As chipmakers drag down the S&P 500, among the most oversold stocks this week are artificial intelligence companies. The broad market index fell 1.6% for the week, with the iShares Semiconductor ETF (SOXX) down more than 10% over the period, as investors began to question companies’ heavy spending on AI. Investors began selling tech stocks after reports of delays in Alphabet’s latest AI model and Taiwan Semiconductor Manufacturing Co.’s announcement of higher spending estimates. That being said, some stocks may have fallen too far and could bounce back. CNBC Pro screened S&P 500 stocks with a relative strength index (RSI) below 30, indicating they are in oversold territory. Oracle leads the pack with an RSI of 17.4. The company is down 10% this week, hitting a 52-week low on Friday. Oracle is looking to raise more money to spend on building AI. Last month, the company announced plans to raise $40 billion through debt and equity financing. At the time, Oracle reported negative free cash flow for the fiscal year of nearly $24 billion. Despite these issues, Wall Street still recommends buying the stock. According to LSEG, 35 out of 44 analysts rate the stock as a “buy.” Supermicrocomputers are also among the tech stocks on the list, with an RSI of 25.3, down more than 14% this week. The server maker has also been affected by a lack of confidence in AI spending. Last month, Supermicro announced plans to raise $7 billion in an equity-related financing deal to pay for hardware components. According to LSEG, 13 out of 22 analysts covering the stock gave the company a Hold rating. International Business Machines fell 26% this week after disappointing earnings reports on Tuesday. IBM reported adjusted earnings of $2.93 per share on revenue of $17.2 billion, which fell short of analysts’ expectations. The stock price fell 25% on Tuesday on the news, its worst trading day in history. Despite the market’s poor performance this week, some S&P 500 stocks are still in overbought territory, with RSIs above 70. An overbought stock may have extended its upside too much and therefore could fall back. Cintas sits near the top of the list with an RSI of 77.2. Cintas, whose shares rose about 14% this week, reported fourth-quarter results on Wednesday that beat analysts’ profit and revenue estimates. The stock rose further on Thursday after Bank of America upgraded the company to buy from neutral buy. According to LSEG, the analyst consensus is split, with 10 giving the stock a buy rating, 10 giving it a hold rating and 1 recommending it as a sell. PayPal is another company on the list with an RSI score of 76.4 and is up 22% this week. PayPal stock soared 17% on Wednesday after CNBC’s David Faber reported that Stripe and Advent International had made a joint bid to acquire PayPal for $60.50 per share in an all-cash deal worth $53.4 billion.
