Following a turbulent week that saw the S&P 500 decline 1.6%, several AI-related stocks have entered oversold territory. Companies like Oracle, Super Micro Computer, and IBM have experienced significant stock price drops, with Oracle showing an RSI of 17.4. Despite financial headwinds for some, analysts largely maintain a positive outlook on Oracle.
Conversely, stocks such as Cintas and PayPal have entered overbought territory. Cintas saw a notable increase after strong earnings, while PayPal jumped on reports of a potential acquisition bid.
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Artificial intelligence players are among the most oversold stocks this week, following a significant downturn that saw the S&P 500 post a weekly loss of 1.6%. The iShares Semiconductor ETF (SOXX) experienced a sharp decline of over 10% as investor confidence in substantial AI spending began to waver. Concerns were heightened by reports of delays in Alphabet's latest AI model and Taiwan Semiconductor Manufacturing's announcement of increased spending forecasts, prompting a sell-off in tech shares. However, some market watchers suggest that certain stocks may have fallen too far and could be poised for a rebound.
CNBC Pro identified S&P 500 stocks with a Relative Strength Index (RSI) below 30, indicating they are in oversold territory. Oracle (ORCL) leads this list with an RSI of 17.4. The software giant has seen its stock price drop by 10% this week, hitting a new 52-week low on Friday. Oracle has been actively seeking to fund its AI infrastructure, announcing plans last month to raise $40 billion through debt and equity financing. This comes as the company reported nearly $24 billion in negative free cash flow for the fiscal year. Despite these challenges, Wall Street largely maintains a positive outlook, with 35 out of 44 analysts rating Oracle as a buy, according to LSEG.
Super Micro Computer (SMCI) is another technology stock appearing on the oversold list, with an RSI of 25.3 and a weekly decline of over 14%. The server manufacturer has also been impacted by subdued confidence in AI spending. Last month, Super Micro announced plans to raise $7 billion in equity-related financing to support hardware component purchases. LSEG data shows that 13 out of 22 analysts covering the stock have a hold rating.
International Business Machines (IBM) saw a significant drop of 26% this week following a disappointing preliminary earnings report. IBM reported adjusted earnings per share of $2.93 on revenue of $17.2 billion, both falling short of analyst expectations. The stock experienced its worst trading session ever on Tuesday, plummeting 25% after the news.
Amidst the broader market's struggles, some S&P 500 stocks remained in overbought territory (RSI above 70), suggesting they might be due for a pullback. Cintas (CTAS) is near the top of this list with an RSI of 77.2. The company's stock climbed nearly 14% this week after reporting strong fourth-quarter results that exceeded earnings and revenue expectations. A boost also came from Bank of America upgrading the firm to buy from neutral on Thursday. Analyst consensus is divided, with 10 buy ratings, 10 hold ratings, and one sell recommendation, according to LSEG.
PayPal (PYPL) is another company showing an RSI of 76.4, having climbed 22% this week. PayPal shares surged 17% on Wednesday following a report that Stripe and Advent International made a joint bid to acquire the company at $60.50 per share in an all-cash deal valued at $53.4 billion.
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