Micron is one of the most overbought stocks after this week’s rally to new highs
Micron Technology emerged as one of the most overbought stocks this week as the stock market rallied to new record highs. Stocks ended the week higher, boosted by gains in the technology sector and optimism over a ceasefire extension in the Middle East, and all three major market averages scored new intraday and closing records on Friday. Investors showed special love for several individual stocks this week, pushing them far into overbought territory. CNBC Pro used its stock screener tool to identify such stocks, based on their 14-day relative strength index, or RSI. Stocks with a 14-day RSI above 70 are considered overbought, meaning that a pullback could be on the horizon. Conversely, a reading below 30 indicates that a stock is oversold and may soon be due for a potential rebound. The following table shows this week’s most overbought names: Insatiable demand for Micron’s memory chips in artificial intelligence applications drove its stock 29% higher this week. On Tuesday, Micron topped $1 trillion in market capitalization for the first time ever. Micron shares got a lift when UBS lifted its price target on the stock to $1,625, at a time when shares were selling for less than half that. The revised price forecast implies additional upside of 67% ahead, based on Micron’s close Friday. “We believe the market will start to put a more ‘normal’ multiple on the stock and MU will continue to re-rate higher as more details emerge about the structural changes AI has driven to the entire memory complex,” UBS analyst Timothy Arcuri wrote in a note to clients. Micron’s RSI at the end of the week was 78. Investors also piled into fellow chipmaker Advanced Micro Devices , which ended the week 10% higher and with an RSI of 77. Dell Technologies , an enormous winner this week after shares surged 33% on Friday, finished with an RSI of 90. A maker of servers used in AI data centers, Dell wound up climbing 43% this week. On Thursday, Dell explosive first-quarter sales and earnings that easily topped analyst estimates , and raised its full-year guidance. Friday’s rally alone marked Dell’s largest-ever single day advance. Dell reported revenue of $43.84 billion, exceeding the $35.43 billion that analysts polled by LSEG had expected. Revenue grew nearly 88% year over year, Dell’s fastest revenue growth since it returned to the public market in late 2018. Following the blockbuster report, several Wall Street analysts turned more bullish on the AI infrastructure stock. Barclays analyst Tim Long reiterated an overweight rating but raised his price target to $550, implying additional upside of 31% from where Dell closed Friday. “Despite tight supply chain, DELL outperformed across all business lines … We are more positive on DELL given the strength in AI server orders, stability of AI [operating] margins, expanding opportunities in enterprise server and storage, and DELL’s consistent disciplined [operating expenditures] management,” Long wrote. Ford Motor also showed up as overbought, with an RSI of 80. The iconic maker of F-series pickup trucks jumped 17% during the holiday-shortened week. “We believe F’s recent rally is a result of increased investor optimism surrounding its battery energy storage system offering,” Bank of America analyst Alexander Perry wrote on Friday. “We think investor sentiment had started to shift prior to recent Ford Energy optimism, with increased interest from long only investors who recognize that Ford is playing in the right North America profit pools, with a protectionist trade agenda barring Chinese EV disruption and a regulatory complex that no longer restricts Ford’s margin accretive [internal combustion engine]/truck SUV platform.” Perry reiterated a buy rating on Ford, and raised his 12-month price target to $20 from $17, corresponding to a further gain of 15%.
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