Now that megacap stocks have lifted the S & P 500 and Nasdaq Composite indexes to all-time highs, some stocks in the group have risen so high, so fast they may actually be due for a pullback. Nvidia and Broadcom , makers of chips used in artificial intelligence, have soared 174% and 61%, respectively, this year. Pharmaceutical developer Eli Lilly , maker of Mounjaro for Type 2 diabetes and Zepbound for obesity, is higher by 53% this year. By contrast, the S & P 500 is up 15% this year, through Tuesday’s close. As a result, a growing chorus on Wall Street worries that the megacap bull market may have gone too far and created an unbalanced, unhealthy, lopsided stock market. According to data from Bespoke Investment Group, for example, Broadcom, Eli Lilly, Nvidia, Microsoft and Apple are all “extremely overbought,” reflected in share prices that are more than two standard deviations above their 50-day moving average. Broadcom leads the overbought list after jumping 36% in June alone, leaving the stock roughly 34% above its 50-day moving average. The semiconductor maker closed Tuesday with a market capitalization of more than $846 billion, the eighth most in the S & P 500, just ahead of Eli Lilly. Last Thursday, Broadcom surged 12% after its fiscal second quarter results beat analysts’ estimates and it declared a 10-for-1 stock split . Eli Lilly is also now extremely overbought, Bespoke said, after benefiting from increased demand for its weight loss and diabetes drugs. Lilly is trading about 12.5% above its 50-day moving average, closing Tuesday with a the ninth largest market value in the S & P 500, at more than $842 billion. Late last month, Lilly said it would invest another $5.3 billion in an Indiana manufacturing plant to boost the supply of its Mounjaro and Zepbound. Other stocks considered extremely overbought are Nvidia, Apple and Microsoft, which have traded more than 33%, 17% and 7%, respectively, above their 50-day moving averages. All three comprise the three largest companies in the S & P by market cap. Nvidia spiked around 3.5% during Tuesday’s trading session to surpass Microsoft as the most valuable public company . The company previously topped Apple in value earlier this month.
