Key Takeaways

• 2024’s big stock market winners are among the worst performers in recent weeks.
• AI stocks have plunged double digits amid a wave of challenging news.
• Technology stocks are down 6.7% in 2025 after surging 36.2% last year.
• Many of 2024’s top performers started the year overvalued but have returned to fair value territory after recent selloffs.

After a strong rally in 2024, the US stock market has stumbled in recent weeks, led by losses in many of last year’s biggest winners.

Drilling into the holdings of the Morningstar US Large-Cap Index—which tracks the top 70% of the US stock market by capitalization—the three biggest winners in 2024 were AI players Palantir Technologies PLTR, Nvidia NVDA, and Broadcom AVGO. Over the past two weeks, Palantir has dropped 32.3%, Nvidia has lost 16.8%, and Broadcom has lost 18.0%. The overall large-cap index is down 6%.

Of the 15 top-performing large-cap stocks in 2024, all have declined in the past two weeks, with more than two-thirds dropping by double digits.

The four largest decliners of the group—Palantir, Constellation Energy CEG, Tesla TSLA, and Arista Networks ANET—are also the four largest decliners of the Large-Cap Index over the past two weeks. Additionally, all four are big players in the artificial intelligence trade.

Despite recent struggles, nearly all these stocks remain winners for investors over the long-term. Fourteen of the 15 have outpaced the market’s 11.2% annualized return over the past three years. The one exception, Tesla, has lost 0.9% per year. Leading the pack are Palantir, which has surged 98% per year, Nvidia, which has gained 72% per year, and Constellation, which has gained 66% per year.

AI Stocks Stumble Amid Bad News

The Morningstar Global Next Generation Artificial Intelligence Index, which tracks companies that produce leading generative AI technologies and adjacent products and services, has fallen 11.5% over the past two weeks and 1.9% in the year to date. Last year, the index soared 37.0%, outpacing the overall market by double digits.

Behind the slide is a slew of bad news for individual AI players and the broader industry.

• Chinese AI startup DeepSeek sent AI stocks like Nvidia and Broadcom tumbling over 15% on Jan. 27 after it announced that its R1 model could handle advanced AI tasks without cutting-edge semiconductor chips.
• Palantir sold off sharply following warnings of a cutback in government spending and news that the company’s chief executive plans to sell upward of $1 billion worth of stock.
• Tesla shares dropped in mid-February after EV competitor BYD BYDDY announced a partnership with DeepSeek to offer free advanced driver assistance software. Later in the month, the stock fell further after news that Tesla’s January deliveries in Europe had plummeted from the year-ago period.
• Policy uncertainty in Washington, including an escalating trade war, has weighed on stocks in 2025.

Valuation Matters

While 2024’s top stocks delivered eye-popping gains, many finished the year priced well above their fair value estimates, trading in overvalued territory.

Broadcom, Constellation, Arista, Marvell Technology MRVL, Apollo Global Management APO, and American Express AXP all ended 2024 with Morningstar Ratings of 2 stars, while Palantir, Netflix NFLX, Walmart WMT, and Tesla each ended up rated 1 star. Stocks rated 2 stars are moderately overvalued, while those rated 1 star are significantly overvalued, according to Morningstar analysts.

As of March 4, Palantir, Broadcom, Arista, Marvell, and Tesla had all fallen back into 3-star territory, meaning our equity analysts see them as fairly valued.

Which Stocks Are Up in 2025?

Healthcare stocks are up nearly 7% to start the year after gaining less than 3% in 2024. Of the 20 top-performing large-cap stocks in the year to date, half are healthcare names. They’re led by CVS Health CVS, Gilead Sciences GILD, Abbott Laboratories ABT, Vertex Pharmaceuticals VRTX, and Amgen AMGN. Real estate and consumer defensive stocks have also posted modest gains.

This trend has continued even as the broader market has stumbled, with healthcare stocks rising nearly 2% since Feb. 19, despite a 6% stock market drop. The most notable gains came from Merck MRK with an 11.1% gain, Bristol-Myers Squibb BMY with a 9.2% gain, and Gilead with a 9.0% gain.