3 Once-Hot Stocks That Could See Major Pullbacks in 2026
Written by
Marc Guberti
Edited by
Zuri Anderson
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It’s normal for stocks to get ahead of themselves in bullish economic cycles, like what investors saw in 2025. While this year looked primed to start on a high note as well, Iran’s Strait of Hormuz blockage is disrupting the global economy, with oil prices up by roughly 50% over the past month.
This event may serve as one of the biggest lessons for growth investors. Stocks with lofty valuations that trade on hype and long-term growth opportunities get crushed the hardest. Suddenly, the focus shifts away from what companies can become within a few years, and current financials become all that matters.
These hot stocks may endure major pullbacks in 2026 as the economy contracts.
Rocket Lab
Rocket Lab launches specialized rockets into space and offers on-orbit management solutions for public and private organizations. The company has a tremendous long-term opportunity in the space industry, but with macroeconomic conditions getting bleaker, potential won’t cut it for now.
The company only generated $602 million in 2025 and closed the year with a $1.85 billion backlog. Rocket Lab delivered impressive growth, but the stock has nearly quadrupled over the past year, resulting in a $40 billion market cap. Rocket Lab needs multiple years of 100% revenue growth to justify the valuation, along with a pivot to profitability. Macroeconomic conditions make investors impatient, and that may hurt Rocket Lab stock.
Palantir
Palantir is another excellent company that continues to gain market share — revenue increased by 56% in 2025 and reached $4.5 billion — but that revenue stacks up against a market cap that is approaching $400 billion.
Some cracks are emerging, with Palantir down by more than 25% from its all-time highs. While a strong economic backdrop featuring low inflation rates and low rates could have extended the rally, the ongoing conflict in Iran should foil that vision with ease. While Palantir can see a boost in government revenue, its valuation will be put under an intense microscope until macroeconomic conditions stabilize.
Just like Rocket Lab, Palantir needs multiple years of exceptional revenue growth to justify its current valuation. A 125 forward P/E ratio does not inspire much confidence in this economic cycle.
Carnival Cruise
The cruise liner’s stock was up by almost 70% over the past year before Iran blockaded the Strait of Hormuz. Now, it’s dropping fast and has erased all of its year-to-date gains. This is the stock to run from amid the blockage since rising oil prices have an immediate effect on the company’s profit margins.
Rising gas prices will inevitably lead to inflation for food and other necessities, and with Gulf Nations accounting for 20% of the circulated fertilizer, food may become scarce, according to DW. The conflict has immediate consequences for Carnival Cruise, and red-hot inflation that can potentially exceed what consumers saw in 2022 will make them cut back on luxuries like carnival rides and focus on the bare essentials.
Recent revenue growth and Carnival Cruise’s 2026 financial outlook have no material value for an economic event that can be equally as potent as pandemic lockdowns.
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