2 Popular AI Stocks That Are Hot Right Now, But I’m Not Investing – Here’s Why

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Artificial intelligence (AI) stocks have become the talk of the town lately, and the hype around them has reached a fever pitch. However, investing in new technologies is not without risks. Here are two popular AI stocks that investors may want to avoid for now.

Nvidia has become the go-to supplier for computer chips that power AI tools, which are computationally intensive. The company’s newest AI chip costs over $10K, giving Nvidia significant pricing power. As a result, its stock has soared over 170% this year. However, Nvidia has a lot of competition in the pipeline, and Taiwan Semiconductor Manufacturing, the sole supplier of Nvidia’s computer chips, is known for increasing its prices on customers. Additionally, Nvidia is extremely overvalued, with a market cap of over $1 trillion. Investors may want to keep the stock on their watchlist for now.

C3.ai, an Enterprise AI Application Software company, sells AI products and implementations to large companies to increase efficiency and save them money. However, it is not making money itself and has only grown revenue by 5% year over year. The company posted a $290 million operating loss on only $267 million in revenue last fiscal year. Despite its broken business model, C3.ai’s stock is up over 200% this year. However, shares now trade at a price-to-sales ratio of 17.75, which would be expensive even if C3.ai was profitable and rapidly growing. Investors should be wary of investing in C3.ai as it has not proven it has a sustainable business model.

See also  Palantir: A Potentially Undervalued AI Stock (NYSE: PLTR)

Frequently Asked Questions (FAQs) Related to the Above News

What are AI stocks?

AI stocks are stocks of companies that specialize in artificial intelligence technologies and products.

Why have AI stocks become popular?

AI stocks have become popular due to the increasing demand for AI technologies and products in various industries, as well as their potential for growth and profitability.

What are some risks associated with investing in AI stocks?

Investing in AI stocks is not without risks. Some risks include intense competition in the market, potential supply chain disruptions, and the possibility of investing in companies with broken business models or high valuations.

Why might investors want to avoid investing in Nvidia?

Investors might want to avoid investing in Nvidia due to its overvaluation, competition in the market, and potential price increases from its sole supplier, Taiwan Semiconductor Manufacturing.

Why might investors want to avoid investing in C3.ai?

Investors might want to avoid investing in C3.ai due to its broken business model, lack of profitability, and high price-to-sales ratio.

Please note that the FAQs provided on this page are based on the news article published. While we strive to provide accurate and up-to-date information, it is always recommended to consult relevant authorities or professionals before making any decisions or taking action based on the FAQs or the news article.

Meera Mehta
Meera Mehta
Meera is our dedicated writer and manager for the AI Stocks category. With her expertise in finance and a deep interest in the AI industry, Meera keeps a close eye on AI-related stocks and market trends. Her articles provide valuable insights into the financial aspects of AI, helping investors navigate this exciting and dynamic sector.

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