Microsoft stock hits a record high. Why its next move might be lower

Microsoft stock reached a new all-time closing high—but there could be some hiccups ahead in the short term.

Microsoft's stock rose 1.1% to $360.53 on Tuesday. That's a new closing high, topping the previous high of $359.49 set on July 18. Furthermore, Microsoft has won for eight days in a row, its longest winning streak since January 28, 2021.

The stock has been helped by the company’s strong earnings and sales, which got a boost from the Azure cloud business.

But it’s not just earnings. Microsoft was already outperforming its peers following tech weakness in August and September. Its stock has gained 15% since the end of September, outpacing Amazon.com (AMZN), which has risen 12%, Meta Platforms (META), which has risen 6.5%, Nvidia (NVDA) and Apple (AAPL), which is up 6%, Alphabet (GOOGL) which has ticked up 0.3%, and Tesla (TSLA), which has dropped 13%.

So, why be concerned? It all comes down to the 14-day relative strength index from Microsoft. The RSI, or Relative Strength Index, is a measure of a stock's or index's momentum, or lack thereof. The closer it comes to 20 on the negative, the more oversold it is, while a score close to 80 indicates that the stock is extremely overbought. A value below 30 usually indicates that a stock is about to rally, while a score above 60 indicates a likely decline. Microsoft's RSI is at 72.75, indicating that it is becoming quite overbought and that a pullback is possible.

That doesn’t mean Microsoft isn’t worth buying for its long-term potential. The company has a lot to recommend, including a cloud business that should get a boost as ChatGPT, which held its developer conference yesterday, looks to expand. It just means that investors might get a better opportunity to pick up shares in the days ahead.