GigaCloud Technology Plummets 9.7% Amid AI-Driven Cloud Sector Volatility – What’s Next?

Summary
• GigaCloud Technology (GCT) slumps 9.67% intraday, trading at $28.03 after opening at $29.54
• Intraday range spans $27.46 to $29.61, signaling sharp bearish momentum
• Cloud sector grapples with AI infrastructure costs and regulatory scrutiny

GigaCloud Technology’s dramatic intraday collapse has thrust the stock into the spotlight, with a 9.67% drop from its opening price of $29.54 to $28.03. The move coincides with a surge in AI-driven cloud infrastructure spending and a broader sector-wide recalibration of risk. Traders are now dissecting technical indicators and options activity to gauge whether this selloff is a buying opportunity or a warning sign.

AI Infrastructure Spending Surge and Regulatory Scrutiny Weigh on GCT
The sharp decline in GigaCloud Technology’s stock price is directly tied to the sector’s evolving dynamics. Meta’s $10 billion cloud deal with Google—aimed at scaling AI infrastructure—has intensified competition and cost pressures across the cloud computing landscape. Simultaneously, regulatory concerns over AI-driven data center bloat and hybrid cloud security gaps (as highlighted in recent InfoWorld and Deloitte analyses) have spooked investors. GCT’s exposure to these macro themes, combined with its 52-week low of $11.17, has amplified short-term volatility.

Cloud Computing Sector Mixed as Amazon Maintains Relative Stability
While GCT’s intraday drop is severe, the broader cloud sector shows mixed signals. Amazon (AMZN) remains a sector leader with a minor -0.05% intraday decline, suggesting its diversified business model and scale provide resilience. In contrast, smaller cloud players face heightened scrutiny over AI cost overruns and infrastructure readiness, as noted in recent reports on AI-ready data centers and network bloat. GCT’s lack of a clear differentiator in this environment has exacerbated its underperformance.

Bearish Momentum and Volatility Playbook: Key Options and Technicals
• 200-day average: 19.479 (well below current price)
• RSI: 79.8 (overbought territory)
• MACD: 2.68 (bullish signal) vs. 2.52 signal line, but histogram at 0.16 suggests waning momentum
• Bollinger Bands: Price at $28.03 near the middle band (27.15), with upper band at 36.44 and lower at 17.85

GigaCloud’s technicals paint a conflicting picture: overbought RSI and bearish intraday reversal suggest exhaustion, while the MACD hints at lingering bullish sentiment. The key support level at $22.21 (30D support) and resistance at $30 (100D SMA) will be critical. With the cloud sector in flux, aggressive short-term strategies may focus on volatility-driven options.

Top Options Picks:
• GCT20250919P25 (Put, $25 strike, 2025-09-19):
- IV: 54.08% (moderate)
- Leverage Ratio: 62.25% (high)
- Delta: -0.189 (moderate sensitivity)
- Theta: -0.0116 (slow time decay)
- Gamma: 0.0669 (responsive to price swings)
- Turnover: $11,472
- Payoff (5% downside): $1.38 per contract (max gain if GCT drops to $26.63)
- Why it stands out: High leverage and gamma make this put ideal for capitalizing on a potential breakdown below $25.

• GCT20251017P25 (Put, $25 strike, 2025-10-17):
- IV: 59.65% (elevated)
- Leverage Ratio: 24.36% (moderate)
- Delta: -0.262 (higher sensitivity)
- Theta: -0.0127 (slow decay)
- Gamma: 0.0506 (moderate responsiveness)
- Turnover: $8,105
- Payoff (5% downside): $1.38 per contract (same as above)
- Why it stands out: Longer expiration (October) offers more time for a sustained move below $25, balancing risk and reward.

Action Insight: Aggressive bears should prioritize GCT20250919P25 for a near-term short play, while GCT20251017P25 suits those expecting a prolonged selloff. Both contracts offer compelling leverage and gamma to exploit GCT’s volatility.

Backtest GigaCloud Technology Stock Performance
The backtest of GCT's performance after an intraday plunge of -10% shows favorable results. The 3-Day win rate is 52.73%, the 10-Day win rate is 56.01%, and the 30-Day win rate is 57.38%, indicating a higher probability of positive returns in the short term following the intraday plunge. The maximum return during the backtest period was 22.12%, which occurred on day 59, suggesting that there is potential for significant recovery after the initial drop.

GigaCloud at Crossroads: Watch $22.21 Support and Sector Catalysts
GigaCloud Technology’s 9.67% intraday drop underscores the sector’s vulnerability to AI cost overruns and regulatory headwinds. While technicals suggest overbought conditions and a potential breakdown below $22.21, the stock’s path will hinge on sector-wide developments—particularly Meta’s AI infrastructure spending and Google’s cloud growth. Amazon’s -0.05% move signals relative stability, but GCT’s lack of differentiation remains a risk. Investors should monitor the $25 psychological level and the options activity around it. For now, the bearish case is well-supported, but a rebound above $30 could reignite long-term optimism.