Tempus AI Plunges 3.5%: What's Behind the Sudden Downturn?

Summary
• Tempus AI (TEM) trades at $76.45, down 3.5% from its $79.23 previous close
• Intraday range spans $74.59 to $78.10, reflecting volatile trading
• 52-week high of $97.78 and 52-week low of $31.36 highlight extreme price swings
• Turnover of 2.55 million shares signals heightened market activity

Tempus AI’s sharp intraday decline has sparked urgent analysis as the stock unwinds recent gains. The pullback follows a string of FDA clearances and strategic acquisitions, yet today’s selloff suggests profit-taking and uncertainty about the company’s path to profitability. With the stock trading below its 50-day moving average and technical indicators mixed, traders are recalibrating positions ahead of key support levels.

FDA-Driven Rally Reverses as Profit-Taking Kicks In
Tempus AI’s recent surge—fueled by a cascade of FDA clearances for its RNA sequencing and cardiac imaging platforms—has triggered a correction as investors lock in gains. The stock’s 7.4% rally on August 22 following the FDA’s approval of its Tempus Pixel cardiac imaging system created a short-term overbought condition. Today’s pullback aligns with classic technical patterns, where momentum stocks retrace after sharp moves. While the company’s Q2 revenue surged 90% year-over-year and its PurIST algorithm gained traction in oncology, the market is now scrutinizing its $1.26 billion 2025 revenue forecast and looming EBITDA breakeven. The selloff also coincides with broader healthcare sector jitters, as Trump-era tariff threats loom over medical device imports.

Healthcare Equipment Sector Sinks with Medtronic's Drag
The broader healthcare equipment sector mirrored TEM’s decline, with Medtronic (MDT) down 2.03% as of 1:53 PM. This drag reflects sector-wide concerns over Trump’s Section 232 investigations into medical device imports, which could trigger tariffs on critical equipment. While Tempus AI’s AI-driven diagnostics differ from traditional medtech, the sector’s risk-off sentiment amplified today’s selloff. Medtronic’s struggles with margin compression in its cardiac and surgical segments further underscored the sector’s vulnerability to regulatory and pricing pressures.

Bearish Options Play and ETF Positioning for a Volatile Rebound
• 200-day MA: $58.36 (far below current price)
• 50-day MA: $81.64 (resistance ahead)
• RSI: 51.67 (neutral territory)
• MACD: 3.61 (bullish divergence with signal line at 4.39)
• Bollinger Bands: $71.60 (lower band) to $91.69 (upper band)

Tempus AI’s technicals suggest a short-term bearish trend amid long-term bullish fundamentals. Key support levels at $73.08 (30D) and $58.33 (200D) are critical for bulls. The stock’s -59.89 P/E ratio and -2.29% year-to-date decline highlight its speculative nature, but the 90% revenue growth in Q2 2025 offers a floor. For options traders, the October 3rd expiration cycle offers high-leverage bearish plays. Two top options from the chain:

• TEM20251003P75 (Put, $75 strike, 10/3 expiry):
- Implied Volatility: 81.79% (high)
- LVR: 24.80% (aggressive)
- Delta: -0.4057 (moderate sensitivity)
- Gamma: 0.0394 (responsive to price swings)
- Turnover: 19,874 (liquid)
- Theta: -0.0540 (moderate time decay)
- Payoff at 5% downside (ST=72.63): $2.37
- This put offers asymmetric risk/reward for a 5% drop, with high leverage and liquidity to capitalize on near-term volatility.

• TEM20251003P76 (Put, $76 strike, 10/3 expiry):
- Implied Volatility: 80.82% (high)
- LVR: 21.77% (aggressive)
- Delta: -0.4461 (higher sensitivity)
- Gamma: 0.0407 (strong price responsiveness)
- Turnover: 11,266 (liquid)
- Theta: -0.0393 (moderate decay)
- Payoff at 5% downside (ST=72.63): $3.37
- This put provides a tighter strike for a sharper move, ideal for aggressive short-term bearish bets given the stock’s overbought correction pattern.

Aggressive bulls may consider TEM20251003C78 into a bounce above $78.10, but the immediate outlook favors defensive positioning. Watch for a breakdown below $73.08 to trigger deeper technical selling.

Backtest Tempus AI Stock Performance
Below is an interactive back-test report. (If the module does not load automatically, please refresh once.)Key insights (not duplicated in the module):• Total strategy return: 30.2 %; annualised ≈ 63.4 %. • Risk: max drawdown -55.9 %; Sharpe 0.68. • Trade distribution: average win +18.7 %, average loss -12.0 %. • Edge comes from occasional strong rebounds; however deep interim drawdowns require strict risk controls.Parameter notes:1. Risk controls (8 % stop-loss, 12 % take-profit, 30-day cap) were auto-set to keep trades finite and comparable; feel free to request different levels. 2. Back-test uses TEM daily close data from 2022-01-03 to 2025-09-25.Let me know if you’d like to adjust thresholds, add transaction costs, or explore other plunge magnitudes!

Bulls on Edge: Key Levels to Watch for Rebound
Tempus AI’s correction is a test of its long-term bullish narrative. While the stock’s 90% revenue growth and AI-driven healthcare expansion justify optimism, today’s selloff underscores the risks of speculative overvaluation. The critical $73.08 support level must hold to avoid a retest of the 200-day MA at $58.33. For now, the sector’s drag from Medtronic’s 2.03% decline and Trump’s tariff threats amplify near-term uncertainty. Traders should monitor the October 3rd options expiry for liquidity-driven moves and watch for a rebound above $81.64 to rekindle momentum. Act now: Short-term bearish options (TEM20251003P75/P76) offer high leverage if the $73.08 breakdown accelerates.