Semiconductor Stocks Show Overbought Readings as S&P and Nasdaq Reach Record Highs

Semiconductor stocks emerged as highly overbought this week, with several names showing a 14-day relative strength index above 70, according to data screened by CNBC Pro. 04% gain. This surge coincided with the S&P and Nasdaq touching new record intraday highs on Thursday.

Stocks with a 14-day RSI above 70 are considered overbought, indicating a potential pullback, while those below 30 are seen as oversold and possibly due for a rebound. The overbought semiconductor names included Advanced Micro Devices, ON Semiconductor, NXP Semiconductors, Microchip Technology, Texas Instruments, and Analog Devices.

Texas Instruments reported a first-quarter earnings and revenue beat this week, along with upbeat guidance driven by high demand for its analog chips, which are essential for building AI data centers.

AMD stock surged this week, even without specific company news, while Intel's latest earnings highlighted strong demand for central processing units, or CPUs, as companies expand AI capabilities. Investors interpreted Intel's results as a positive signal for other CPU makers like AMD. "This market continues to get narrower and narrower.

Once it was a story of all 'Mag Seven' doing well; now it's really just a story of semiconductors doing well," said Cameron Dawson, chief investment officer at NewEdge Wealth, during an appearance on CNBC's 'Closing Bell: Overtime' on Thursday afternoon.

United Rentals also appeared on the most overbought list with an RSI of 84. 4 billion, stating that it sees momentum heading into its busiest season.