Shares of CoreWeave (CRWV) dropped by more than 10% after the company released its earnings report. Although the earnings were solid, the company’s guidance was weaker than expected, causing the stock price to fall. Investors had hoped for a strong report to maintain the momentum seen in AI chip stocks, but that did not happen. The main issues for CRWV included a slight decrease in profit margins and a lack of energy supply. Some data centers have stopped operations due to insufficient power in the grid, which may lead to a reassessment of chip stocks. This energy shortage is likely to continue, as it will take years to develop nuclear power options.

Trading Levels of Interest

For short-term trading, the $85 level is significant, as it was a key low on August 20th and September 5th, 2025. If the price drops to this level, a quick rebound could occur. For swing trading, the focus is on the $60.75 level, which is the pivot high from April 2nd, 2025, and a breakout point on May 13th, 2025. A bounce is expected here over several weeks. Long-term investments in CRWV are currently on hold until the stock reaches new lows and shows a strong reversal. Weak guidance from CoreWeave highlights a major risk: the energy bottleneck for AI. The real issue is not the demand for chips but the lack of power to run data centers, as pointed out in last year’s energy agency reports. This situation suggests that the entire semiconductor and data center sector may need to be reassessed in the upcoming weeks.

Strategy Amid Energy Concerns

We are considering buying put options on a range of AI-related stocks, likely through an ETF like the SMH. The news from CoreWeave has created fear, raising implied volatility across the sector. A sharp decline could still make these positions quite profitable. This strategy bets that the power-grid issue will affect the entire sector, not just CRWV. For short-term trading, we view the $85 level on CRWV as a crucial support zone, given its prior importance in August and September. Instead of purchasing shares, we could sell out-of-the-money put spreads that expire in a few weeks. This allows us to profit if the stock stays above this key level, benefiting from both a potential bounce and the decline of high option premiums. For multi-week swing trades, the $60.75 level is also significant, as it was a major breakout point in May 2025. If sector weakness drives CRWV down to this level, we would consider buying call debit spreads set for early 2026. This approach limits our risk while offering substantial upside if this previous resistance turns into strong support. Beyond this one stock, we expect to see increased market-wide volatility as investors question high valuations across the tech sector, which have surged since the bull run of 2024. Reflecting on the market turbulence of 2022, the VIX consistently traded above 25, a level we haven’t seen in a while. We should prepare for a return to higher volatility, making it appealing to sell options on broader indices. Create your live VT Markets account and start trading now.

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