Microsoft Hits Overbought Territory: RSI Soars to 78.4 Amid 2% Weekly Surge

Tech giant Microsoft is flashing warning signs as its Relative Strength Index (RSI) rockets to 78.4—firmly in overbought territory. The stock’s 2% climb this week has traders buzzing, but is this rally built to last?

RSI Reality Check: When the indicator crosses 70, it’s often a red flag. Microsoft’s current reading suggests the stock might be due for a pullback—or at least a breather.

Wall Street’s déjà vu: Yet again, investors pile into a ‘safe’ mega-cap while ignoring the ticking time bomb of overvaluation. Because what could go wrong?

Microsoft leads Wall Street’s overbought list

The jump came after Microsoft reported over $75 billion in revenue from Azure and other cloud services for fiscal year 2025. That’s up 34% from the year before. The company disclosed its cloud figures separately for the first time.

That transparency, paired with better-than-expected earnings, pushed Microsoft’s market cap past $4 trillion briefly. But that rally, in a week where the market tanked, is exactly what pushed the RSI into dangerous territory.

Goldman Sachs and Bank of America both increased their price targets after the numbers came out. But even with those upgrades, traders are warning that the chart looks stretched. “We’re watching RSI closely now,” said Jeff Schulz, managing director at ClearBridge Investments. “Anything NEAR 80 means the stock might need to cool off.”

Microsoft wasn’t alone on the overbought list. CNBC’s screener also flagged defense and aerospace company Northrop Grumman, which posted an RSI of 76.1. Northrop rose 1.7% on Friday and ended the week up 2.9%, hitting an all-time high.

The stock is up about 25% this year, powered by growing demand for military contracts and tensions abroad. Out of 24 analysts tracking the stock, half rate it a buy or strong buy, while the rest say hold, according to data from LSEG.

Other stocks that made the overbought list include Generac, which manufactures power systems, and Western Digital, a big name in storage technology. Generac recorded an RSI of 79.1, while Western Digital came in at 74.2, and both advanced during the week despite the market downturn.

At the opposite end of the scale were several major health care names. Centene, a managed care company, dropped 8.7% this week after an unexpected second-quarter loss, which pushed its RSI down to 23.1, far into oversold territory. Molina Healthcare also got caught in the selloff, falling around 6% for the week and landing at an RSI of 22.8. Both companies are now being watched for possible rebounds.

The list of oversold stocks didn’t stop there. Charter Communications, W.W. Grainger, and Gartner also showed up in the data. Though their declines weren’t as steep, they each dropped enough to fall below the RSI threshold of 30.

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