Tempus AI Plunges 5.7%, Sparking Urgent Questions: Is This a Buying Opportunity or a Warning Sign?

Summary
• Tempus AI (TEM) slumps 5.67% intraday to $74.00, its lowest since April 2025.
• CEO Eric Lefkofsky and COO Ryan Fukushima sold shares totaling $18.5 million in recent months.
• Analysts remain split, with six firms maintaining 'buy' ratings despite Piper Sandler and Bank of America issuing 'neutral' tags.

Tempus AI’s sharp intraday decline has ignited urgency among traders, with the stock trading below its 52-week average and facing heightened volatility. The sell-off coincides with a flurry of strategic partnership announcements, yet insider sales and a mixed analyst outlook suggest underlying fragility. As the stock tests critical support levels, the question looms: is this a buying opportunity or a warning sign?

Insider Sales and Analyst Divergence Trigger Volatility
The 5.67% intraday drop in Tempus AI’s stock is driven by a confluence of factors. CEO Eric Lefkofsky’s recent sale of 250,000 shares and COO Ryan Fukushima’s 5,000-share divestment signal internal caution. Meanwhile, analyst ratings remain split: six firms maintain a 'buy' rating, but Piper Sandler and Bank of America have issued 'neutral' or 'overweight' tags, reflecting uncertainty. The stock’s 89.5% revenue growth in Q2 failed to offset a -122.86% return on equity, compounding investor skepticism. With the stock trading at a forward P/S of 9.38X—well above the industry average—valuation concerns are amplifying the sell-off.

Healthcare Information Services Sector Volatile as SOPH Stumbles
The Healthcare Information Services sector is under pressure, with sector leader Sophia Genetics (SOPH) down 1.15% intraday. Tempus AI’s decline outpaces SOPH’s, reflecting divergent investor sentiment. While SOPH’s recent partnership with AstraZeneca and Result Laboratorium highlights AI-driven pharma innovation, Tempus AI’s aggressive expansion into oncology and neuroscience has yet to translate into sustainable profitability. The sector’s mixed performance underscores the challenge of monetizing AI in healthcare, with Tempus AI’s high valuation making it a prime target for profit-taking.

Options and ETFs to Watch Amid Volatility
• 200-day average: $55.36 (below current price)
• RSI: 82.02 (overbought)
• MACD: 3.09 (bullish divergence)
• Bollinger Bands: $49.82–$75.61 (current price near lower band)

Tempus AI’s technicals suggest a potential rebound from the $60–$61 support zone, but the 5.8% intraday drop has triggered panic selling. The Tradr 2X Long TEM Daily ETF (TEMT), down 11.97%, amplifies downside risk for leveraged bulls. For options traders, two contracts stand out:

• TEM20250829P75 (Put)
- Strike: $75, Expiration: 2025-08-29
- IV: 75.87% (high volatility), Leverage: 15.99%, Delta: -0.528 (moderate sensitivity), Theta: -0.003858 (low time decay), Gamma: 0.041068 (high sensitivity to price swings), Turnover: 251,498 (liquid)
- Payoff at 5% downside (ST = $70.19): $4.81 per contract. This put offers asymmetric upside if the stock breaks below $70, leveraging high gamma and IV.

• TEM20250829C78 (Call)
- Strike: $78, Expiration: 2025-08-29
- IV: 79.41% (high volatility), Leverage: 31.31%, Delta: 0.3648 (moderate sensitivity), Theta: -0.269862 (high time decay), Gamma: 0.037052 (moderate sensitivity), Turnover: 1,287,545 (extremely liquid)
- Payoff at 5% downside (ST = $70.19): $0 (out of the money). This call is a high-risk, high-reward play for aggressive bulls expecting a rebound above $78, but its high theta makes it vulnerable to time erosion.

Action: Aggressive bears should prioritize TEM20250829P75 for short-term volatility. If $70 breaks, the put’s high gamma and IV could drive rapid gains. For bulls, patience is key—wait for a bounce above $75 before considering TEM20250829C78.

Backtest Tempus AI Stock Performance
The 3-Day win rate for TEM after an intraday plunge of -6% is 49.63%, the 10-Day win rate is 55.15%, and the 30-Day win rate is 65.81%. The maximum return during the backtest period was 25.91%, with a maximum return day at 59.

Critical Levels and Sector Cues to Watch Now
Tempus AI’s 5.8% intraday drop has created a pivotal inflection point. The stock’s ability to hold above $68–$70 will determine whether this is a buying opportunity or a deeper correction. With Sophia Genetics (SOPH) down 1.15% and the sector under pressure, cross-sector correlations suggest further volatility. Traders should monitor the $68 support level and the 200-day moving average ($55.36) as key thresholds. For now, the TEM20250829P75 put offers the most compelling risk-reward profile. If $70 breaks, this contract could capitalize on the sector’s fragility. Watch for $70 breakdown or regulatory reaction—either could trigger a decisive move.