The Nasdaq Composite‘s rally has yet to abate, but there are still Nasdaq stocks to sell. The tech-heavy index has risen over 11% and is likely to edge upwards. Fueling the rally are two dynamics. On the one hand, the core consumer personal expenditures (PCE) index, which excludes volatile food and energy prices, increased only 0.3% on a month-to-month basis, a stark difference from the 0.5% month-over-month increase we witnessed in January. Recent macroeconomic data suggests inflation is cooling.
On the other hand, demand for artificial intelligence products and technologies remains at a fever high. AI-chip behemoth Nvidia (NASDAQ:NVDA) reported Q1 financial figures last Thursday and beat Wall Street’s revenue and earnings handedly, indicating the AI craze isn’t just hype. The Nasdaq has broadly benefitted from Nvidia’s consistent earnings beats over the past year, and this time wasn’t different from any others.
Of course, not every Nasdaq-listed stock has enjoyed the rally. Like in every index, there are winners and losers. Not every Nasdaq-listed company is linked to AI. Some are operating in sectors that are facing severe headwinds due to high interest rates as well as general macroeconomic uncertainty.
Below are three Nasdaq stocks to sell this month before they ruin your returns.
Thoughtworks (TWKS)
Digital transformation is an important theme amongst technology businesses these days. Enterprises covering almost every sector of the economy have worked to increase operational efficiencies through onboarding various technological solutions. To help them plan and execute on this pivotal business changes, many companies will approach a technology consultancy services business like Thoughtworks (NASDAQ:TWKS). Thoughtworks helps businesses to develop and implement modernization strategies. For example, the tech consultancy company helped Australian software giant Atlassian (NYSE:TEAM) to migrate its application-building tool, Bitbucket, to the public cloud.
Unfortunately, the uncertain macroeconomic environment has bitten into Thoughtworks’ sales growth since the pandemic years ushered in an era of high interest rates. Uncertainty has caused some of Thoughtworks current clients and prospective ones to delay projects. Moreover, despite a clear earnings-beat for Q1 2024, investors are still feeling sour about the ability for technology services company to improve revenue growth rates. TWKS shares have plummeted more than 29% on a year-to-date basis.
Lumentum (LITE)
Lumentum (NASDAQ:LITE) is a communications equipment provider that specializes in optical and photonic products. The former is crucial for creating high-capacity, low-latency fiber optics cables, while the latter consists of industrial lasers that original equipment manufacturers (OEMs) leverage in their manufacturing processes.
Telecom and data center providers, driven by the rise of cloud computing, have increased their demand for optical products. Photonics devices, which include LiDAR (light detection and ranging) sensors that go into modern automotives, have also been in high demand. As a result, companies like Lumentum should be seeing a steady rise in sales over time. However, the communications equipment provider reported a year-over-year decrease in revenue in its Q3 2024 earnings report as telecom customers pulled back spending as they continue to digest already elevated inventory levels. It’s remains unclear when that particular segment of Lumentum’s customer set will recover.
In the meantime, LITE shares have fallen nearly 12% on a YTD basis, making it a prime candidate of Nasdaq stocks to sell.
Walgreens Boots Alliance (WBA)
Walgreens Boots Alliance (NASDAQ:WBA) is probably best known for its iconic pharmacy and retail outlets that are located across the United States. The Covid-19 global pandemic sent the company into a whirlwind. Lockdowns during the onset of the pandemic meant many customers who would have shopped in store for products had to source them online. Walgreens did, however, benefit from the countrywide Covid-19 vaccination campaign. If we double-click into Walgreens’ reported sales growth for fiscal year 2021, there was sizable jump to 8.6% largely off of the back of vaccinations. With the brunt of the pandemic now behind us, those tailwinds have largely dissipated.
The company’s earnings history after the pandemic years has also been hit or miss. Most recently, despite exceeding Wall Street’s expectations on both revenue and earnings, Walgreens decided to slash its quarterly dividend nearly in half, from $0.48/share to $0.25/share, ultimately causing the chain drug store’s stock to plunge.
WBA has fallen more than 37% YTD, making it amongst some of the Nasdaq’s underperformers.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.