On a technical basis, the selling intensity in Microsoft's stock $(MSFT)$ has reached levels not seen in a decade. With the stock falling in 12 of the past 14 sessions, its relative strength index - which measures the magnitude of losses over a recent period against the magnitude of gains - fell to 22.26 on Friday. That's Microsoft's lowest RSI chart reading at close since it ended at 21.82 on Aug. 25, 2015, according to FactSet data.
Many chart watchers view any RSI reading below 30 as indicating an "oversold" condition, which suggests a bounce could be coming as bears take a break from selling to catch their breath. But there's also a technical school of thought, backed by historical data, that being oversold is more of an ability than a condition - basically, that the ability to become oversold is a sign of underlying weakness. (See Constance Brown's "Technical Analysis for the Trading Professional.")
Back in 2015, while the stock bottomed on Aug. 25 of that year, the RSI had dipped into oversold territory for the first time in 18 months in the previous January.
And in 2022, which was the last time Microsoft's stock suffered a yearly decline, the RSI first fell below 30 in late January, and the last time it was oversold was in late September. When the stock bottomed at a nearly two-year low that Nov. 3, the RSI was only able to get down to 34.95.
During the current bout of weakness, the RSI first fell below 30 on Nov. 21 of last year. The stock has fallen nearly 24.4% since then.
What's ailing Microsoft's stock? Melius Research analyst Ben Reitzes told MarketWatch that the company is "really losing the AI narrative."
He's concerned that perhaps the best part of Microsoft's Copilot artificial-intelligence assistant leverages technology from Anthropic - a dynamic Reitzes likened to "letting the fox into the henhouse."
Reitzes also thinks the company's Office lineup, which includes products like Word and Excel, is "arguably under assault from AI and pressures on seats." If companies are able to get by with fewer workers, that threatens the traditional software model that charged based on "seats," or the number of employees using an offering.
Baptista Research analyst Ishan Majumdar told MarketWatch that Microsoft's stock performance demonstrates that investors have reservations over the company's ability to monetize its Copilot offerings and translate its AI investments into returns.
The stock dropped 2.5% on Friday to close at its lowest price since April 8, 2025. It has lost 9.2% in March and has tumbled 31.1% amid a six-month losing streak, which would be its longest such streak since the six-month stretch that ended February 2009.
Majumdar, for his part, doesn't necessarily see fundamental business issues with the Anthropic partnership, though he acknowledged that it creates a "perception challenge" for the company, "especially when competitors are seen as more vertically integrated."
"While some may interpret reliance on external models as a lack of internal leadership, I think it is more consistent with Microsoft's historical approach," which is to prioritize "integration over owning every layer of innovation," he noted.
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