Samsara (IOT) Plummets 6.5%: What's Fueling the Selloff Amid AI Hype and Analyst Revisions?

Summary
• Samsara (IOT) trades at $34.37, down 6.5% intraday after opening at $37.31
• Piper Sandler cuts price target to $47 from $53, maintaining 'Overweight' rating
• Analysts highlight AI energy infrastructure challenges as potential catalyst

Today’s sharp selloff in Samsara (IOT) has sent shockwaves through the software infrastructure sector, with the stock trading near its intraday low of $34.08. The move follows a revised analyst outlook and growing uncertainty around AI-driven energy demands. With the stock now trading 6.5% below its previous close of $36.77, investors are scrambling to decipher whether this is a buying opportunity or a warning sign in a volatile market.

Analyst Downgrade and AI Energy Infrastructure Uncertainty Spark Samsara's Sharp Decline
The selloff was triggered by Piper Sandler’s revised price target for Samsara, which dropped 11.32% to $47 from $53. This follows a string of recent analyst upgrades, including a 20.45% increase in May and a 12.50% boost in June, suggesting a recalibration of expectations. Meanwhile, sector-wide concerns about AI’s energy demands—highlighted in speculative news pieces about nuclear infrastructure and LNG exports—have created a ripple effect. While Samsara itself is not an energy company, the broader market’s anxiety over AI’s power consumption and infrastructure bottlenecks has spilled over into software stocks perceived as indirect beneficiaries.

Software—Infrastructure Peers Mixed as Samsara Underperforms
Samsara’s decline contrasts with mixed performance among software infrastructure peers. GitLab (GTLB) fell 5.19%, while Confluent (CFLT) dipped 1.68%. MongoDB (MDB) and Zscaler (ZS) also declined, though at lower magnitudes. The sector’s uneven response underscores diverging investor sentiment: while some firms are seen as resilient to macroeconomic pressures, Samsara’s exposure to AI infrastructure uncertainty has amplified its volatility.

Options and ETF Plays for Navigating Samsara’s Volatility
• MACD: -0.771 (bearish divergence), Signal Line: -0.676, Histogram: -0.095 (negative momentum)
• RSI: 44.78 (neutral but trending lower), Bollinger Bands: $35.99 (lower band) vs. current $34.37
• 200-day MA: $44.59 (well below price), 30-day MA: $38.35 (resistance ahead)

Technical indicators suggest a bearish bias, with price near the lower Bollinger Band and MACD signaling weakening momentum. The 200-day MA remains a critical hurdle for long-term bulls. For options, two contracts stand out:

• IOT20250815P33 (Put):
- Strike: $33, Expiry: 2025-08-15
- IV: 52.55% (moderate), Delta: -0.286 (sensitive to price), Theta: -0.005 (slow decay), Gamma: 0.1198 (high sensitivity)
- Turnover: 3,439 (liquid)
- Why: High gamma and moderate IV make this put ideal for a 5% downside scenario (projected price: $32.65). Payoff: $0.65 per share.

• IOT20250815C35 (Call):
- Strike: $35, Expiry: 2025-08-15
- IV: 47.83% (reasonable), Delta: 0.432 (moderate exposure), Theta: -0.1225 (aggressive decay), Gamma: 0.1521 (very sensitive)
Why: Strong gamma and moderate delta position this call to benefit from a rebound above $35.50. Payoff under 5% downside: $0.15 per share.

Aggressive bears should consider IOT20250815P33 into a breakdown below $33.50. Bulls may test IOT20250815C35 if the stock stabilizes above $35.50.

Backtest Samsara Stock Performance
The iShares Core S&P U.S. ETF (ITOT) has historically shown resilience following a -7% intraday plunge. The 3-day win rate is 54.06%, the 10-day win rate is 53.83%, and the 30-day win rate is 57.08%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest period was 10.17%, which occurred on day 59, suggesting that ITOT can recover from significant dips and even exceed its pre-plunge levels.

Act Now: Samsara’s Volatility Presents High-Risk, High-Reward Opportunities
Samsara’s sharp decline reflects both analyst skepticism and broader AI energy infrastructure concerns. While the stock remains below its 52-week high of $61.90, the technical setup suggests a continuation of downward pressure in the near term. Investors should monitor the 200-day MA at $44.59 as a long-term benchmark and the $33 support level for short-term direction. For context, sector leader Microsoft (MSFT) fell 1.08% today, underscoring the sector’s fragility. A breakdown below $33.50 could trigger further selling, while a rebound above $35.50 might attract bargain hunters. Position yourself now with options like IOT20250815P33 to capitalize on this pivotal juncture.