The ASX’s hottest shares just stumbled — warning sign?

Two of the ASX’s hottest shares are starting to wobble.

Shares in 4DMedical Ltd (ASX: 4DX) and Electro Optic Systems Holdings Ltd (ASX: EOS) have delivered eye-watering gains over the past year, but recent pullbacks are raising eyebrows.

4DMedical has surged an astonishing 1,520% over 12 months, though it’s slipped 28% in the past month. Meanwhile, Electro Optic Systems is still up around 676% for the year, but dropped more than 5% on Tuesday.

If you’ve been along for the ride, it’s been spectacular. If not, the big question now is simple: Is there any upside left for these 2 red-hot ASX shares?

4DMedical

The company develops advanced medical imaging technology that creates detailed, real-time 3D and 4D views of lung function. Its platform helps doctors diagnose and monitor respiratory diseases more accurately than traditional imaging methods.

This $3 billion ASX share has delivered a remarkable growth story. A $3,000 investment just a year ago — buying 10,000 shares at $0.30 — would now be worth roughly $47,100.

But after such a massive run, valuation becomes far less clear. The company remains in a growth and commercialisation phase and is still loss-making, with much of the share price momentum driven by contract wins and future expectations.

While its technology is gaining traction and new deals continue to support sentiment, the lack of consistent earnings adds a layer of risk. Much of the recent share price strength appears tied to what the growth stock could achieve, rather than what it is currently delivering financially.

According to TradingView data, the average analyst price target sits at $4.47, about 5% below the current share price. That suggests expectations may already be stretched in the near term.

Electro Optic Systems

Electro Optic Systems operates in the defence and advanced technology space, an area currently benefiting from rising geopolitical tensions and increased military spending.

That backdrop has helped drive strong investor interest and price gains for this ASX share over the past year.

However, as with many high-growth companies, sentiment can shift quickly. Any slowdown in contract momentum or changes in defence spending outlooks could weigh on performance.

At the time of writing, the ASX share is trading at $9.70, and analyst views remain mixed. Price targets range from around current levels up to $16, implying potential upside of roughly 65%.

That widespread highlights the uncertainty surrounding the stock, even after its strong run.

Foolish Takeaway

Both companies have delivered extraordinary gains, but recent pullbacks suggest momentum may be cooling.

For existing investors, the focus may shift to protecting gains. For those on the sidelines, the decision is less straightforward. When shares climb this quickly, expectations can outpace fundamentals, and that’s when the risks start to rise.

The post The ASX’s hottest shares just stumbled — warning sign? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Electro Optic Systems. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.