Evercore identifies 40 stocks, including Tesla, IBM, and McDonald's, as vulnerable to selling pressure as institutional investors reposition portfolios to participate in anticipated AI IPOs.
Tesla is identified by Evercore ISI as a candidate for potential selling pressure as mutual funds look to liquidate underperforming assets. The stock meets the criteria of being down YTD and having negative earnings revision trends, making it a target for portfolio trimming to fund upcoming AI-related IPOs.
Institutional investors are trimming underperforming holdings to generate liquidity for anticipated blockbuster AI IPOs.
A combination of mutual fund tax-loss harvesting and the desire to reallocate capital into new AI-focused market opportunities.
IBM appears on the Evercore screen of stocks with poor recent performance and negative earnings revisions. As investors prepare for major AI IPOs, IBM is flagged as a potential source of funds due to its inclusion in the list of 40 stocks likely to face selling pressure.
Yes, it meets the screen criteria of being down YTD and having negative earnings revision trends.
While the AI boom is viewed as a positive for the market, it creates selling pressure on laggards like IBM as funds rotate capital into new AI IPOs.
McDonald's is highlighted as a large-cap stock that may face selling pressure as mutual funds execute tax-loss strategies. Evercore suggests that investors are trimming such names to 'make room' for the anticipated IPOs of companies like OpenAI and Anthropic.
It is being sold primarily due to a combination of negative earnings revisions and the need for liquidity for new IPOs.
Evercore expects this to intensify in the post-Labor Day environment leading into the October tax-loss season.
Lowe's is listed among the top 40 stocks in the Evercore screen due to its recent underperformance and negative earnings revisions. The stock is identified as a likely candidate for trimming as institutional investors reposition their portfolios ahead of the AI IPO wave.
A list of Russell 3000 stocks with >$5B market cap, down 10%+ YTD, and negative 3-month earnings revisions.
It fits the profile of a stock that funds may sell to harvest tax losses and raise cash for new AI investments.
Evercore ISI strategists warn that upcoming blockbuster IPOs from OpenAI and Anthropic may trigger a sell-off in underperforming stocks. As mutual funds prepare for tax-loss harvesting season, investors are expected to trim laggards to free up capital for new AI-driven market entrants.
Funds are looking to free up capital for high-profile AI IPOs while simultaneously utilizing tax-loss harvesting strategies to offset capital gains before the end of the year.