Butterfly Network's AI Platform Launches But Stock Tanks 7% — What's Going On?

Butterfly Network (BFLY) just rolled out Compass AI, an enterprise software platform designed to revolutionize point-of-care ultrasound (POCUS) workflows across hospitals. Here’s the thing: the tech sounds genuinely impressive.

Compass AI claims to boost documentation compliance from a measly 15% to 94%, potentially unlocking 5x more revenue from the same exam volume. The AI-powered suite includes ambient voice dictation (cuts charting time by 25%), automated QA workflows, and real-time program dashboards — basically everything health systems have been asking for.

But here’s the plot twist: BFLY shares dropped nearly 7% right after the announcement.

Year-to-date, the stock is up 34.7% while the broader medical device industry is down 10.8%, so maybe profit-taking kicked in. Or maybe the market is pricing in execution risk — great software doesn’t always translate to quick revenue wins in enterprise healthcare.

Long-term thesis still holds though. If Compass AI actually delivers on those compliance numbers, BFLY pivots from hardware-dependent to recurring software revenue, which is a completely different valuation story. The question is timing: will health systems adopt fast enough to justify the stock’s current momentum?

Current snapshot: $535.5M market cap, Zacks Rank #3 (Hold).