"Extremely crowded" alarm sounds! JP Morgan warns: These six speculative growth stocks face the risk of a reversal in trend.

Recently, the volatility in the US stock market has highlighted the risks that JPMorgan strategists have been warning about - some of the stocks that have seen significant increases this year are facing a situation of being "extremely crowded". The bank has listed six speculative growth stocks, including Broadcom Inc. (AVGO.US), AMD (AMD.US), Expedia (EXPE.US), Estee Lauder Companies Inc. Class A (EL.US), Invesco (IVZ.US), and Nucor Corporation (NUE.US), and warned that if any significant macroeconomic event occurs, the trend of these stocks could "easily reverse". Data shows that the S&P 500 index fell by 1.2% on Wednesday, marking the fourth consecutive day of decline after reaching a historical high last week. Tech stocks led this round of selling, as investors rotated out of the "winners" sector. This is exactly the situation that JPMorgan quant analysts had warned about. They stated that the "crowdedness" of these high volatility, high-risk stocks has reached the 99th percentile - an "extreme" level that may lead to sharp liquidation that investors need to hedge against. Bram Kaplan, head of Americas equity derivatives strategy at JPMorgan, said, "These companies are more sensitive to shocks, which exposes them to the risk of sudden repricing." He added that compared to many high volatility stocks belonging to the "secondary speculative AI concept stocks", low volatility stocks have more attractive risk-return characteristics. Since December 10th, the stock prices of Broadcom Inc. have fallen by over 21%, AMD by 11%, Estee Lauder Companies Inc. Class A, Invesco, and Nucor also declined, with only Expedia rising by about 3%. The market is increasingly feeling that the AI frenzy can no longer drive all stocks higher, and investors are trying to differentiate between winners and losers. Investors seeking to profit from the AI frenzy this year have moved away from large tech stocks like NVIDIA Corporation (NVDA.US) and Microsoft Corporation (MSFT.US), and entered into targets they expect to benefit from the AI wave. JPMorgan refers to the listed stocks as "secondary speculative AI beneficiary stocks" and says they are prone to significant fluctuations because these companies need to raise funds through the capital or debt markets for expansion, rather than relying on internal growth. Kaplan provided a simple strategy for clients looking to capitalize on the current situation - buying put options on speculative stocks and establishing long positions on low volatility stocks. Investors may consider shorting some high momentum stocks while going long on relatively "boring" low volatility weight stocks like Cigna (CI.US), Pfizer Inc. (PFE.US), and Verizon (VZ.US). Of course, the continuous decline of these momentum stocks in recent days may only be due to temporary rotation of funds out of a few popular stocks, rather than a significant shift in the market. The strong performance announced by Micron Technology, Inc. on Wednesday - once again driving up AI concept stocks - corroborated this view. Alexis Mobuge, Chief Investment Officer at Swiss hedge fund Adapt Investment Managers, said, "True asset owners - retail investors and large institutions - are the only ones who can drive the market beyond short-term, shallow, and technical pullbacks. There needs to be a major fundamental change, such as a substantial shift in the AI narrative, for them to unwind their positions."