Recent trends in the stock market indicate a potential rebound for several technology stocks that experienced notable sell-offs last week. Despite gains on Friday, the major U.S. indexes concluded the week on a downward note. The S&P 500 saw a decline of nearly 2%, with the Dow Jones Industrial Average following closely behind. The Nasdaq Composite faced a sharper drop of 2.7%, particularly affected by diminishing momentum in high-profile artificial intelligence (AI) stocks, even after strong quarterly results from Nvidia.
Using the CNBC Pro stock screener, analysts identified securities within the S&P 500 that fell significantly and now possess a relative strength index (RSI) below 30, indicating they are technically oversold. This assessment highlighted companies such as Oracle, Arista Networks, and Uber Technologies as potential candidates for a price rebound.
Among these, Arista Networks stood out with an RSI of 25 following a 10.6% slump during the week. Earlier in the year, the stock had benefitted from enthusiasm surrounding its networking products essential for AI data centers. However, recent sentiment shifted negatively after the company issued disappointing fourth-quarter sales guidance, resulting in a nearly 26% drop throughout November.
Similarly, Oracle has become another stock under scrutiny. With an RSI close to 25, it tumbled almost 11% over the week, including a near 6% decline on Friday. Investor concerns have centered on high valuations associated with AI, as well as risks linked to debt financing strategies and capital expenditures in the AI sector. Despite these challenges, Oracle maintains a consensus buy rating among analysts, who suggest a price target reflecting over 70% potential upside; still, Oracle is currently 43% off its September peak.
Uber Technologies experienced an 8.5% decline this week, driven by overall market weaknesses, bringing its RSI down to 25. Notably, the company has performed well year-to-date, climbing 39%. Analysts expressed optimism for Uber’s future, especially following the release of its third-quarter earnings, which showed revenues surpassing expectations despite adjusted earnings falling short of consensus forecasts. Goldman Sachs analyst Eric Sheridan pointed out promising trends in both mobility and delivery sectors, indicating potential for continued demand. He emphasized that themes around medium- to long-term investments and their impact on margins will be crucial in forthcoming discussions among investors, particularly concerning the future of the autonomous vehicle landscape.
Other stocks currently identified as oversold, which may be poised for a near-term recovery, include Humana, Palo Alto Networks, and BlackRock. These companies, alongside Oracle, Arista Networks, and Uber, are under watch as investors speculate on their ability to rebound in the changing market environment.
