Tempus AI Plunges 5.49%—Is the AI Healthcare Revolution Losing Momentum?

Summary
• Tempus AI (TEM) slumps 5.49% intraday, trading at $76.1 amid sharp volatility.
• Intraday range spans $81.73 to $76.07, with turnover surging to 8.01 million shares.
• Leveraged ETF Tradr 2X Long TEM Daily ETF (TEMT) drops 10.7%, amplifying bearish sentiment.

Tempus AI’s dramatic selloff has ignited speculation about valuation pressures in the AI healthcare sector. With the stock trading near its 52-week low of $31.36 and technical indicators flashing overbought conditions, investors are scrambling to decipher whether this is a short-term correction or a deeper shift in market sentiment. Sector-wide regulatory scrutiny and recent acquisition news add layers of complexity to the unfolding narrative.

Acquisition Spark Volatility Amid AI Valuation Concerns
The sharp decline in Tempus AI’s stock coincides with the company’s $81 million acquisition of AI pathology developer Paige, a move that has triggered mixed market reactions. While the deal underscores Tempus’s ambition to dominate AI-driven diagnostics, analysts are questioning whether the valuation reflects sustainable growth potential. Additionally, sector-wide regulatory uncertainty—highlighted by EHRA’s call for HHS to clarify analytics tool rules—has amplified risk-off sentiment. The stock’s overbought RSI (80.06) and short-term bullish divergence with long-term bearish trends suggest a correction was overdue, exacerbated by profit-taking after the recent rally.

Health Information Services Sector Mixed as UnitedHealth Group Trails
The Health Information Services sector remains fragmented, with sector leader UnitedHealth Group (UNH) down 0.71% intraday. While Tempus’s selloff appears idiosyncratic to its recent acquisition and valuation concerns, broader sector pressures persist. Regulatory debates over AI validation tools and electronic health record alignment continue to weigh on investor confidence, though no direct causal link exists between Tempus’s move and sector peers.

Bearish Playbook: Leveraged ETFs and Short-Dated Puts in Focus
• 200-day average: $55.97 (below current price)
• RSI: 80.06 (overbought)
• MACD: 4.47 (bullish divergence)
• Bollinger Bands: $82.29 (upper), $65.21 (middle), $48.13 (lower)

Tempus AI’s technical profile suggests a critical juncture. The stock is testing its 52-week low and key support levels near $65.21 (middle Bollinger Band). Short-term traders may consider bearish strategies, particularly given the leveraged ETF Tradr 2X Long TEM Daily ETF (TEMT)’s 10.7% drop, which amplifies downside exposure. For options, two contracts stand out:

• TEM20250829C76 (Call, $76 strike, 2025-08-29):
- IV: 73.65% (high volatility)
- Leverage Ratio: 27.72% (moderate)
- Delta: 0.533 (moderate sensitivity)
- Theta: -0.584 (rapid time decay)
- Gamma: 0.0605 (high sensitivity to price swings)
- Turnover: 43,633 (liquid)
- Payoff (5% downside): $0.00 (strike above current price)
This call option offers aggressive short-term exposure to a potential rebound, though its high theta makes it a high-risk, high-reward play.

• TEM20250829P74 (Put, $74 strike, 2025-08-29):
- IV: 75.89% (elevated)
- Leverage Ratio: 45.37% (strong)
- Delta: -0.351 (moderate bearish bias)
- Theta: -0.0089 (slow decay)
- Gamma: 0.0547 (responsive to price moves)
- Turnover: 81,203 (high liquidity)
- Payoff (5% downside): $1.62 (strike below projected price)
This put option is ideal for capitalizing on a continued decline, with favorable leverage and liquidity to manage risk.

Hook: If $74 breaks, TEM20250829P74 offers a high-leverage bearish bet.

Backtest Tempus AI Stock Performance
The TEM strategy has historically shown positive performance after experiencing a -5% intraday plunge. The backtest data reveals that such events have occurred 277 times over the past five years, with a 3-day win rate of 49.46%, a 10-day win rate of 54.51%, and a 30-day win rate of 66.43%. This indicates that the strategy tends to recover from such significant dips, with the potential for positive returns in the short to medium term.

Critical Support at $65.21—Position for a Breakdown or Rebound
Tempus AI’s selloff reflects a confluence of valuation pressures, regulatory uncertainty, and sector-wide skepticism about AI’s ROI in healthcare. While the stock’s technicals suggest a potential rebound near $65.21 (middle Bollinger Band), a breakdown below this level could accelerate the decline toward the 52-week low. Sector leader UnitedHealth Group’s 0.71% drop underscores broader risk-off sentiment. Investors should monitor the $74 strike as a key inflection point—breaking it could validate bearish momentum, while a rebound might reignite short-term optimism. For now, short-dated puts and the leveraged ETF TEMT offer the most dynamic exposure to this pivotal moment.