If you’re wondering which AI stocks to sell, look no further. Artificial intelligence ( ) continues to be a key driver for the stock market. The tech-focused Nasdaq 100 Index is currently at an all-time high. This is due in large part to investors remaining excited about the potential of AI to remodel society and businesses. Statista forecasts that the global market for AI will more than double between now and 2030, reaching $738.80 billion in annual revenues by the end of the decade.
While AI continues to have a lot of potential, not every AI company makes for a good investment. There are many great AI stocks currently outperforming the market, but there are just as many duds whose share prices are declining. As the market for AI grows and matures, winning stocks will increasingly separate themselves from underperformers. Take our advice and dump these three loser AI stocks before it’s too late.
AI Stocks to Sell: Baidu (BIDU)
Chinese tech firm Baidu (NASDAQ:BIDU) continues to promote its generative AI capabilities to diminishing returns. BIDU stock has declined 13% so far in 2024, has fallen 27% over the last 12 months, and is down 40% in the past five years. This despite the company claiming to have developed an AI system that matches the technology used in the ChatGPT and GPT-4 chatbots created by privately held American firm OpenAI.
Many analysts and investors continue to doubt the AI claims made by Baidu, noting that most of the generative AI technology to come out of China has paled in comparison to what’s being developed in the U.S. The truth is that BIDU stock has crumbled ever since the company last year unveiled a new AI system to rival ChatGPT that it called “Ernie Bot.” The first public unveiling of Erne Bot was a disaster and amounted to little more than a pre-recorded marketing video.
With its share price in decline, Baidu is among loser AI stocks to sell before it’s too late.
The stock of AI start-up C3.ai (NYSE:AI) has benefitted greatly from the fact that its ticker symbol is “AI.” While the stock has gained 80% in the last 12 months, it remains extremely volatile and its long-term performance is terrible. Despite the AI-fueled run-up over the last year, C3.ai’s stock is still down 78% since its market debut in December 2020. So far in 2024, AI stock has fallen nearly 10% as most securities tied to artificial intelligence continue to rally.
Much of the problem with C3.ai can be traced to its financial results and the fact that the company remains unprofitable. In December, AI stock plunged 12% after the provider of enterprise generative AI software issued weak forward guidance. For what was its fiscal second quarter, C3.ai announced a loss of 13 cents a share. The company also withdrew its forecast of achieving profitability by the end of this year. Time to sell this loser AI stock.
Unfortunately, investors who bought this AI stock have been left holding a bunch of lemons. The start-up company Lemonade (NYSE:LMND) came to market in July 2020 amid much hype and fanfare. The company claimed that it was going to disrupt the entire insurance industry with its unique AI-based underwriting system. Nearly four years later, and LMND stock is down 75% as the company’s AI system sputters and its finances falter.
Lemonade is losing money hand over fist. In 2022, it lost $225 million for the entire year, burning through much of its cash pile in the process. Equally bad, the rate of growth in its insurance premiums has slowed dramatically, falling to 12% in 2023 from 116% the previous year. While LMND stock has increased 10% in the last 12 months, don’t be fooled. The long-term outlook for the company and its stock is not good, making this an AI stock to sell.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.