GNAI Visual Synopsis: A graphic image of a person standing at a crossroads, with road signs pointing in different directions labeled “Invest” and “Divest,” symbolizing the investor’s decision-making process concerning AI stocks.
One-Sentence Summary
InvestorPlace cautions investors against certain overhyped AI stocks that underperformed in 2023, specifically Upstart Holdings, C3.ai, and Veritone. Read The Full Article
Key Points
- 1. Upstart Holdings (UPST) has been labeled as risky due to its significant short interest and disappointing financial performance, with 42% of its float sold short and a recent 14% revenue decline.
- 2. C3.ai (AI) experienced a rapid surge in stock price, but investor skepticism has mounted as the company retracted its profitability forecast following poor earnings, leading to about 30% of its float being sold short.
- 3. Veritone (VERI) has seen software revenues plummet by 29% and overall revenues fall by 6%, with a concerning increase in net loss from $4.9 million to $20.9 million year-over-year, despite some positives like strong bookings figures.
Key Insight
Despite the general excitement around AI technologies, not all companies in the sector may deliver on their potential, as evidenced by Upstart, C3.ai, and Veritone’s inability to fulfill their ambitious promises and investor expectations.
Why This Matters
The cautionary tale of these AI stocks serves as a reminder to investors that potential and hype do not always translate into financial success and that rigorous scrutiny is essential before investing, particularly in high-tech, rapidly evolving industries like AI.
Notable Quote
“It’s a fool’s errand to think an algorithm can accurately assess the multifactorial decision process required.” — This statement by the author encapsulates the skepticism about the practicality of AI in certain applications like lending, where complexity may outpace current AI capabilities.
