Wall Street had one of its roughest sessions of the year this week. The Nasdaq Composite fell 5.52% on November 5, its deepest one-day drop in 19 months, Reuters reported that day. The index closed more than 10% below its October 6 record, which confirmed a technical correction.
The S&P 500 slid 4.36% and the Dow Jones Industrial Average lost 3.44%, wiping about $3 trillion off the value of S&P 500 companies.
The Philadelphia SE Semiconductor index plunged more than 12%, and trading volume reached 26.9 billion shares, well above the 20-session average of 17.7 billion. Chipmakers and other AI-linked stocks took the brunt of the damage.
Fears of AI Regulation Hit Chip Stocks Hardest
The trigger was politics. Democrats won control of Congress in Tuesday’s elections, including in states where opposition to new data centers has grown. Investors worried that tougher rules could slow the buildout of AI infrastructure, according to the Reuters report.
Melissa Brown, global head of investment decision research at SimCorp, said any slowdown would raise concerns because AI growth has leaned on rapid construction of supporting infrastructure. Jed Ellerbroek, a portfolio manager at Argent Capital Management, said, “This feels like the capitulation phase for the data center capex beneficiary stocks,” though he thinks the size of the moves is outsized.
The drop followed a strong run. The S&P 500 had posted its biggest one-day gain in three months the day before, and it is still up 7.4% for the year. We recently rounded up ten stocks you are selling and insiders are buying.
A Hot Jobs Report Revives Rate-Hike Bets
Friday’s jobs report did little to calm nerves. Employers added 165,000 jobs in October, more than twice what economists expected, and the unemployment rate edged down to 4.1%, Reuters reported on November 6.
Traders raised their bets on a Federal Reserve rate hike in response. Markets priced about a 78% chance of a quarter-point increase at the central bank’s December 8-9 meeting, up from about 67% on Thursday, and they now expect a final hike in April rather than June. For a look at the other side of the analyst picture, see our ranking of affordable stocks Wall Street analysts like.
Cleveland Fed President Beth Hammack and Richmond Fed chief Thomas Barkin had already hinted at possible future rate hikes, Reuters reported on November 5. Fed Chairman Kevin Warsh said last month that policymakers would watch the accumulation of data to decide whether more tightening is needed. Fitch Ratings analyst Olu Sonola said “the economy remains on firm footing” despite recent AI-related concerns, while Raymond James analysts wrote that they expect the Fed to raise rates by 25 basis points in December.
Our Methodology
For this article, we reviewed analyst downgrades issued on Friday, November 6, 2026. We picked the 10 with the largest market caps and ranked them in descending order of average upside potential, based on analysts’ average price target, as of November 6, 2026. We also list each stock’s number of hedge fund holders as of Q2 2026, from our database of 1,006 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Insider Monkey’s quarterly newsletter strategy selects 14 small-cap and large-cap stocks every quarter and has returned 612% since May 2014, beating its benchmark by 375 percentage points (see more details here).
Sell Alert: 10 High-Profile Stocks Just Dumped by Top Analysts
10. iRhythm Holdings (NASDAQ:IRTC)
Market Cap: $2.97 billion
Average Upside Potential: 75%
Number of Hedge Fund Holders: 42
Citi cut iRhythm to Neutral from Buy on November 6, following the company’s third-quarter report, and lowered its price target to $124 from $157. The bank pointed to the company’s raised 2026 revenue outlook, which includes about $16 million from the VitalConnect acquisition. Citi noted that the outlook implies fourth-quarter organic revenue growth of 10%, which it called “a steep quarter-over-quarter decline.”
The quarter itself showed strong demand. Revenue rose 14.9% from a year earlier, and iRhythm credited “sustained volume demand across our customer base.” Gross margin also improved this quarter, helped by a one-time tariff refund benefit.
Profit was messier. The company reported a wider GAAP net loss than a year earlier after booking $49.8 million in litigation settlement charges, net of expected insurance recoveries, while adjusted net income swung to a profit from an adjusted loss.
iRhythm closed the VitalConnect acquisition on October 5, after the quarter ended. The deal adds an FDA-cleared mobile cardiac telemetry offering and broadens the company’s cardiac monitoring portfolio. The updated 2026 revenue guidance includes the expected VitalConnect contribution from the closing date through year-end.
9. Gildan Activewear (NYSE:GIL)
Market Cap: $6.44 billion
Average Upside Potential: 35%
Number of Hedge Fund Holders: 32
UBS analyst Jay Sole cut Gildan to Neutral from Buy on November 6 and lowered his price target to $38 from $71. The downgrade followed a weak third-quarter report and a significant cut to fiscal 2026 EPS guidance. Sole said a tougher macroeconomic environment is hurting the business more than previously expected. UBS expects some top-line headwinds to persist into next year, sees added downside risk to Wall Street’s fiscal 2027 EPS estimates, and sees no positive catalysts until the company’s analyst day in spring 2027. It now sees balanced upside and downside for the shares.
