5 S&P 500 ‘sell-off stocks’ Fools have added to their watchlist

5 S&P 500 ‘sell-off stocks’ Fools have added to their watchlist

  • 20.03.2025 09:01
  • fool.co.uk
  • Keywords: Stock Market Volatility, Market Correction

Five S&P 500 stocks, including Adobe, Alphabet, Amazon, ServiceNow, and Super Micro Computer, have seen significant price drops but are being closely monitored for long-term investment potential despite risks like market volatility and regulatory challenges.

Alphabet ProductsADBEsentiment_dissatisfiedGOOGLsentiment_satisfiedAMZNsentiment_dissatisfiedNOWsentiment_dissatisfiedSMCIsentiment_dissatisfied
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Estimated market influence

Adobe

Adobe

Negativesentiment_dissatisfied
Analyst rating: Buy

Shares have fallen almost 25% over the last 12 months.

Alphabet

Alphabet

Positivesentiment_satisfied
Analyst rating: Buy

Stock has fallen by 22%, trading at a forward P/E of 18, which is cheaper than S&P 500 and peers. Revenue up 14% to $350bn, operating profit up 33% to $112bn.

Amazon

Amazon

Negativesentiment_dissatisfied
Analyst rating: Strong buy

Stock has been pushed down due to broader tech sector sell-off; weaker Q1 sales and higher AI spending warnings.

ServiceNow

ServiceNow

Negativesentiment_dissatisfied
Analyst rating: Buy

Stock fell by a third, but seen as undervalued with aggressive AI investments. Facing competition from Salesforce.

Super Micro Computer

Super Micro Computer

Negativesentiment_dissatisfied
Analyst rating: Neutral

Shares have fallen 60% over the past year; allegations regarding accounting practices and export restrictions.

Context

Analysis of S&P 500 Sell-Off Stocks: Business Insights and Market Implications

Overview

  • The S&P 500 dropped by 9% in one month, creating buying opportunities for long-term investors.

Adobe (ADBE)

Key Facts:

  • Share price fell 25% over the last 12 months.
  • Forward P/E ratio: 17x, trading at a lower multiple compared to historical levels.
  • Margins and returns on invested capital remain strong, but AI adoption could disrupt market dynamics.

Alphabet (GOOGL)

Key Facts:

  • Share price dropped 22% since early February.
  • Forward P/E ratio: 18x, cheaper than the S&P 500 and tech peers.
  • Revenue in 2023: $350 billion, up 14% year-over-year.
  • Operating profit: $112 billion, up 33% year-over-year.
  • Risks: Antitrust lawsuits (e.g., forced sale of Chrome browser) and regulatory scrutiny.

Amazon (AMZN)

Key Facts:

  • Share price correction after hitting an all-time high in February.
  • Revenue diversification across e-commerce, cloud computing, and AI.
  • Challenges: Weaker Q1 sales forecasts and increased AI infrastructure spending.
  • Dominance in online retail and cloud computing provides resilience.

ServiceNow (NOW)

Key Facts:

  • Share price fell by 33% recently.
  • Clientele: 8,100 clients, including 85% of the Fortune 500.
  • Revenue growth driven by AI-powered upgrades (predictive analytics, NLP, virtual agents).
  • Risks: High valuation and competition from Salesforce.

Super Micro Computer (SMCI)

Key Facts:

  • Share price dropped by 60% over the past year.
  • Market volatility linked to AI boom and bust in 2024.
  • Forward P/E ratio for 2025: 17x, expected to fall to 10.5x by 2026.
  • Risks: Accounting investigation and export restrictions on AI-related products.

Market Implications and Strategic Considerations

  • AI Impact: Both a growth opportunity and competitive risk for tech companies.
  • Valuation Adjustments: Companies like Adobe, Alphabet, and ServiceNow are trading at attractive multiples post-correction.
  • Regulatory Risks: Antitrust scrutiny and export restrictions pose long-term challenges for Big Tech.
  • Investment Themes: AI and cloud computing remain key growth drivers, but investors should monitor market volatility.

Long-Term Effects and Regulatory Impact

  • Antitrust Scrutiny: Potential breakup of tech giants could reshape industry dynamics.
  • Export Restrictions: Could limit growth in emerging markets like China for hardware suppliers like Super Micro.
  • AI Regulation: Future regulations may impact the competitive landscape and profitability of AI-driven businesses.

Competitive Dynamics

  • Tech Titans vs. Startups: Established players face competition from startups leveraging AI innovations.
  • Market Leadership: Companies like Amazon, Alphabet, and Adobe maintain strong market positions but must adapt to evolving trends.

Strategic Considerations for Investors

  • Margin of Safety: Falling valuations present opportunities for long-term investors seeking undervalued tech stocks.
  • Diversification: Tech giants like Amazon and Alphabet offer diversified revenue streams, reducing reliance on single growth drivers.
  • Risk Management: Investors should monitor regulatory developments and market volatility, particularly in AI-related sectors.

Conclusion

The sell-off in S&P 500 tech stocks presents a mixed picture of opportunity and risk. Companies like Adobe, Alphabet, Amazon, ServiceNow, and Super Micro Computer offer varying degrees of growth potential, but investors must navigate challenges such as regulatory risks, market volatility, and competitive dynamics.