The Bear Cases For Wall Street's Darlings

After a stellar 2016, some of the top-performing stocks that Wall Street loves seem poised to deliver huge returns again in 2017. However, it’s important to remember that there’s always two sides to each trade.

Here’s a bearish contrarian take on some of the hottest stocks on Wall Street.

Amazon

Amazon.com, Inc. AMZN delivered yet another impressive year in 2016, climbing 13.2 percent to new all-time highs. Amazon currently has 39 Buy/Outperform ratings from analysts, 4 Hold ratings and absolutely zero Underperform/Sell ratings. However, Global Equities Research analyst Trip Chowdhry recently said Amazon has finally run out of steam.

“We think AMZN-AWS future growth expectations are now fully baked into AMZN valuation,” Chowdhry explained.

NVIDIA

NVIDIA Corporation NVDA finished the year as the top-performing stock in the S&P 500 by a huge margin. Wall Street remains overwhelmingly bullish on NVIDIA. The stock currently has 17 Buy/Outperform ratings, 13 Hold ratings and only 2 Underperform/Sell ratings. Wells Fargo analyst David Wong downgraded NVIDIA to Underperform back in July.

“We expect Nvidia will be able to continue to grow its coprocessor business in the future but we wonder if rising competition from Intel in this segment creates some headwind to momentum in the space,” Wong wrote.

Freeport-McMoRan

Freeport-McMoRan Inc FCX stock has doubled in 2016, but Wall Street is a bit more mixed on the stock looking forward. Freeport-McMoRan currently has 5 Buy/Outperform ratings, 13 Hold ratings and 4 Underperform/Sell ratings. Bank of America analyst Timna Tanners downgraded the stock to Underperform in October.

“After asset sales, Freeport-McMoRan’s Americas and Indonesia mines become even more critical, and Indonesia challenges return to the forefront,” Tanners said.

Applied Materials

Applied Materials, Inc. AMAT stock has a very few Wall Street naysayers these days. The stock currently has 20 Buy/Outperform ratings, 5 Hold ratings and zero Underperform/Sell ratings. Just last month, Goldman Sachs analyst Toshiya Hari downgraded Applied materials to Neutral.

“While we remain very bullish on management’s ability to identify technology inflections, appropriately allocate resources and to ultimately gain share and deliver above-industry-average growth, we view risk-return to be fair at current levels,” Hari said.

Newmont Mining

Newmont Mining Corp NEM is another 2016 market leader that is getting plenty of love from Wall Street. The stock currently has 12 Buy/Outperform ratings, 9 Hold ratings and zero Underperform/Sell ratings. Citigroup recently downgraded the stock to Neutral.

"We are not inclined to aggressively chase the recent rally, especially given that technical positions are very long,” analyst Alexander Hacking said of gold stocks back in August.

Micron

Micron Technology, Inc. MU shares were up 57 percent in 2016, but most Wall Street analysts see more upside ahead. The stock currently has 21 Buy/Outperform ratings, 5 Hold ratings and only one Underperform/Sell rating. Goldman Sachs was among the Micron skeptics back in March.

“We believe the improvement in profitability that some investors have been expecting, driven by the 20nm shrink and the Inotera margin sharing agreement, will take time to occur due to both weak pricing and Micron's inventory build,” the firm wrote.