The S&P 500 index started the week with a bang after staying under pressure for a few days. There was a realization that Wall Street may have overestimated the impact of tariffs. Once the dust settles, the market will continue to go higher, just like the US economy which continues to grow despite challenges.
When the broader market corrects itself due to uncertainty, such as the one brought about by Trump’s tariff wars, mega-cap stocks also get affected. This provides investors, especially the ones that invest at regular intervals, to take another bite of these impressive stocks. The same situation happened during the last week, and we believe that after Monday’s impressive recovery, the trend is about to reverse.
Mega cap stocks like the ones in our list have driven the market in recent months and are therefore likely to be the ones leading it again. We decided to come up with the top 10 mega-cap stocks in the S&P index that have lost a considerable chunk of value in the last month and are now trading at a discount, a valuation gap that could quickly be recovered during this week’s trading.
To come up with the list of 10 oversold S&P 500 Mega-Cap Stocks To Trade This Week, we only looked at stocks with a market cap of at least $200 billion that have lost the most value in the last month.
A trader on the floor of a bustling stock exchange, surrounded by a sea of monitors.
10. Tesla, Inc. (NASDAQ:TSLA)
Tesla, Inc. is a manufacturer, designer, seller, developer, and lessor of energy storage and generation systems and electric vehicles. The company operates through Energy Generation and Storage and Automotive segments.
After a meteoric rise post the US presidential elections, Tesla investors have had a reality check. Matters have been made worse by the fact that Elon Musk’s involvement in politics is resulting in boycotts of his company’s products.
Figures coming out of Europe show that the EV maker’s sales in the continent went down 40% YoY, resulting in a paltry market share of just 1.8%. This happened despite the fact that total EV sales went up by 26% during the same period. Meanwhile, BYD, which is now the leading EV maker in the world, reported a 94% YoY increase in vehicles registered despite having to deal with increasing tariffs on Chinese EVs.
Despite losing a significant portion of the gains registered after the US elections, investors are still optimistic about the company. Cathie Wood of ARK Invest has said that she hasn’t changed her outlook on the stock, reiterating that she still sees the stock at $2,600 in 5 years.
Tesla has lost one-third of its value so far this year but Cathie Wood’s ARK Autonomous Technology and Robotics ETF (with Tesla weightage at 10% of total holdings) is only down 6%. Clearly, Tesla is dragging down the performance of her ETF, but the current EV downturn does not bother her. She sees Tesla’s valuation realization through robotaxis:
“We think that robotaxis will account for 90% of the value of the company in five years.”
9. Broadcom Inc. (NASDAQ:AVGO)
Broadcom Inc. develops, designs, and supplies different semiconductor devices. The company is focused on III-V analog products and mixed-signal complementary metal oxide semiconductor (CMOS) devices. It operates through the Infrastructure Software and Semiconductor Solutions segments. The stock is down 5.69% in a month, though holding out better than a lot of other tech stocks during the same period.
One reason for this stability is AVGO’s strategic acquisitions in the recent past as well as its AI positioning in the wake of custom chips’ demand. The company faced a lot of criticism for the way it bundled VMWare products into its existing portfolio post-acquisition. However, management was quick to rectify the mistakes and listen to the customers, so much so that 70% of the largest VMWare customers now opt for its most expensive bundle.
Since these bundles work on a subscription-based model, the recurring revenue strengthens the company’s cash flows. When one combines this financial strength with the unique positioning in custom chip design for AI training models, the current dip in share price looks as enticing as ever.
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