If a Bear Market Is Coming, 2 Stocks You Don't Want to Own -- and 1 You Do

It's been a chaotic thrust for investors this year. After falling much than 7% successful the archetypal 4 months, the S&P 500 is up astir 20% successful the months since. As is usually the case, the thrust for the tech-heavy Nasdaq Composite has been adjacent much jarring: down much than 10% done April and present up astir 25% from that low.

Given each that's happening successful the world, immoderate investors are tense that the caller tally volition reverse. If this happens, and a carnivore marketplace -- a 20% driblet successful the banal marketplace -- is coming, present are 2 stocks I deliberation volition autumn overmuch further, and 1 that volition fare acold amended than astir of the market.

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Why a carnivore marketplace would apt commencement with AI

Before we get into the specifics, fto maine acceptable this up. To my mind, the astir apt script that leads to a carnivore marketplace (or thing worse) would halfway astir large issues successful the AI manufacture that person been driving the marketplace higher for years now.

Given that astir 40% of the S&P 500's worth sits successful conscionable 10 stocks, astir each of which are elephantine tech companies, it would look improbable for the remainder of the marketplace to vessel portion AI companies support chugging along.

Oracle: Impressive growth, but built connected a upland of indebtedness

On the surface, Oracle (NASDAQ: ORCL) looks terrific. Revenue for Oracle Cloud Infrastructure (OCI), the portion of the concern that rents computing powerfulness to different companies, roseate 46% to $9.9 cardinal successful the 4th fourth of fiscal 2026 (ended May 31). The company's remaining show obligations (RPO) -- contracted gross it hasn't delivered yet -- reached an unthinkable $638 billion.

But there's a catch: Oracle is paying for that maturation with borrowed money. Total indebtedness has reached a whopping $156 billion. Sitting connected apical of that is $261 cardinal of data-center lease commitments that haven't deed the equilibrium expanse yet.

Free currency travel (FCF), the wealth near implicit aft moving the concern and paying for caller construction, was antagonistic $24.5 cardinal successful fiscal 2026. That is rather a shortfall.

Perhaps astir concerning, astir fractional of Oracle's $638 cardinal backlog is expected to travel from 1 company: OpenAI. The shaper of ChatGPT is burning done currency astatine a complaint we've fundamentally ne'er seen and is connected the hook for trillions during the adjacent 5 years.

That is simply a risky presumption to beryllium in. Oracle has leveraged itself to a superior grade and is heavy reliant connected a institution that precise good whitethorn person occupation paying.