Butterfly Network Soars 12.16% on AI Breakthrough and Licensing Windfall – What’s Next for This Medical Tech Innovator?

Summary
• Butterfly Network (BFLY) hits 52-week high of $4.99, surging 12.16% intraday
• Q4 2025 revenue growth projection of 17% and $15M Midjourney licensing deal drive optimism
• Compass AI platform launch and semiconductor-based ultrasound tech spark sector buzz
• Turnover jumps to 7.13M shares, with RSI at 71.74 and MACD signaling bullish momentum

Butterfly Network’s stock has ignited a 12.16% surge to $4.935, fueled by a landmark AI licensing deal, aggressive revenue guidance, and a new software platform. The medical tech innovator’s 52-week high of $5.03 underscores its breakout potential amid a $1.26B market cap and 16.04% revenue growth. With options volatility spiking and Medtronic (MDT) leading the medical device sector, investors are weighing whether this rally is a sustainable inflection point or a short-term overbought correction.

AI Licensing and AI-Driven Ultrasound Spark Explosive Move
Butterfly Network’s meteoric rise stems from three catalysts: a $15M upfront payment and $10M annual licensing fee from Midjourney for its semiconductor-based ultrasound tech, a 17% Q4 revenue growth projection, and the launch of Compass AI. The Midjourney deal, which includes milestone payments, positions BFLY as a key player in AI-enabled medical imaging. Meanwhile, Compass AI’s cloud-based platform enhances diagnostic workflows, aligning with the company’s $1.26B market cap expansion. Analysts at Freedom Capital Markets initiated a Buy rating, citing these advancements as catalysts for sustained growth in a sector where Medtronic (MDT) is up 1.78%.

Medical Device Sector Gains Momentum as Medtronic Leads Charge
The broader medical device sector is rallying, with Medtronic (MDT) up 1.78% on news of expanded M&A firepower. Boston Scientific’s CE mark for its Embold detachable coil and Amplifi Vascular’s FDA breakthrough designation for vein dilation systems highlight sector-wide innovation. Butterfly Network’s 12.16% surge outpaces peers, driven by its AI-first strategy and licensing deals. While Medtronic’s scale and cash reserves offer stability, BFLY’s 16.04% revenue growth and 30.56% 52-week price increase position it as a high-conviction play in a sector primed for disruption.

Options and ETFs to Capitalize on BFLY’s AI-Driven Bull Run
• MACD: 0.324 (bullish crossover), RSI: 71.74 (overbought), Bollinger Bands: 4.498 (upper), 3.823 (middle), 3.148 (lower)
• 200-day MA: 2.313 (far below), 30-day MA: 3.549 (support level)
• Key Resistance: $4.498 (Bollinger upper), Support: $3.823 (20-day MA)

BFLY’s technicals suggest a continuation of its bullish trend, with RSI near overbought territory and MACD above the signal line. The 200-day MA at $2.313 remains a critical floor. For options, BFLY20260220C4.5 and BFLY20260220C5.5 stand out. The former has a 0.552 delta, 92.59% price change ratio, and 6.19% leverage, while the latter offers a 0.428 delta and 166.67% price change ratio. Both contracts have high gamma (0.251–0.261) and moderate implied volatility (88.12%–94.07%), making them ideal for a 5% upside scenario (targeting $5.18).

BFLY20260220C4.5: Call option with 4.5 strike, 0.552 delta (moderate sensitivity), 92.59% price change ratio (strong momentum), 6.19% leverage (amplified gains), and 0.251 gamma (high sensitivity to price swings). Turnover of 84,339 contracts ensures liquidity. A 5% move to $5.18 would yield a $0.68 payoff (max(0, 5.18 - 4.5) = 0.68).
BFLY20260220C5.5: Call option with 5.5 strike, 0.428 delta (balanced exposure), 166.67% price change ratio (aggressive potential), 12.38% leverage (high reward), and 0.261 gamma (dynamic response). Turnover of 8,857 contracts supports tradability. A 5% move to $5.18 would yield a $0.68 payoff (max(0, 5.18 - 5.5) = 0.00; breakeven at $5.50).

Action: Aggressive bulls should target BFLY20260220C4.5 for a $5.03 breakout, while BFLY20260220C5.5 offers high leverage for a $5.50+ move. Monitor Medtronic’s (MDT) 1.78% rally for sector confirmation.

Backtest Butterfly Network Stock Performance
The backtest of BFLY's performance following a 12% intraday increase from 2022 to now reveals a significant underperformance. The strategy yielded a return of -56.28%, lagging the benchmark by 99.25%. With a maximum drawdown of 91.44% and a Sharpe ratio of -0.19, the strategy indicated a high-risk, low-reward scenario.

BFLY’s AI-Driven Surge: Hold for Breakout or Cash in on Overbought Momentum?
Butterfly Network’s 12.16% rally is underpinned by AI innovation, licensing windfalls, and a 16.04% revenue growth trajectory. While RSI at 71.74 signals overbought conditions, the 200-day MA at $2.313 and Medtronic’s (MDT) 1.78% surge suggest the sector is in a bullish phase. Investors should watch for a $5.03 breakout (52-week high) or a pullback to $3.823 (20-day MA). For those seeking leverage, BFLY20260220C4.5 offers a high-gamma, high-leverage play on a 5% upside. Action: Hold long positions for a $5.03+ move or consider partial profit-taking at $4.99 (52-week high).