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Exclusive Content

3 Recently Downgraded Stocks to Avoid in 2026

Written by Dan Schmidt. Publication Date: 12/11/2025. 

Quick Look

• Marvell Technology was downgraded due to potential revenue risks from Amazon’s in-house chip development, despite strong earnings.
• Lucid Group faces solvency concerns as it burns cash and risks shareholder dilution, prompting a severe downgrade from Morgan Stanley.
• Robert Half was downgraded due to AI-related threats to its staffing model and declining relevance in an increasingly automated job market.

Earnings season has concluded, the Federal Reserve has cut another 25 basis points, and investors are now focused on whether the S&P 500 can reach the 7,000 mark by year’s end. Yet not all stocks have enjoyed the recent bullish momentum. These three companies were recently downgraded by analysts, highlighting growing concerns that could weigh on their stock prices heading into 2026.

Why Downgrades Matter More Than Upgrades

Stock analysts are a bit like meteorologists: they do difficult, often thankless work and are remembered more for their misses than their hits. Unlike weather forecasters, though, analysts must also contend with the reactions of company executives.

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Stock coverage can be a tightrope. Analysts must provide accurate, reliable research to clients while managing relationships with corporate management. Companies often exclude analysts with Sell ratings from investor calls, which creates pressure to issue more Buy or Hold recommendations than Sells.

For that reason, a downgrade—from Buy to Hold, or especially from Hold to Sell—should trigger more attention than an upgrade or a higher price target. Downgrades typically reflect substantive concerns about a company’s outlook, backed by detailed analysis.

Here are three stocks that were recently downgraded and the reasons behind those actions.

Marvell Technology: Strong Earnings Mask Brewing Headwinds

Marking down a semiconductor stock like Marvell Technology Inc. (NASDAQ: MRVL) requires conviction, especially when the stock is up more than 35% in the last three months.

The company beat top- and bottom-line estimates in its fiscal Q3 2026 results released after the market closed on Dec. 3, reporting record quarterly revenue and 38% year-over-year growth in its data center business.

So why did Benchmark downgrade the stock from Buy to Hold following earnings?

Marvell relies heavily on selling chips to AI hyperscalers, and one of its largest historical customers is Amazon Inc. (NASDAQ: AMZN). Amazon is moving to next‑generation Trainium3 chips, and it’s unclear whether the partnership will continue under the same terms.

In his report, Benchmark analyst Cody Acree said he expects Amazon to use a Taiwanese fabricator for Trainium3, which would create a meaningful revenue gap for Marvell if the relationship shifts.

Other commentators offer differing views on Marvell’s ties to Amazon, but the partnership remains a critical dynamic for investors. Next quarter’s report will include full-year fiscal 2027 projections, which could reveal weakness from lost contracts with Amazon or other hyperscalers. Any softness in data center revenue guidance or deteriorating gross margins—potentially from pricing pressure—would lend credence to Acree’s concerns.

Technically, the stock is hovering around the 50-day simple moving average (SMA). If that level gives way, it would be another negative mark against the former tech sector darling.

Lucid Group: Cash Burn Increases Risk of Dilution

Cash-strapped electric carmaker Lucid Group Inc. (NASDAQ: LCID) has faced recurring downgrades, and its valuation — roughly five times sales — belies mounting debt concerns.

The stock carries a consensus Reduce rating based on 11 analyst reports, but a recent downgrade from Morgan Stanley caught attention. Morgan Stanley’s Adam Jonas cut the rating from Buy to Underweight (Sell) and slashed his price target from $30 to $10.

Lucid lost more than $2.7 billion over the last 12 months, increasing pressure on management to raise capital and further diluting existing shareholders. Jonas doesn’t expect the company to reach profitability until 2028 at the earliest, and the loss of EV tax credits has weighed on demand.

Jonas estimates Lucid will need to raise at least $2 billion to remain solvent through 2026, which would increase share supply while the stock trades near multi-year lows. The price had been hovering near the 200-day SMA but has further collapsed amid the threat of dilution. Unless Lucid’s Galaxy SUV achieves outsized success, the stock likely has more downside.

Robert Half: Unique AI Vulnerabilities

If you were job hunting during the Great Financial Crisis, you’ve probably encountered Robert Half Inc. (NYSE: RHI), one of the largest staffing agencies in the U.S.

Times have changed, and the company now faces multiple threats from AI. The stock received two Sell downgrades in the last month from Zacks Research and BNP Paribas, with Zacks going so far as to label it a Strong Sell.

The AI threats are twofold. First, Robert Half generates revenue by placing candidates in full- or part-time roles, and generative AI tools have made resume screening and skills matching easier for employers to do in-house.

In that scenario, Robert Half risks being cut out as a middleman.

Second, the firm focuses heavily on administrative and back-office staffing—roles that are among the most vulnerable to automation.

Robert Half faces a potential long-term contraction in its addressable market, and its stock has struggled to keep pace with AI-driven changes. RHI shares are down more than 60% year-to-date, and the price is approaching resistance at the 50-day SMA.

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