Leading AI Stocks Facing Uncertainty: February 2024
As the stock market continues to be driven by the advancement of artificial intelligence (AI), there are a few companies that seem to be struggling in this fast-paced industry. While the overall market for AI is thriving and expected to reach over $2.5 trillion by 2032, these three AI stocks are forecasted to face a decline. Let’s take a closer look at these companies and the reasons behind their potential dive.
C3.ai (NYSE: AI) was once considered the darling of AI stocks. However, since reaching its 52-week high of $48.87 last summer, its share price has plummeted by almost half. In 2024 alone, the stock has already dropped by 16%. This significant downfall can be attributed to disappointing financial results and mounting losses at the company. The release of weak forward guidance, projecting an operating loss of $46 million for the first quarter of 2024, further contributed to the decline. Moreover, C3.ai withdrew its forecast of achieving profitability by the end of the year, leaving investors uncertain about its future prospects.
Super Micro Computer (NASDAQ: SMCI) is another AI stock experiencing rapid growth. In the past 12 months, the company’s stock has soared by 650%, with a 120% gain so far this year. However, this kind of exponential growth often raises concerns among investors. Despite not being classified as a meme stock, Super Micro Computer’s trading pattern is beginning to resemble one. Investors need only look at the example of C3.ai to understand the risks associated with rapidly rising stocks. While the company has benefited from a fruitful partnership with chipmaker Nvidia (NASDAQ: NVDA), which boosted its earnings projections, there is speculation that the stock could experience a sharp decline in the near future.
Among the leading AI developers, China’s Baidu (NASDAQ: BIDU) is currently facing setbacks. Despite unveiling an AI system called Ernie Bot that claimed to rival Chat-GPT in terms of power and sophistication, Baidu has struggled to convince analysts and investors of its AI prowess. One of the major concerns surrounding Baidu is its ability to obtain the necessary microchips to run its advanced AI models and applications. With the U.S. ban on exporting powerful chips and semiconductors to China, doubts have been cast on Baidu’s future prospects. As a result, BIDU stock has declined by 7% in 2024 and almost 25% over the past 12 months. Its share price has experienced a staggering decline of nearly 40% in the past five years.
While the AI market continues to flourish, it is important for investors to be cautious and recognize that not all AI stocks are destined for success. Companies like C3.ai, Super Micro Computer, and Baidu are currently facing challenges that are impacting their stock performance. As the industry evolves, these stocks should be closely monitored to determine whether they are capable of turning their fortunes around and reclaiming their positions in the competitive AI market.
