Richtech Robotics Inc. (NASDAQ: RR) shares continued their downward spiral on Friday morning, extending losses from the previous session following a scathing report from Hunterbrook Media. The stock, which was down 2.26% at $3.92 at the time of publication, is reeling as investors reassess the validity of the company’s recently touted relationship with Microsoft.
The catalyst for the selloff is a dispute regarding the nature of Richtech’s collaboration with the tech giant. While Richtech previously characterized the relationship as a “close collaboration,” Hunterbrook’s investigation suggests otherwise. According to the report, Microsoft views Richtech’s role merely as a standard engagement with its AI Co-Innovation Lab—a setup with “no commercial element.” This contradiction has sparked concern that the market significantly overestimated the value of the tie-up, particularly after excitement over the initial announcement inflated Richtech’s market capitalization by more than $370 million.
Compounding investor skepticism is the timing of Richtech’s capital raising activities. The company disclosed a $38.7 million private placement the morning after the stock surged on the Microsoft news, a move that critics argue capitalized on unsubstantiated hype.
Financial Red Flags and Short Seller Pressure
Beyond the partnership controversy, fundamental concerns are weighing heavily on sentiment. The report highlights Richtech’s delayed 10-K filing, a regulatory stumble that could complicate future fundraising efforts and potentially trigger deficiency notices from Nasdaq. The filing paints a picture of a company with a high cash burn rate, showing fiscal 2025 revenue of approximately $5 million against a net loss approaching $15.8 million. This financial imbalance underscores the company’s heavy dependence on issuing new shares to stay afloat.
Richtech is no stranger to skepticism. Hunterbrook’s critique follows allegations from short seller Capybara Research, which previously branded the company a “China Hustle,” accusing it of using rebranded robots and fabricating partnerships. Adding pressure to the stock, Hunterbrook Capital, an affiliate of the media outlet, has disclosed a short position in RR.
Microsoft Slides Despite Earnings Beat
While Richtech struggles to maintain credibility regarding its connection to Microsoft, the tech behemoth itself is navigating a difficult correction. Since reporting earnings on January 28, Microsoft shares have shed roughly 16.7%, falling from around $482 to trade near $401.
Fundamentally, Microsoft delivered a solid performance for the second quarter of fiscal year 2026. The company reported revenue of $81.27 billion, surpassing analyst expectations of $80.27 billion. The bottom line was equally robust, with adjusted diluted EPS coming in at $4.14 against a forecast of $3.97. However, these headline beats were not enough to satisfy a market fixated on future growth metrics.
Cloud Growth and AI Spending Concerns
The primary drag on Microsoft’s stock has been its cloud outlook. While Azure continued to grow, the guidance for the third quarter projects growth of 37% to 38% in constant currency. This barely scrapes by the consensus estimate of 37.1%. Investors, having priced in an acceleration of AI-driven demand, were disappointed by what appears to be a stabilization at high levels rather than a new leg of explosive growth.
Furthermore, the company’s massive capital expenditure is under the microscope. Microsoft reported $37.5 billion in CapEx and finance leases for the quarter, signaling an aggressive and sustained build-out of AI infrastructure. This spending is weighing on margins, with the operating margin outlook for the next quarter dipping to roughly 45.1%, missing the consensus of 45.5%.
OpenAI Exposure and Technical Outlook
Risk concentration has also become a talking point. Microsoft revealed that OpenAI now accounts for approximately 45% of its Commercial Remaining Performance Obligation (RPO)—essentially its contractually guaranteed revenue backlog. With total RPO jumping 110% year-over-year to $625 billion, such heavy reliance on a single partner poses a significant strategic risk.
Despite the pullback, analysts generally maintain a positive view, with average price targets hovering around $600. However, some firms have begun to trim their expectations; for instance, Daiwa lowered its target from $630 to $600, while maintaining a Buy rating.
Technically, Microsoft remains in a long-term uptrend, having not yet breached relevant intermediate lows. The stock is currently testing a key support zone established during the consolidation phase of 2024, between $400 and $420. Should this level fail to hold, the next significant support cluster lies between $340 and $360.
