Microsoft stock cools off after 10.6% induced-rally from positive earnings outlook
The stock began to cool off, closing near 425.0
Microsoft Corp stock has enjoyed a positive start to May, following a strong rally in April that ended a four-month stretch of consecutive declines.
The catalyst for the surge was the company’s robust earnings report released on April 30th, which resulted in a notable 10.6% rally on May 1st, lifting the stock to a four-month high of 437.1. However, after reaching this peak, the stock began to cool off, closing near 425.0, slightly paring its year-to-date gain to 1.67%.
The rally on May 1st caused the stock to enter overbought territory on the 4-hour chart, and the daily RSI is now approaching the 70 threshold, indicating that the stock is nearing overbought conditions. Given these technical signals, it’s likely that the stock may experience some consolidation or pullback, potentially correcting some of the post-earnings gains. The presence of the 20-day and 100-day exponential moving averages (EMAs) on the 4-hour chart, which recently formed a golden cross, further suggests that the stock is in a technically strong position, but may also see some profit-taking in the near term.
MSFT stock RSI nearing 70 signals potential pullback, while 20-day EMA offers support
For those monitoring near-term levels, the price support at 418.2 offers a cushion for any retracement, while resistance is found at the year’s peak of 448.2, which is approximately 5% above its current level. Should the stock move closer to this resistance, it will likely encounter further challenges as investors consider whether the recent rally has fully priced in Microsoft’s positive earnings.
Microsoft price dynamics (Oct 2024 - May 2025). Source: TradingView
On the fundamental side, major banks are revising their price targets for Microsoft. HSBC has raised its target to $626 from $598, while Fubon has adjusted its target to $490 from $510, reflecting positive sentiment surrounding the company’s prospects despite the stock’s recent pullback.
As we approach the coming weeks, Microsoft’s stock is poised for a period of potential consolidation after its sharp post-earnings rally. The technical indicators and analyst upgrades suggest a promising outlook, though investors will likely be cautious in the short term, awaiting clearer direction.
Microsoft stock surged 9.5% after a strong earnings beat, erasing Q1 losses. The stock reached a 4-month high, marking a clear recovery from earlier declines.
