By Doug Busch
After a multi-month rally across the semiconductor space, cracks may be finally starting to appear, with several highflying names showing signs of fatigue.
The group has been one of the market's strongest performers due to enthusiasm about artificial intelligence and aggressive momentum buying, but stretched technical conditions and select fading upside follow-through suggest some stocks could be vulnerable to a near-term pullback.
With that in mind, Advanced Micro Devices and Rambus are beginning to show signs of technical deterioration as traders watch key support levels closely.
Overall, the space tracked by the VanEck Semiconductor exchange-traded fund could be showing signs of slowing down. It is a highly concentrated fund, holding just 25 U.S.-listed securities. It is looking for a seven-week winning streak, and the past six have closed at the top of the weekly range.
This week heading into Thursday is printing a doji, which is adept at signaling potential trend changes from the prevailing direction. To be fair, in my experience, bearish candlesticks in a firm uptrend are a bit less reliable than bullish ones in downtrends near bottoms. However, some open up opportunities offering good risk/reward for short sales, or at least for taking some money off the table.
Let's now focus on two semiconductor stocks that may be flashing early warning signs: Advanced Micro Devices and Rambus.
Looking at AMD's daily chart, some things stand out that could be a warning sign. To be clear, I am not calling for a new bear trend to begin, but just a prudent pullback, as the stock is now almost 200 points above its rising 50-day simple moving average.
The current issues include the bearish RSI divergence that began in May, where the RSI was higher as the price decreased. A bearish MACD crossover is highly possible as the MACD line is curling lower at a very high altitude. And there were doji candles on Monday and Tuesday, followed by a bearish hanging man on Wednesday.
Notice this same appearance, with multiple doji candles, occurred at short-term tops in October and January. I think the stock can trade back toward the very round $400 number in the near term. If that level doesn't hold, look for the gap fill from the May 5 session to be visited.
Advanced Micro Devices was trading around $453 Thursday.
Glancing at the RMBS daily chart, the relative strength picture shows continued underperformance versus the broader semiconductor group, as measured against the VanEck Semiconductor ETF on the ratio chart since September, aside from a few short-lived spikes.
The stock also reacted poorly to recent earnings, including a 13% drop on Feb. 2 that formed a bearish counterattack candle and a 21% gap down on April 28 that completed a bearish island reversal pattern. More recently, a doji on Wednesday came close to filling the upside gap left from that April 28 session, highlighting ongoing hesitation in the trend.
Looking ahead, the chart structure suggests downside risk toward the $119 area in the near term, which would fill the May 5 gap. If that level is reached, the stock's behavior from there will be key in determining whether it stabilizes or resumes its broader weakness.
Rambus was trading around $132 Thursday.
Doug Busch is the senior technical analyst at Barron's Investor Circle . His technical view is added to stock picks, including those published exclusively for Investor Circle readers. A glossary of technical terms is updated regularly with new entries.
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(END) Dow Jones Newswires
May 14, 2026 15:22 ET (19:22 GMT)
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