These companies look mostly shiny on the outside, but things aren’t as rosy as the headlines suggest.
The smartest money doesn’t just chase the heat, but it watches for signs of trouble. Though some stocks are riding on momentum, others are starting to show real cracks, even as the broader market shows strength.
And when one of Wall Street’s top firms starts calling attention to names it thinks are heading in the opposite direction? Well, that’s exactly when it’s worth listening up.
JPMorgan highlights cracks are forming in some high-profile stocks despite the market rallyImage source: Triballeau/AFP via Getty Images
The market’s built a strong head of steam this spring.
As of late June, the S&P 500 has surged almost 11% for the second quarter, gaining north of 5.5% year-to-date.
That adds up to a 13% run over the past 12 months.
A spring surge helped the index rise over 25% from April lows. Fed rate-cut buzz and cooling tariff talk pushed the S&P to fresh record highs.
But now comes the hangover.
Some big names, including Bank of America’s Michael Hartnett, are flashing red flags.
He says the stock market is flirting with an overbought trigger, which is tough for investors to ignore.
And they aren’t.
Stock-pickers are separating the wheat from the chaff, looking at earnings quality, balance sheet strength, and valuation realism.
A big part of that is the belief that this isn’t a rising tide lifting all boats situation.
Look at Intel, which is still licking its wounds after dropping close to 30% over the past 12 months.
Moreover, Morningstar analysts say that U.S. stocks are currently trading at a slight premium to fair value.
Growth names in particular are especially rich. Small-cap still may look a steal, though, but patience is warranted. They haven’t caught the rally’s tailwind yet.
That’s exactly where short selling creeps in. Betting against overhyped names isn’t just a bold strategy; it can be a smart one.
That involves selling high, buying low (if you’re right).
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But if things go south, the pain has no ceiling. A short gone bad can lead to margin calls, losses, and you’re faced with a ton of regret. Hence, timing and discipline are imperative.
While the S&P and Nasdaq have impressed, the bank just dropped a list of 9 stocks it thinks are better shorted in the second half of 2025.
We’re not talking nobodies here, with Tesla (TSLA) , Moderna (MRNA) , and Whirlpool (WHR) headlining the list.
The picks cover everything from tech to healthcare to burgers, showing how wide the risk radar’s stretched.
Moreover, the list also reflects the bank’s cautious stance on the stock market, despite the recent highs.
JPMorgan analysts feel that policy uncertainty and profit concerns still linger, and their short ideas look to zero in on the most vulnerable names.
Tesla’s down over 20% this year, but JPMorgan feels things will continue moving south.
The stock still trades at a steep premium compared to its Magnificent Seven peers, even as earnings are forecasted to drop for the third straight year.
Analysts point to dwindling margins and shrinking EV subsidies as major red flags.
There’s also uncertainty surrounding Tesla’s robotaxi plans, which the bank criticizes for safety requirements.
Moderna has managed a recent 20% jump, but it’s not fooling JPMorgan.
The stock is still down 19% year-to-date, and the firm doesn’t see much of a spark for a sustained comeback.
Analysts highlight regulatory hiccups, cash burn, and a lack of near-term growth drivers. Without a pipeline catalyst or a big earnings surprise, Moderna remains on the “avoid” list.
Whirlpool has risen by a massive 38% since June, but JPMorgan says the disconnect from its fundamentals has become too steep.
Analyst Michael Rehaut notes the stock is currently trading 15% higher than its historical valuation range.
Though Whirlpool could benefit from tariff-related tailwinds due to its U.S. manufacturing footprint, the firm is skeptical.
High multiples, sector risks fuel the rest of the list
Shake Shack is another big name on the list that’s raising eyebrows, while trading at a sky-high 467 times earnings.
JPMorgan views valuation as a major risk there.
It’s the same story with Mobileye, Intel, Bumble, Comerica, and Rivian, all flagged for sector-specific issues and slapped with Underweight ratings.
Overall, the firm’s latest short picks serve as a reality check.
Even if the broader market looks strong, JPMorgan says the risks currently outweigh the rewards for these stocks.
