AI Stocks: Big Investors Fleeing

Date:

3 AI Stocks That Are Losing Big Investors

As the artificial intelligence (AI) trade appears to be fading, big investors are starting to abandon certain AI stocks. The recent signals from the U.S. Federal Reserve regarding interest rate hikes have significantly impacted the technology sector, particularly companies focused on AI. This has led hedge funds and other institutional investors, including college endowments, to reassess their investments in AI-focused companies. While some AI companies are expected to be long-term winners, many are now slipping lower in the market and are unlikely to survive.

As the AI market matures, it is crucial for investors to carefully evaluate and differentiate between good and bad AI investments. Failure to do so could result in portfolio losses. Here are three AI stocks that have witnessed big investors running for the exit.

Baidu, the Chinese technology giant, recently announced its generative AI chatbot called Ernie Bot, which supposedly outperformed OpenAI’s leading chatbots on various tasks. However, Baidu’s claims have yet to be independently verified. The company’s credibility regarding AI has been questioned following a disappointing launch of Ernie Bot earlier this year. The launch, which showed a pre-recorded video instead of a live demonstration, left investors and developers unimpressed. Consequently, Baidu, and even the entire tech sector in China, is perceived to lag behind the U.S. in terms of chatbot technology. Consequently, many hedge funds and investors have been selling Baidu (BIDU) stock. Over the past year, the company’s share price has fallen nearly 10% and is currently trading 42% lower than it was five years ago. Due to this lackluster performance, it may be wise to avoid investing in Baidu as an AI stock.

See also  Investing in the Future: The Top AI Stocks to Watch Out For

Another AI stock facing challenges is C3.ai, a U.S. artificial intelligence firm. While the company’s stock price has nearly tripled this year, there are underlying issues that investors should be aware of. C3.ai has attracted a substantial short position from traders who are betting on the stock’s decline. Currently, 30% of the company’s outstanding shares are shorted, indicating expectations of a collapse following its significant rally over the past six months. The heavy short position has also sparked speculation about a potential short squeeze among retail investors. While this scenario could briefly drive the share price even higher, it is likely to result in a subsequent drop as investors take profits and sell the stock. This presents a risky situation for investors and reinforces the notion that C3.ai (AI) is a stock to avoid.

Similarly, Upstart Holdings, a company that uses AI to assess borrowers’ creditworthiness before granting loans, has witnessed a surge in its stock price this year. However, a closer look reveals that the company’s share price is less impressive over an extended period. Despite the significant increase this year, Upstart (UPST) stock is trading 16% lower than it was a year ago. Furthermore, it has experienced a 15% decline since mid-June as enthusiasm for AI-related companies diminishes. This meteoric rise in stock price is speculated to be a result of a short squeeze. Moreover, professional investors remain skeptical of Upstart’s business model, as it deviates from traditional methods of evaluating creditworthiness, such as relying on FICO scores and instead focuses on unconventional metrics like grade point averages and standardized test scores. Given these factors, it may be time to consider selling Upstart stock.

See also  3 Artificial Intelligence Stocks to Revolutionize Your Investment Portfolio

As the AI industry continues to evolve, it is imperative for investors to conduct thorough research and exercise caution when selecting AI stocks for their portfolios. It is crucial to differentiate between promising long-term prospects and those that are unlikely to thrive. By being discerning, investors can avoid potential losses and position themselves for success in the ever-changing AI landscape.

Frequently Asked Questions (FAQs) Related to the Above News

Why are big investors starting to abandon certain AI stocks?

Big investors are starting to abandon certain AI stocks due to the recent signals from the U.S. Federal Reserve regarding interest rate hikes, which significantly impacted the technology sector, particularly companies focused on AI.

What should investors do to avoid portfolio losses in the AI market?

Investors should carefully evaluate and differentiate between good and bad AI investments. Failure to do so could result in portfolio losses. Thorough research and discernment are crucial when selecting AI stocks for their portfolios.

Which AI stock has seen big investors fleeing due to credibility concerns?

Baidu, the Chinese technology giant, has seen big investors fleeing due to credibility concerns regarding its AI. The disappointing launch of its generative AI chatbot called Ernie Bot and its perceived lag behind the U.S. in chatbot technology have led many hedge funds and investors to sell Baidu (BIDU) stock.

What are the underlying issues that investors should be aware of with C3.ai?

While C3.ai's stock price has nearly tripled this year, there is a substantial short position from traders betting on the stock's decline. Currently, 30% of the company's outstanding shares are shorted, indicating expectations of a collapse following its significant rally over the past six months. This presents a risky situation for investors and reinforces the notion that C3.ai (AI) is a stock to avoid.

Why is enthusiasm for Upstart Holdings diminishing despite a surge in its stock price?

Enthusiasm for Upstart Holdings is diminishing despite a surge in its stock price because it is trading 16% lower than it was a year ago and has experienced a 15% decline since mid-June. Professional investors remain skeptical of Upstart's business model, as it deviates from traditional methods of evaluating creditworthiness.

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.

Share post:

Subscribe

Popular

More like this
Related

Apple in Talks with Meta for Generative AI Integration: Wall Street Journal

Apple in talks with Meta for generative AI integration, a strategic move to catch up with AI rivals. Stay updated with Wall Street Journal.

IBM Stock Surges as Analyst Forecasts $200 Price Target Amid AI Shift

IBM shares surge as Goldman Sachs initiates buy rating at $200 target, highlighting Generative AI potential. Make informed investment decisions.

NVIDIA Partners with Ooredoo for AI Deployment in Middle East

NVIDIA partners with Ooredoo to deploy AI solutions in Middle East, paving the way for cutting-edge technology advancements.

IBM Shares Surge as Goldman Sachs Initiates Buy Rating at $200 Target, Highlights Generative AI Potential

IBM shares surge as Goldman Sachs initiates buy rating at $200 target, highlighting Generative AI potential. Make informed investment decisions.