A rough week pushed Oracle, Palantir, and Super Micro Computer into their deepest oversold levels in months after a sharp sell-off hit U.S. tech and AI stocks. The downturn was so severe that several major indexes recorded their worst day in over four weeks.
The drop unfolded on Thursday, as traders offloaded major technology names amid fresh concerns over stretched AI valuations, according to CNBC. Although the Nasdaq Composite tried to recover losses on Friday, the index remains down 3.5% for November. This decline exposed a group of battered stocks now signaling oversold conditions on the 14-day Relative Strength Index (RSI) screen.
### Oversold Stocks Under Pressure
The RSI screen, run on the S&P 500, highlighted companies facing sharp pressure this week — spanning sectors from cloud databases to frozen fries. Stocks with an RSI below 30 fall into oversold territory, and some names plunged well below that threshold.
#### Oracle: Deep Dive Into Debt Concerns
The most notable example is Oracle, a major player in cloud infrastructure, whose RSI dropped to just above 24 — one of the lowest readings across the entire index. Oracle’s shares declined nearly 6% this week, leaving the stock down 35% since its peak on September 10, despite being up 35% year-to-date.
The primary concern for Oracle is rising Wall Street worries that the company is relying too heavily on debt to fund its AI infrastructure expansion. This unease intensified when Bank of America resumed coverage of Oracle’s credit on Wednesday, maintaining a market weight rating but urging for greater financial clarity amid heavy spending cycles.
Analyst Tom Curcuruto noted that investors “have priced in a reasonable discount for a lengthy list of concerns likely to remain overhangs in the medium term,” highlighting AI rivals, significant capital requirements, and weak free cash flow as major challenges.
#### Super Micro Computer: Momentum Slips After Earnings Miss
Super Micro Computer (SMCI) also landed on the oversold list with an RSI under 27 after shares plunged 30% in November and dropped 45% from their February peak.
The latest selling pressure followed a first-quarter earnings report that missed expectations on both revenue and earnings, coupled with a slimmer gross profit margin. Analysts tracking SMCI via LSEG have mixed ratings — two strong buys, seven buys, and eight holds — though their consensus target still suggests roughly 23% upside. This implies some Wall Street optimism for improvement despite recent setbacks.
A one-year chart reveals steep price swings as traders reacted to shifting growth prospects throughout the year.
#### Palantir: Navigating Valuation Fears and Public Battles
Palantir became a focal point after Jim Cramer responded to comments from Carl Quintanilla regarding the company’s recent stock movements. Cramer expressed confidence in Palantir, describing it as a major player in defense and aerospace sectors.
“I can’t back away from Palantir,” Cramer stated, highlighting the company’s profit growth and rapid adoption under CEO Alex Karp. He added that every CEO he surveyed confirmed Palantir had “radically” transformed their companies and argued the firm could revolutionize U.S. defense systems.
The stock took a hit after earnings when it dipped below $170, partially tied to a short call by investor Michael Burry, who had publicly clashed with Alex Karp during that period. Palantir then rebounded to $190 amid heavy trading volume.
The weekly chart shows the stock dipping to an uptrend line from mid-2024 alongside its 20-week moving average. The daily chart illustrates a volatile round-trip move following the public feud between Karp and Burry. The stock broke below its 20-day, 50-day, and even the weekly trendlines before surging back above $190 on volume exceeding its 50-day average.
At Inside Edge, the team holds an 8.5% stake in the fast money book and a 2% stake in the flagship growth model, planning to add more if the stock breaks into the $200 range. Traders now await to see whether Burry will replicate his prior real-estate short success or falter with this bearish call on the AI sector.
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