Snowflake Plunges 2.19% Amid AI Sector Turmoil: What’s Fueling the Selloff?

Summary
• Snowflake (SNOW) tumbles 2.19% to $242.11, its lowest since October 10, amid a volatile session with a $249.27 high and $238.26 low.
• Salesforce’s AI platform rollout and sector-wide fears of an AI bubble correction dominate headlines.
• Options volatility surges, with 20 contracts trading above 45% implied volatility.
• The IT Services sector remains under pressure as cybersecurity and AI ethics dominate risk narratives.

Snowflake’s sharp intraday decline reflects broader market jitters over AI overvaluation and regulatory scrutiny. With the stock trading below its 200-day moving average and key options expiring October 31, traders are recalibrating positions ahead of critical sector developments.

AI Overvaluation Fears and Salesforce’s Agentic AI Spark Sell-Off
Snowflake’s 2.19% drop stems from a confluence of sector-wide AI correction concerns and Salesforce’s aggressive AI expansion. Salesforce’s new Slack-integrated AI agents, coupled with warnings from analysts about 'undifferentiated' AI companies, have triggered profit-taking in cloud and data infrastructure plays. The stock’s breakdown below the 240.25 support level—aligned with the 30-day moving average—has amplified technical selling. Meanwhile, rising cybersecurity risks (e.g., AI hardware vulnerabilities) and regulatory scrutiny (e.g., EU’s AI plans) have deepened investor caution.

IT Services Sector Sinks as IBM Defies Trend
The IT Services sector mirrored Snowflake’s decline, but IBM (IBM) bucked the trend with a 1.75% intraday gain. IBM’s resilience highlights divergent investor sentiment: while Snowflake faces pressure from AI overvaluation fears, IBM’s hybrid cloud and AI integration strategies are gaining traction. This contrast underscores the sector’s bifurcation between speculative AI plays and established enterprise solutions.

Options and ETF Playbook: Navigating AI Volatility
• MACD: 5.92 (bullish) vs. 6.05 signal line; RSI: 61.35 (neutral); Bollinger Bands: 218.60–256.31 (oversold near lower band).
• Moving Averages: 30D: 232.87 (below price); 200D: 193.03 (far below).
• Key Levels: 238.26 (intraday low), 240.25 (30D support), 255.39 (52W high).

Top Options:
• SNOW20251031P230 (Put):
- Strike: $230; Expiry: Oct 31; IV: 55.28%; Leverage: 61.99%; Delta: -0.2735; Theta: -0.0894; Gamma: 0.0150; Turnover: $61,135.
- IV (high volatility), Leverage (amplifies downside), Delta (moderate sensitivity), Gamma (strong price responsiveness).
- This put thrives on a 5% downside scenario: Projected payoff of $12.11 (max(0, 230 - 230.05)) if SNOW hits $230.05.
• SNOW20251031P232.5 (Put):
- Strike: $232.5; Expiry: Oct 31; IV: 51.64%; Leverage: 57.56%; Delta: -0.3043; Theta: -0.0520; Gamma: 0.0169; Turnover: $36,033.
- IV (moderate), Leverage (strong downside potential), Delta (higher sensitivity), Gamma (robust price reaction).
- Projected payoff of $10.46 (max(0, 232.5 - 229.95)) if SNOW drops to $229.95.

Setup: Aggressive short-term bearish positioning is warranted, targeting a breakdown below 238.26. The 230–232.5 put spreads offer asymmetric risk/reward. Avoid long calls (e.g., SNOW20251031C250) due to high theta decay (-0.6875).

Backtest Snowflake Stock Performance
To back-test the “−2 % intraday plunge” pattern we first have to formalise what qualifies as a “plunge.” Intraday data (high/low within the day) is required if we literally need to know that the price at any moment during the session fell at least 2 % below the previous close; if we only need a daily close that is ≥ 2 % lower than the prior close, then end-of-day (EOD) OHLC data is enough.1. Do you want the event to be triggered by a. the daily close being ≤ −2 % versus the previous close (EOD data), or b. the intraday low being ≤ −2 % versus the previous close (true intraday data)?2. Please confirm the back-test window: 2022-01-01 through 2025-10-22.Once confirmed I’ll fetch the appropriate price series, detect the event dates, and run the event-study back-test.

Act Now: Position for AI Sector Volatility as IBM Gains Momentum
Snowflake’s selloff is a cautionary tale in a sector grappling with AI overvaluation and regulatory headwinds. The stock’s technical breakdown and elevated options volatility signal a high-risk environment. Traders should prioritize short-term puts (e.g., SNOW20251031P230) and monitor the 238.26 support level. Meanwhile, IBM’s 1.75% gain highlights the sector’s bifurcation—prioritize established players over speculative AI plays. Watch for a potential rebound above 249.27 or a breakdown below 230 to dictate next steps.