2 Overpriced Stocks to Sell

Susan Dziubinski: Hi, I’m Susan Dziubinski, co-host of The Morning Filter podcast. On a recent episode, Morningstar’s Chief US Market Strategist Dave Sekera talked about five stocks that’ve skyrocketed during the past 12 months that he thinks investors should take profits in. Why? Because each of the stocks, which are Bloom Energy BE, Ciena CE, SanDisk SNDK, Micron Technology MU, and eBay EBAY, are trading way above Morningstar’s fair value estimates. Today, we’re covering two more stocks that have rallied hard during the past year and, as a result, look really overvalued today. They’re so overpriced that we think they’re stocks to sell. This first overvalued stock to sell is ARM Holdings. ARM develops CPU architecture and intellectual property that it then licenses. We expect this wide-moat company to remain the dominant architecture in smartphone CPUs, where it has a 99% market share. Now, 2026 marked a very important strategic shift for the company as it announced plans to become a fabless chip company, selling its own data center CPUs on top of licensing intellectual property.

2 Overpriced Stocks to Sell

1. Arm Holdings ARM
2. Nokia NOK

So ARM will now be directly competing with some of its own customers like Nvidia NVDA, Qualcomm QCOM, and the hyperscalers, while at the same time licensing IP to them. We think the market’s gotten way ahead of itself on the news. ARM’s stock is up significantly this year. We think it’s time to cash in, as shares trade well above our $150 fair value estimate. The second overvalued stock to sell is Nokia. This no-moat company is fundamentally a networking equipment provider, primarily serving wireless carriers and data centers. Now, not surprisingly, the company is increasingly focused on serving AI and data center customers. Nokia even made an acquisition in 2025 to supplement its existing optical networking products. The acquisition looks timely, with data center capacity expected to double by 2028. We expect the sheer scale of demand to support growth and margin expansion. However, we think investors have been overly excited about the prospects here.

Read Morningstar’s full report on Arm Holdings.

We assign Nokia’s ADRs a fair value estimate of $8.50, and they trade well above that. For more stock ideas, be sure to tune into The Morning Filter wherever you get your podcasts, and visit Morningstar.com, too.

Read Morningstar’s full report on Nokia.

For more stock ideas, be sure to tune in to The Morning Filter wherever you get your podcasts, and visit Morningstar.com, too.

Morningstar senior analysts Javier Correonero and analyst Martin Szumski provided the research behind this segment.