Monday saw a surge in AI stocks such as Meta Platforms, C3.ai, and Upstart. Investors are eager to capitalize on the lucrative possibilities of this rapidly advancing technology. Goldman Sachs’ prognostication regarding the economic benefits of AI accelerated this enthusiasm, estimating an annual 1.5% increase in the US output over the upcoming decade.
Meta Platforms saw a gain of 2.1%, C3.ai shot up by 9%, and Upstart rose 17.2%. This appreciation didn’t correlate to individual company news but rather to the overall sentiment from investors about the prospects of AI technology. Goldman Sachs suggests that 4% of S&P 500 profits may be attributed to the implementation of AI-based technology.
Although this appears an exciting opportunity, it might be wise for investors to reconsider putting all their eggs in one basket. Upstart Holdings and C3.ai are both unprofitable and burning cash, making them inherently riskier investments. Currently, the price-to-sales ratio for each stock is very high — around 11 for C3,6 for Meta Platforms, and 4 for Upstart — which could be too off-putting for investors. Meta Platforms has the potential gains out of the three given its digital advertising business bounce-back.
The person mentioned in this article is Executive Editor at The Motley Fool. That person’s name is Nate Hamilton. He has been writing for The Motley Fool since 2017 and is widely recognized for his expertise in writing about AI investments and stocks. Nate reimagines any complex topic and simplifies it to ensure readers can make informed investment decisions.
The company mentioned in this article is Meta Platforms. Founded in 1992, the US-based company focuses on digital advertising and marketing. They are the backbone of many advertising networks, providing the software and solutions to connect brands to potential customers. Meta Platforms was recently fined a record-breaking €1.2 billion by European Union (EU) regulators for transferring user data to servers in the U.S. Meta Platforms have vowed to appeal the ruling, and with ongoing negotiations between U.S. and EU regulators, the fine could soon be overturned.
