A massive rally in memory chip stocks has seen some big gains this week, but that could mean some of the gainers could soon fall. Artificial intelligence trading fueled this week’s big rally. The S&P 500 rose more than 2%, and the tech-heavy Nasdaq Composite Index closed up 4%. The Dow Jones Industrial Average, which includes many old economy companies, rose slightly this week. But the biggest gainers were semiconductor memory chip and data storage stocks, with the Round Hill Memory ETF (DRAM) leading by nearly 30% for the week. The rise was triggered by the first quarter results report revealing bottlenecks in memory chips amid a surge in demand. This week’s rally has left several stocks overbought. This is determined when the stock’s relative strength index exceeds 70. Conversely, stocks with an RSI below 30 are considered oversold and are likely to rebound. Here’s a look at the most oversold and overbought stocks in the S&P 500. Memory stocks dominated the list of overbought stocks, with names like Qualcomm and Micron Technology emerging. Qualcomm soared more than 23% this week, and Micron soared nearly 37% over the period, posting its best weekly performance since 2008. Qualcomm’s RSI is 86, giving it a consensus rating of “Unchanged” among analysts. Shares are expected to fall 22% to reach analysts’ consensus price target. Micron’s RSI is 82, but most analysts rate the memory stock as a buy. However, like Qualcomm, the stock has risen very quickly, with the average price target being 23% below where the stock ended this week. Among the most oversold stocks was software engineering provider EPAM Systems, with an RSI of 18 after falling more than 11% this week. The stock price fell after the company lowered its full-year sales growth forecast to a range of 4-6.5% from the previous forecast of 4.5-7.5%. EPAM has a buy consensus among analysts and should rise nearly 70% to reach the consensus price target. Animal drug company Zoetis is also oversold. Zoetis stock is down more than 27% this week, with an RSI near 15. Zoetis fell after the company reported lower-than-expected first-quarter adjusted earnings. The company also lowered its full-year profit and sales forecasts. If stocks rise to the average analyst price target, stocks rated buys would rise 75%.
