Driven largely by the ongoing artificial intelligence (AI) boom, the benchmark S&P 500 (SNPINDEX: ^GSPC) index has more than doubled from its bear-market low point in 2022, so investors have enjoyed spectacular returns over the last few years.
But the index currently trades at a Shiller Cyclically Adjusted Price-to-Earnings (CAPE) ratio of 41.9, making it the second-most expensive market in history, behind only the dot-com bubble in 2000. With ongoing geopolitical tensions in the Middle East, elevated inflation, rising government bond yields, and the upcoming midterm congressional elections in November, this may be a good time for investors to trim their market exposure.
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Stocks with high valuations tend to be the most vulnerable to steep declines during broad-market sell-offs, as investors tend to take such events as cues to cash out of their bigger winners and reduce the level of risk in their portfolios. I’ve identified two popular technology stocks trading at sky-high valuations now that might be worth selling if the S&P 500 starts to head south.
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The first stock to sell: Advanced Micro Devices (AMD)
Advanced Micro Devices (NASDAQ: AMD) has become a leading supplier of graphics processing units (GPUs), the primary type of processor used to power workloads in AI development. It’s one of the only chipmakers genuinely competing with Nvidia, which currently leads this market.
AMD will start shipping its new MI450 GPUs over the next few months, which are expected to be comparable to Nvidia’s Vera Rubin chips. In fact, when paired with the Helios data center rack, which includes specialized software and networking hardware, the MI450 could deliver 15% more processing power with 30% better cost efficiency than anything else on the market.
Companies like OpenAI, Microsoft, Meta Platforms, and Anthropic plan to deploy several gigawatts’ worth of computing capacity over the next few years using AMD’s GPUs, starting with the MI450. This will help the company capture a meaningful slice of what CEO Lisa Su believes will be a $1.4 trillion market by 2030.
During the second quarter of 2026, AMD’s data center revenue more than doubled year over year to a record $6.7 billion. It accounted for more than half of the company’s total revenue of $11.5 billion, underscoring how important AI GPUs and components have become to the business.
However, investors are being asked to pay a hefty premium for that growth right now. Based on AMD’s adjusted trailing-12-month earnings of $5.76 per share, its stock is trading at a price-to-earnings (P/E) ratio of 87.8, so it’s more than twice as expensive as Nvidia stock, which currently has a P/E ratio of 34.4. In my opinion, that will leave AMD stock especially vulnerable to a sharp correction in the event of a sell-off in the broader market.
The second stock to sell: CrowdStrike
CrowdStrike (NASDAQ: CRWD) is one of the world’s largest cybersecurity companies, and its Falcon platform is one of the industry’s only true all-in-one solutions for enterprises. It protects cloud networks, employee identities, endpoints (computers and devices), and everything in between. This unified approach to security has never been more important, as AI-powered cyberattacks are quick to exploit holes in corporate defenses.
Businesses can choose from 33 different Falcon modules (products) to build a cybersecurity solution that suits their specific needs. Plus, with the Flex subscription, they can use a fixed annual budget to switch between modules as their needs change.
A growing number of Falcon modules are designed to protect businesses during the AI era. The AI Detection and Response (AIDR) module, for example, hunts for unauthorized AI agents or software applications running in corporate networks. It also monitors all inputs and outputs across trusted AI apps, so it can detect anyone using a technique called prompt injection to orchestrate a breach.
CrowdStrike had $5.5 billion in annual recurring revenue (ARR) as of its fiscal 2027 first quarter (which ended April 30), a 24% increase from the year-ago period. Flex subscription ARR doubled to $1.9 billion, so it was a key growth driver. The company also said its AIDR module experienced an eye-popping 250% increase in ARR during the quarter, which highlights how growing adoption of AI is driving a surge in cybersecurity demand.
Although CrowdStrike’s operating results have been exceptional, its stock is extremely expensive. Its price-to-sales (P/S) ratio is over 42, which is a substantial premium to the P/S ratio of its closest rival, Palo Alto Networks. For some additional perspective, the Nasdaq-100 technology index has a P/S ratio of just 6.3.
CrowdStrike stock is no stranger to volatility, having suffered three peak-to-trough declines of at least 25% since 2024 alone. Therefore, investors who currently own it should brace for a bumpy ride if the broader market turns south.
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Anthony Di Pizio has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Advanced Micro Devices, CrowdStrike, Meta Platforms, Microsoft, and Nvidia. The Motley Fool recommends Palo Alto Networks. The Motley Fool has a disclosure policy.
If a Stock Market Crash Is Coming, These 2 Growth Stocks Might Be Worth Selling was originally published by The Motley Fool
