3 Recently Downgraded Stocks to Avoid in 2026

Key Points

• 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 perform a difficult, thankless job where they're often right, but remembered most when they're wrong. However, meteorologists do have one advantage—the clouds don’t get angry when you predict they’ll produce snow. 

Stock analysis can be a tightrope walk, because you want to report accurate and reliable information to clients, but you must consider potential backlash from company executives. CEOs often don't invite analysts with Sell ratings onto their company conference calls, so covering a stock requires both dedicated research and a bit of public relations savvy. This is often why you see so many more Buy or Hold ratings than Sells; an analyst risks angering the C-suite if they label their stock a Sell. 

Therefore, a stock downgraded from Buy to Hold, or (especially) Hold to Sell, should make investors' Spidey-sense tingle more than an upgrade or price target boost. Downgrades typically reflect substantial concerns about a company's future, backed by detailed analysis.

Here are three stocks that recently received downgrades, along with the reasons behind the poor reports.

Marvell Technology: Strong Earnings Mask Brewing Headwinds

Marking down a semiconductor stock like Marvell Technology Inc. NASDAQ: MRVL in the age of AI requires conviction, especially one up more than 35% in the last three months.

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

So why did analysts at Benchmark drop the stock from Buy to Hold following earnings? 

Marvell depends on selling its chips to AI hyperscalers, and one of its largest historical customers is Amazon Inc. NASDAQ: AMZN. However, Amazon is advancing to its next-gen Trainium3 chips, and it's unclear if the partnership will continue. 

In his report, Benchmark analyst Cody Acree announced his belief that Amazon will use a Taiwanese fabricator for the Trainium chips, which would create a serious hole in the company’s revenue. 

Although some commentators offer differing views on Marvell’s relationship with Amazon, it remains a key dynamic for investors to watch. Next quarter’s earnings report will include full-year fiscal 2027 projections, which could show weakness from any lost contracts with Amazon or other hyperscalers. Any weakness in data center revenue guidance or deteriorating gross margins—possibly due to pricing pressures—could validate Acree’s concerns.

The stock is at a crucial technical level along the 50-day simple moving average (SMA). If this level doesn’t hold, it's 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 isn’t a stranger to downgrades and negative news, considering the stock trades at 5 times sales and its debt woes are mounting faster than angry callers at Philadelphia sports talk radio stations.

The stock has a consensus Reduce status based on 11 analyst reports, but a recent downgrade from Morgan Stanley raised eyebrows. Morgan Stanley’s Adam Jonas dropped the stock from Buy to Underweight (Sell) and slashed his price target from $30 to $10.

The company has lost more than $2.7 billion over the last 12 months, putting pressure on management to raise funds and further diluting shareholders who were already unhappy. Jonas doesn’t expect the company to reach profitability until 2028 at the earliest, and the loss of EV tax credits is weakening the market.

Jonas estimates the company will need to raise at least $2 billion to stay solvent through 2026, which would flood the market with shares since the stock is near all-time lows. The stock had been hovering near the 200-day SMA, but the price has now further collapsed amid the threat of dilution. Unless Lucid’s Galaxy SUV is an outsized success, the stock probably has further to fall.

Robert Half: Unique AI Vulnerabilities

If you were looking for a job during the Great Financial Crisis, you’re probably familiar with Robert Half Inc. NYSE: RHI, one of the largest staffing agencies in the country.

Times change, however, and the company is facing threats from AI in several different directions. The stock has received two Sell downgrades in the last month from Zack’s Research and BNP Paribas, with Zack’s going so far as to label it a Strong Sell.

The AI threats are twofold. First, the company earns revenue by placing candidates in full- or part-time positions, and generative AI has made this process easier for companies to handle by scanning resumes and matching skills.

In this scenario, Robert Half becomes a middleman that’s easily cut out.

Second, the company primarily focuses on staffing administrative roles considered “back office,” which are also among the most vulnerable to AI automation.

Robert Half faces a long-term decline in its addressable client base, and its stock is struggling to keep pace with AI advances. RHI shares are already down more than 60% year-to-date, and the price is approaching a sturdy resistance level at the 50-day SMA.