Cloudflare Tumbles 2.9% Amid AI Sector Woes as $430M Volume Ranks 220th in Market Activity

On August 19, 2025, Cloudflare (NET) closed down 2.90% to $194.68, with a trading volume of $430 million, ranking 220th in market activity. The decline reflects sector-wide recalibration amid AI infrastructure uncertainty, as conflicting signals between long-term optimism and near-term execution risks weighed on investor sentiment.

The stock’s pullback coincided with Zipline AI securing $7 million in seed funding for its open-source platform, which intensified scrutiny over Cloudflare’s positioning in the AI ecosystem. Meanwhile, Unisys’ report highlighting a 36% readiness gap in AI adoption further amplified skepticism about short-term returns for cloud infrastructure providers. Technical indicators showed the price nearing the lower Bollinger Band support at $187.89, aligning with the 30-day moving average at $197.38 but diverging from the 200-day average at $140.68.

Options activity underscored market positioning. The NET20250829P185 put option, with a strike price of $185, attracted attention due to its high leverage (97.08%) and sensitivity to price swings (gamma 0.017357). Conversely, the NET20250829C197.5 call option, with moderate liquidity, positioned traders for a potential rebound above $197.5. Both contracts highlighted the pivotal nature of key support and resistance levels in determining short-term direction.

Backtesting a strategy of holding top 500 high-volume stocks for one day from December 2022 to August 2025 yielded a net profit of $2,940. However, the approach faced a maximum drawdown of -$1,960, indicating volatile performance with a peak-to-trough decline of 19.6% during the period.