Amid a tumultuous week that saw the S&P 500's nine-week winning streak broken by a Friday sell-off in chip stocks, certain individual equities defied the broader market's seesaw volatility to become significantly "overbought." Hewlett Packard Enterprise (HPE) emerged as a prime example, captivating investors despite the surrounding market uncertainty.
Market analysts at CNBC Pro leveraged their proprietary stock screener, focusing on the 14-day Relative Strength Index (RSI), to pinpoint these aggressively acquired stocks. An RSI reading above 70 typically signals an overbought condition, suggesting that a potential price correction might be imminent. Conversely, an RSI below 30 often indicates an oversold state, hinting at a possible rebound.
HPE's shares witnessed an impressive 14% weekly surge, primarily driven by a remarkable fiscal second-quarter earnings report. The tech giant's cloud and artificial intelligence revenue figures significantly surpassed analyst expectations. HPE reported an adjusted earnings per share of 79 cents on $10.68 billion in revenue, outperforming LSEG-polled analyst consensus of 53 cents per share and $9.79 billion in revenue. This stellar performance marked HPE's most substantial earnings beat since 2018.
Following these outstanding results, Loop Capital upgraded HPE's stock from a "hold" to a "buy" rating, drastically revising its price target from $23 to an ambitious $75. Analyst Ananda Baruah highlighted the "historic blowout quarter" as "Agentic and Inferencing adoption is triggering not only amplified revenue growth but [operating margin] expansion as well." Baruah further expressed optimism, stating, "Now that commercial inference investment has begun in earnest…we believe we could be at the front end of a 3-5 year growth expansion." HPE concluded the week with a 14-day RSI of 73.
Fortinet and Others Also Land in Overbought Territory
Cybersecurity firm Fortinet also saw a significant influx of investor interest, closing the week with a robust RSI of 76. Fortinet's trading week was eventful, with its stock reacting to peer earnings reports from Palo Alto Networks and CrowdStrike. Despite momentarily hitting a 52-week high on Thursday, Fortinet's shares experienced a 3% dip on Friday amidst a broader tech sector decline. Nevertheless, the stock managed a respectable nearly 5% gain for the week.
Other notable companies appearing on this week's list of most overbought stocks included Host Hotels and Resorts and Humana, which posted RSIs of 79 and 77, respectively, by week's end.
