Microsoft is flagged as overbought with an RSI of 78.4 after a 2% gain this week

Microsoft may have delivered blowout earnings, but Wall Street just threw a warning flag. The company’s stock is now among the most overbought names on the market, with an RSI score of 78.4, a level that typically screams, “TROUBLE AHEAD!”

That data came from CNBC Pro’s Stock Screener, released after the markets closed Friday. The platform tracks the 14-day relative strength index to determine whether stocks are trading too high or too low. Anything above 70 is considered overbought. Microsoft is well past that line.

The timing couldn’t be worse. U.S. indexes got hammered this week after the July jobs report missed expectations and President Donald Trump announced new adjusted tariff rates.

The S&P 500 dropped 2.4%, the Nasdaq Composite fell 2.2%, and the Dow Jones shed 2.9%. Microsoft didn’t follow them down. Instead, it climbed 2%, fueled by its earnings release and a wave of bullish analyst upgrades. But now that move is raising eyebrows, not cheers.

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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