Large-cap stocks usually command their industries because they have the scale to drive market trends. The flip side though is that their sheer size can limit growth as expanding further becomes an increasingly challenging task.
These trade-offs can cause headaches for even the most seasoned professionals, which is why we started StockStory - to help you find high-quality companies that can grow their earnings no matter what. That said, here are three large-cap stocks that may face near-term headwinds and some other investments you should consider instead.
Microchip Technology (MCHP)
Market Cap: $50.38 billion
Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.
Why Is MCHP Risky?
- Annual sales declines of 21.4% for the past two years show its products and services struggled to connect with the market during this cycle
- Earnings per share decreased by more than its revenue over the last five years, showing each sale was less profitable
- Free cash flow margin dropped by 17.8 percentage points over the last five years, implying the company became more capital intensive as competition picked up
At $100.48 per share, Microchip Technology trades at 30.3x forward P/E. Check out our free in-depth research report to learn more about why MCHP doesn’t pass our bar.
onsemi (ON)
Market Cap: $45.45 billion
Spun out of Motorola in 1999 and built through a series of acquisitions, onsemi (NASDAQ: ON) is a global provider of analog chips specializing in autos, industrial applications, and power management in cloud data centers.
Why Do We Think Twice About ON?
- Annual sales declines of 13.8% for the past two years show its products and services struggled to connect with the market during this cycle
- Demand will likely be soft over the next 12 months as Wall Street’s estimates imply tepid growth of 9.8%
- Competitive supply chain dynamics and steep production costs are reflected in its low gross margin of 39%
onsemi is trading at $125.76 per share, or 34.6x forward P/E. To fully understand why you should be careful with ON, check out our full research report (it’s free).
PNC Financial Services Group (PNC)
Market Cap: $93.94 billion
Tracing its roots back to 1852 when Pittsburgh's industrial boom demanded stronger financial institutions, PNC (NYSE: PNC) is a diversified financial institution that provides retail banking, corporate banking, and asset management services through a coast-to-coast branch network.
Why Are We Hesitant About PNC?
- Large revenue base makes it harder to expand quickly, and its annual net interest income growth of 8.8% over the last five years was below our standards for the banking sector
- Weak unit economics are reflected in its net interest margin of 2.8%, one of the worst among bank companies
- Large asset base makes it harder to grow tangible book value per share quickly, and its annual tangible book value per share growth of 2.8% over the last five years was below our standards for the banking sector
PNC Financial Services Group’s stock price of $230.05 implies a valuation ratio of 1.6x forward P/B. Dive into our free research report to see why there are better opportunities than PNC.
Stocks We Like More
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Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,326% between June 2020 and June 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.