Gildan’s quarter backs up the cut. Revenue of $1.47 billion came in below the company’s guidance of about $1.65 billion, and the 2026 adjusted EPS outlook fell to a range of $3.70 to $3.80 from $4.65 to $4.75. Management pointed to weaker-than-expected demand, an unfavorable product mix, lower selling prices and product availability constraints. Chief executive Glenn Chamandy described “a more subdued demand environment” in both Wholesale and Retail.
Revenue was still up 61.1% from a year earlier because of the HanesBrands acquisition, which we examined in our look at whether Gildan is a bargain or a broken deal.
8. Five9 (NASDAQ:FIVN)
Market Cap: $2.12 billion
Average Upside Potential: 26%
Number of Hedge Fund Holders: 35
Evercore ISI cut Five9 to In Line from Outperform on November 6 and kept its price target at $24. The firm said a clear turning point in growth is not yet visible and that near-term positive catalysts are missing.
The quarter had real strength. Revenue rose 13% to $323.3 million in the third quarter, and subscription revenue grew 16%. AI revenue was roughly $45 million, up 91% from a year earlier, and management raised its full-year AI growth outlook to at least 75% from at least 60%.
The profit outlook was the weak spot. Fourth-quarter non-GAAP earnings per share guidance of $0.88 to $0.92 came in below estimates, and full-year guidance of $3.17 to $3.21 implies a lower midpoint than the $3.26 cited in prior quarters. GAAP gross margin slipped to 53.4% from 55.0% a year earlier, and the company reaffirmed rather than raised its EBITDA margin and free-cash-flow targets.
Five9 also has a pending acquisition of Level AI, which it expects to close in the fourth quarter. Its guidance excludes that deal, and management said it “bought it for a steal.”
7. International Flavors & Fragrances (NYSE:IFF)
Market Cap: $20.69 billion
Average Upside Potential: 19%
Number of Hedge Fund Holders: 39
BofA cut International Flavors & Fragrances to Underperform from Buy on November 6 and lowered its price target to $91 from $95. The bank said the shares had risen substantially and lack near-term catalysts, making further upside hard to achieve, and it pointed to softness in businesses outside Taste. BofA also expects raw material inflation of about 3% to limit operating leverage into the first half of 2027. It called the third quarter strong but said the risk/reward has shifted as margin pressure builds.
The report itself had plenty of growth in it. Third-quarter net sales were $1.94 billion, up 4%, and adjusted operating EBITDA of $403 million beat BofA’s own estimate of $398 million. Health & Biosciences grew by only 1%, the slowest of the company’s three segments. IFF also raised the low end of its 2026 sales outlook, which is now $7.5 billion to $7.6 billion.
The company is reshaping its portfolio too. The sale of its Food Ingredients business is on track to close by the end of the second quarter of 2027, and IFF has finished its share repurchase authorization, which it had set at $500 million.
6. Gartner (NYSE:IT)
Market Cap: $11.99 billion
Average Upside Potential: 6%
Number of Hedge Fund Holders: 50
Barclays analyst Manav Patnaik cut Gartner to Underweight from Equal Weight on November 6 but raised the price target to $185 from $150. He said contract value growth is slowing and exiting the year at a low-single-digit rate, and that the company’s per-seat exposure is “already too high for a world in which the macro pressures are likely to continue.” Barclays also remains concerned about AI disruption to information services companies, even after Gartner’s shares rallied 27% from early October to early November, and concluded that “Gartner’s setup into next year is unattractive.”
Gartner’s own report gave the bulls something to point to. Adjusted earnings per share rose 30.1% to $3.59, and the company raised its full-year guidance for revenues, adjusted EBITDA excluding the divested operation, adjusted EPS and free cash flow.
Total contract value reached $5.3 billion, up 2.5% from a year earlier, with both Global Technology Sales and Global Business Sales growing their contract value. Quarterly revenue of $1.51 billion slipped 1.3% as reported. The shares had fallen 13.2% on the Tuesday after the report, before the downgrade arrived.
5. Molson Coors Beverage (NYSE:TAP)
Market Cap: $7.54 billion
Average Upside Potential: 4%
Number of Hedge Fund Holders: 41
Wells Fargo analyst Chris Carey cut Molson Coors to Underweight from Equal Weight on November 6 and lowered his price target to $36 from $38. He cited ongoing inflation compressing gross margins and concern about market share erosion, and he sees more than 20% downside risk to consensus earnings estimates. Wells Fargo said the stock’s valuation can “track back to lows,” and it expects 2027 to be challenging.
The company’s third-quarter results showed the same pressure. Net sales were $2.93 billion, down 1.6% and just short of the $2.94 billion analysts expected, while adjusted earnings per share of $1.46 edged past the $1.45 consensus. Global beer brand volume fell 4.9% from a year earlier.
