Snowflake Plummets 2.29%—Is AI Hype Losing Steam?

Summary
• Snowflake (SNOW) plunges 2.29% to $235.48, erasing Thursday’s 18.6% surge after a blockbuster Q2 report.
• Revenue hits $1.1B, EPS jumps 94% to $0.35, with AI-driven growth cited as a catalyst.
• RPO surges 33% to $6.9B, customer count hits 12,062, and net retention remains robust at 125%.
• Sector leader Oracle (ORCL) tumbles 5.11%, signaling broader tech sector jitters despite Snowflake’s strong fundamentals.

Today’s session for Snowflake is a rollercoaster of extremes. After opening at $237.94 and briefly hitting a 52-week high of $241.43, the stock has retreated to $235.48, trading near its intraday low of $233.29. The sharp reversal raises questions about the sustainability of AI-driven euphoria and whether the market is recalibrating for a post-earnings reality.

Earnings Euphoria Gives Way to Profit-Taking
Snowflake’s post-earnings volatility reflects a classic case of profit-taking after a 20%+ surge. The company’s Q2 results—$1.1B revenue (32% YoY), $0.35 EPS (94% YoY), and a 33% RPO increase—were stellar, yet the market’s initial euphoria has faded. Traders are now parsing whether the stock’s 14x forward sales multiple justifies its AI ambitions. With 6,100 accounts using Snowflake’s AI weekly, the company’s long-term thesis remains intact, but near-term momentum has stalled as short-term traders lock in gains.

Data Processing Sector Mixed as Oracle Slumps
The Data Processing Services sector is in flux, with Oracle (ORCL) down 5.11% despite Snowflake’s strong fundamentals. Oracle’s decline—driven by concerns over cloud customer attrition—casts a shadow over the sector. While Snowflake’s AI-driven growth story remains compelling, Oracle’s struggles highlight the fragility of high-growth valuations in a tightening macro environment. Investors are now weighing whether Snowflake’s AI tailwinds can offset broader sector headwinds.

Options Playbook: Capitalizing on Volatility and Key Levels
• 200-day average: 179.53 (well above); RSI: 84.57 (overbought); MACD: -0.22 (bearish divergence).
• Bollinger Bands: Upper at 222.86, Middle at 200.56, Lower at 178.27 (current price near upper band).
• Key support/resistance: 30D support at 191.73, 200D support at 171.34.

With SNOW trading near its 52-week high of $249.99 and RSI in overbought territory, the stock is primed for a pullback. Short-term traders should monitor the 235–237 level as a critical support zone. For options, two contracts stand out:

• SNOW20250905C240 (Call, $240 strike, 9/5 expiry):
- IV: 33.32% (moderate); Leverage: 77.89% (high); Delta: 0.383 (moderate); Theta: -0.738 (high decay); Gamma: 0.0328 (sensitive to price swings); Turnover: 552,487 (liquid).
- Payoff at 5% downside (223.70): $0 (strike above current price).
- Why it works: High leverage and liquidity make this ideal for a bullish bounce above $240, though theta decay accelerates as expiry nears.

• SNOW20250905P222.5 (Put, $222.5 strike, 9/5 expiry):
- IV: 36.80% (moderate); Leverage: 274.41% (very high); Delta: -0.130 (moderate bearishness); Theta: -0.0035 (low decay); Gamma: 0.0165 (moderate sensitivity); Turnover: 10,594 (liquid).
- Payoff at 5% downside (223.70): $1.20 (strike below current price).
- Why it works: High leverage and low theta decay make this a cost-effective hedge against a potential pullback to $220–225.

Action: Aggressive bulls may consider SNOW20250905C240 for a short-term rally above $240, while cautious bears should eye SNOW20250905P222.5 for downside protection. Watch for a breakdown below $235 to trigger a deeper correction.

Backtest Snowflake Stock Performance

Bullish Fundamentals vs. Bearish Technicals: What to Do Now
Snowflake’s Q2 results reaffirm its AI-driven growth narrative, but technical indicators suggest a near-term correction is likely. With RSI in overbought territory and the stock near its 52-week high, traders should brace for profit-taking. The 235–237 level is critical; a break below could trigger a test of the 200-day average at $179.53. Meanwhile, Oracle’s 5.11% decline as a sector leader underscores broader tech sector jitters. Act now: Position for a bounce above $240 with SNOW20250905C240 or hedge with SNOW20250905P222.5. Watch Oracle’s trajectory for sector-wide clues.