3 S&P 500 Stocks to Sell in 2026: The Alpha Leaks

The market's broad strength is a mirage. While the S&P 500 is up 17% over the past year, the tech-heavy NASDAQ is down -1.75% year to date. That's the signal. The rotation away from overvalued mega-cap tech is already underway.

Strategists expect 2026 returns to be solid but "more modest," with tech unable to match its outsized gains. The proof is in the pudding: on January 14, over half the S&P 500 rose even though the index as a whole dropped. That's a healthy shift from one-sector dominance to broader, more sustainable growth.

The setup is clear. Concentration risk is huge, but the floor for the market remains high. Now is the time to trim positions in stocks that can't ride this new wave. Let's identify the three S&P 500 names that are getting left behind.

The Breakdown: 3 Stocks Facing 2026 Headwinds

The rotation is real. Now, let's get specific. Here are three S&P 500 names where the fundamentals are cracking, the valuation is stretched, or the policy risk is too high to hold. These are the stocks getting left behind in the new market regime.

1. Tesla (TSLA): The Fading Edge & Delivery Slide

Tesla's tech lead is officially fading. The company's move to make Full Self-Driving a subscription-only service is a clear signal that its software edge is eroding, as noted by analyst Ross Gerber. That's the first red flag. The second is the brutal competition. Chinese giant BYD is poised to officially surpass Tesla as the world's biggest EV maker in annual sales, setting a new global benchmark. The proof is in the numbers: Tesla's global deliveries fell 8.6% year-over-year last quarter. That's a massive decline for the sector leader. Add in the recent selling by the ARK ETF, and you have a classic case of a once-dominant growth story losing its momentum. In a rotation away from overvalued tech, TSLA is a prime target.

1. GE HealthCare (GEHC): Valuation Meets China Headwinds

This healthcare tech play is facing a perfect storm of pressure. Its Q4 earnings are due in early February, and the setup is fragile. The company is already grappling with a major sales slump in China, where sales declined 11% and 18% year-over-year in recent quarters. That's a critical market for medical imaging. The pressure is now hitting the valuation. Just last week, UBS downgraded the stock, citing concerns over growth and margins. With earnings on the horizon and China sales still under water, GEHC is a classic "wait and see" story where the risk of a downgrade or weak guidance is high. In a market rotating to broader growth, healthcare tech is getting squeezed.

1. UnitedHealth (UNH): Policy Crossfire & Margin Squeeze

UNH is trapped in a policy crossfire that creates massive regulatory risk. The company is facing Medicare Advantage retrenchments, which are directly threatening its core profitability. The math is stark: its projected Medicaid margin is expected to swing from a small profit to a loss, dropping from -0.1% to -1.8%. That's a brutal margin compression. On top of that, new Senate scrutiny is adding to the uncertainty. The combination is a recipe for volatility. The company is also set to terminate coverage for 300,000 lives in its Medicare Advantage plans. That's a significant operational and reputational hit. In a year where policy risk is a key driver, UNH's setup is too exposed to hold.

The bottom line: The market rotation is a signal to trim. These three stocks face clear, fundamental headwinds that make them vulnerable in 2026. It's time to take some chips off the table.

Key Takeaways & Watchlist

The rotation is real, and the catalysts are lining up. Here's what to watch in the coming weeks to confirm or break the thesis for these three stocks.

For Tesla (TSLA): The first major test is the Q4 earnings report on February 4. This is the data dump that will show if the delivery slide is stabilizing or accelerating. Watch for any commentary on competitive pressure from BYD and the impact of the new FSD subscription model. A weak print here would validate the fading growth story and likely trigger further selling in a rotation away from overvalued tech.

For UnitedHealth (UNH): The critical date is January 27. The company will release its full-year results and, more importantly, 2026 guidance. This is where the policy crossfire hits the balance sheet. Any guidance that reflects the projected Medicaid margin collapse or hints at further Medicare Advantage retrenchments will confirm the volatility thesis. The market will price in the regulatory risk.

The Bigger Picture: The broader market's ability to sustain this rotation beyond tech will be tested as the year progresses. The setup is clear: strategists expect 2026 returns to be solid but more modest, and the January 14 data point is the signal. On that day, over half the S&P 500 rose even though the index as a whole dropped. That's the definition of healthy breadth. If this continues, it confirms the rotation is structural, not a blip. If mega-cap tech reclaims dominance, it breaks the thesis and signals a return to concentration risk.

The watchlist is set. Monitor these dates. The market is telling you to rotate. Now is the time to act.