The company then lowered its 2026 outlook. It now expects constant-currency net sales to fall 1% to 2%, compared with a prior range of roughly flat, and underlying earnings per share to fall 16% to 19%, against a prior decline of 11% to 15%. Management cited lower sales volumes and higher costs for materials, logistics and manufacturing, including about $30 million from the Midwest Premium pricing impact.
4. Fortis (NYSE:FTS)
Market Cap: $30.71 billion
Average Upside Potential: -1%
Number of Hedge Fund Holders: 18
Barclays analyst Michael Lonegan cut Fortis to Equal Weight from Overweight on November 6 while raising the price target to $61 from $56. Lonegan noted that the shares trade at a historical peak two-year forward price-to-earnings valuation with a 35% premium to US peers, and near their historical peak with nearly a 10% premium to Canadian peers. Barclays said Fortis “trades at a peak historical valuation versus peers” and believes its growth prospects are now fully priced into the shares.
The company gave investors plenty of growth to price in. It unveiled a $32.2 billion capital plan for 2027 through 2031 that supports rate base growth of 7.5%, a five-year compound annual rate at a constant US dollar to Canadian dollar exchange rate. The utility also extended its guidance for annual dividend growth of 4% to 6% through 2031.
Third-quarter adjusted earnings per share were $0.92, up from $0.87 a year earlier, and net earnings were $474 million. Over the past five years, Fortis has grown earnings per share 4.66% a year, and its net margin over the past 12 months is 14.35%.
3. BJ’s Wholesale Club (NYSE:BJ)
Market Cap: $13.82 billion
Average Upside Potential: -1%
Number of Hedge Fund Holders: 40
Citi cut BJ’s Wholesale Club to Neutral from Buy on November 6 and also raised its price target to $113 from $111. After the stock’s strong run, Citi sees a more balanced risk/reward, with the shares at about 22 times its fiscal 2027 EPS estimate, above a five-year average of about 19 times. The bank said “there’s a lot of optimism priced into shares at this point.” It added, “We are also concerned that some of the sales strength in the near-term is driven by one-time promotional events,” and it flagged rising competition among warehouse clubs for memberships.
The optimism has support in the numbers. Second-quarter revenues rose 15.7% to $6.23 billion, and comparable club sales rose 11.9%, or 3.1% without gasoline, a measure the company reports both ways. Membership fee income climbed from a year earlier, and adjusted earnings per share rose. BJ’s ended the quarter with a record 8.5 million members and raised its full-year adjusted EPS guidance to a range of $4.60 to $4.80.
For the longer-term case, see our earlier piece on why BJ’s Wholesale Club has been called a good investment.
2. American Water Works (NYSE:AWK)
Market Cap: $29.92 billion
Average Upside Potential: -4%
Number of Hedge Fund Holders: 39
UBS cut American Water to Neutral from Buy on November 6 and raised its price target to $162 from $153. UBS noted that the stock has risen about 21% since its late-May low while the Dow Jones Utility Index was flat, and said “upside is now insufficient to support a Buy rating.” It sees a more balanced risk-reward ratio of 1.2 to 1 and describes its estimates as in line with consensus. A possible post-closing sale of Peoples Gas or renewed interest in ESG investing could provide upside, while a closing delay on the Essential Utilities merger is the main downside risk.
American Water reported adjusted earnings per share of $2.00 in the third quarter, up from $1.89 a year earlier, and narrowed its 2026 adjusted guidance to $6.07 to $6.12 per share. It also initiated 2027 standalone guidance and said its $3.7 billion capital investment plan for 2026 is on track.
On the merger, regulators in Kentucky, Ohio and Virginia have given approvals, and settlements in Pennsylvania, North Carolina and Texas still need commission approval. The company expects to close by the end of the first quarter of 2027.
1. Essential Utilities (NYSE:WTRG)
Market Cap: $13.02 billion
Average Upside Potential: -6%
Number of Hedge Fund Holders: 40
UBS cut Essential Utilities to Neutral from Buy on November 6 while raising its price target to $49 from $47. UBS noted that the stock has risen 22% from its late-May low, while the Dow Jones Utility Index was flat and the S&P 500 rose 1.5%. It said a post-closing sale of Peoples Gas or renewed interest in ESG investing could provide upside, and it named a closing delay as the primary downside risk, with the merger with American Water potentially five months from closing at the end of the first quarter of 2027.
The company earned $0.36 per diluted share in the third quarter, up from $0.33 a year earlier. Net income was $103.8 million, up from $92.1 million, and adjusted earnings per share, which leave out merger-related costs, were $0.38.
Essential said it was on track to invest $1.7 billion in infrastructure in 2026. Regulators in Kentucky, Ohio and Virginia have approved the merger, and settlements in Pennsylvania, North Carolina and Texas still need commission approval. UBS also cut American Water, its merger partner, to Neutral from Buy the same day.
READ NEXT: Essential Utilities (WTRG) Keeps Growing While Profits Quietly Slide and What Is American Water Works (AWK)’s Economic Moat, and Is It Widening or Narrowing?
