In the tech world, the rise of artificial intelligence (AI) has been a game changer, driving innovations and reshaping industries. The excitement around this technology has led to predictions of a massive AI industry, capturing the interest of investors. Yet, it’s important to approach AI stocks with caution and consider which AI stocks to sell.
Although Nvidia’s (NASDAQ:NVDA) stock has benefited from its crucial role in AI processing, Microsoft’s (NASDAQ:MSFT) investment in OpenAI and integration of AI tools in its cloud services solidified its position in the market. However, not all stocks associated with AI have foundational merit.
Therefore, navigating AI investments requires careful consideration. This journey is about more than just saving time; it’s about protecting your financial well-being. Let’s identify the underperforming AI stocks to help you make informed decisions. The aim is to ensure your investments are sound, offering sustainable returns.
BlackLine (BL)
BlackLine (NASDAQ:BL), a once-promising contender in the financial automation arena, now treads through a challenging phase. As BlackLine evolves from a dynamic mid-cap to a mature software firm, it confronts a fiercely competitive market with few growth drivers. Given its struggling AI integration in a fast-evolving sector, this shift highlights BlackLine as a potential AI stock to sell.
Moreover, BlackLine’s director, Thomas Unterman, jazzed up the stock market buzz by selling 750 shares at $60.58. This move, often seen as a director’s lack of confidence in future performances, along with its share price declining 16.94% over the past year, added a bit of intrigue to BlackLine’s stock story.
Therefore, BlackLine’s shares have plummeted 17.77% over the past year, facing stiff competition from giants like SAP, Oracle and Workday. The company’s heavy reliance on resellers for sales, substantial debt, and an unattractive valuation positions it as a precarious investment.
Snap (SNAP)
In the dynamic social media landscape, Snap (NYSE:SNAP) is currently facing a series of challenging developments. The company’s performance in 2023 depicted a worrying scenario, highlighting various issues that have raised concerns about its future viability.
Financially, compounding these worries, SNAP’s stock performance has not been encouraging, with a 1.36% decline year to date. This decline is exacerbated by year-over-year revenue growth of negative 1.21% and a stark 21.78% fall in forward EBITDA growth. When pieced together, these financial indicators strongly advise investors to tread carefully when contemplating investment in SNAP.
Moreover, in response to Snap Inc.’s challenges, CEO Evan Spiegel plans to boost advertising revenue by over 20% in 2024. However, this strategy appears uncertain given the difficult economic conditions, escalating losses, and TipRanks analysts having a consensus rating of hold with 20.28% downside potential. Therefore, investing in SNAP stock now seems risky amidst these significant financial obstacles.
C3.ai (AI)
C3.ai (NYSE:AI) investors are increasingly uneasy with recent shifts. The company’s reliance on nebulous metrics like customer engagement, which it acknowledges doesn’t truly mirror market reception of its products, is concerning, subtly casting doubts on its future trajectory and strategic direction.
Financially, the picture is bleak. The company’s shares have plummeted 26.33% over the past six months. More alarming is the trailing twelve months’ EBIT margin, which is a disturbing negative 104.97%, starkly contrasting the sector median of 4.92%. The revenue of $73.23 million, which fell short of expectations by $1.1 million, further erodes investor confidence.
Furthermore, the company’s pricing strategy exacerbates its troubles, as its price-to-sales ratio is worse than 89.02% of its competitors in the software industry. This high cost and its dismal financials mark it as one of the market’s most overvalued stocks. Investors must proceed cautiously as a notable overvaluation marks BlackLine’s path.
On the date of publication, Muslim Farooque 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.