market, such as a recession, 10-year Treasury yields above 5%, an aggressively hiking Federal Reserve, “and true wild eyed FOMO around a Capital Markets surge, were not present in June and are not yet present.”
FOMO refers to investors’ fear of missing out, and Evercore provides the chart below to show that the proportion of bullish respondents in the American Association of Independent Investors survey is nowhere near the peak seen at the turn of the century.
Still, the Evercore team think that investors’ desire to continue betting on the AI boom may bode ill for some of those stocks that have been struggling of late. That’s because the looming mammoth IPOs of Anthropic, OpenAI and others may coincide with a calendar-based mutual-fund tax strategy to encourage additional selling of poor performers.
“As was the case in the days before the SPCX IPO, clients scenario-modeled with us how they might ‘make room’ for such an IPO going into their publicly traded portfolio holdings, via hedges and trimming existing portfolio names,” the strategists said.
“The dynamic is different in the post-Labor Day market environment in that with mutual fund tax loss season approaching in October, naturally, funds may decide to get a ‘head start’ on such sales to make room for impending blockbuster IPOs,” they added.
Tax-loss selling of stocks is used by investors to lower their overall tax bill by using investment losses to cancel out capital gains. In Evercore’s scenario, it will also of course free up funds for buying the IPOs.
In consideration of this portfolio dynamic, Evercore screened the Russell 3000 for stocks with the following characteristics: a market capitalization of more than $5 billion; and shares down 10% or more for the year to date and up less than 20% from their 2026 low.
Evercore also screened for stocks with negative three-month earnings revision trends. The firm noted that downbeat expectations “in a year of unusually sharp upward revisions, weigh on shares, reducing hope that shares will rebound before year end.”
Here’s the top 40 in the Evercore screen, ranked by market capitalization. Tesla, IBM, American Express, McDonald’s, S&P Global, Lowe’s, AppLovin, HCA Healthcare, Boston Scientific, Medline, Rocket Cos, Martin Marietta Materials, Zoetis, Las Vegas Sands, Fiserv, Coupang, Otis Worldwide, NRG Energy, AST SpaceMobile, Markel, First Solar, Fidelity National Information Services, Equifax, Lennar, Fair Isaac Group, FedEx Freight, Tyson Foods, Flutter Entertainment, Rollins, The Carlyle Group, Somnigroup International, RB Global, Talen Energy, Albemarle, McCormick & Co., QXO, Lennox International, Dick’s Sporting Goods, Fidelity National Financial, DraftKings.
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