Investors right now are trying to separate the wheat from the chaff when it comes to artificial intelligence stocks. And with all the hype and hyperbole, it can be difficult to tell the legitimate AI stocks from the imposters. It seems that every company under the sun is promoting itself as having an AI application or an AI platform that promises to revolutionize its industry. To be sure, the opportunity presented by AI is huge, as the global AI market is expected to be worth $1.59 trillion by 2030, according to one forecast. But in reality, it will likely be only a handful of companies that ultimately come to dominate the AI space. With that in mind, here are three AI stocks that will make you poor in ten years.
The name Riskified (NYSE:RSKD) seems a bit ironic, given that this stock has declined 80% since its 2021 initial public offering (IPO) and is now trading near penny-stock territory. The Israeli software company uses AI to detect fraud in e-commerce transactions. How effective its AI application is remains up for debate, and that helps to explain why its share price has collapsed over the last two years.
Also weighing down the share price is the fact that Riskified remains unprofitable. The company has forecast a loss ranging from $22 million to $27 million for this year. It also doesn’t help that the e-commerce space is experiencing a sharp slowdown coming out of the pandemic. The outlook for RSKD stock is definitely risky (pun intended).
PROS Holdings (PRO)
PROS Holdings (NYSE:PRO) offers an artificial intelligence-based software-as-a-service platform that identifies the preferences of online shoppers and then targets them with advertisements and promotions. Companies that use its AI platform include airlines, vehicle manufacturers, pharmaceutical companies, and consumer electronics firms. While the concept sounds intriguing, PRO stock has been slumping for many years, as it has fallen 20% since 2018.
Among the factors holding the share price down have been substandard earnings that continue to cause the company to spill red ink. Indeed, despite being founded back in 1985 as a software company, PROS Holdings remains unprofitable
It is also a comparatively small company, generating only about $70 million of revenue per quarter. While its addressable market is forecast to grow to nearly $4 billion by 2026, PROS Holdings doesn’t appear able to capitalize on the opportunity, making it one of the AI stocks to avoid.
UiPath (NYSE:PATH) is a global software company founded in Romania that now operates in the U.S. and incorporates AI into its robotic process automation software. The stock went public in April 2021, and any investor who got in on the IPO is sure to have buyer’s remorse. Since going public, PATH stock has fallen 79%. And that’s after the share price rebounded 30% this year.
UiPath promises that its AI-driven software can automate repetitive tasks such as data entry, processing invoices, and sending emails. Clients who buy its software can streamline their operations and save money, according to PATH.
However, its growth has been decelerating, especially coming out of the pandemic. UiPath’s revenue rose 19% to $1.06 billion in its fiscal 2023. That might seem good, but it’s 47% below the growth that it delivered during the previous fiscal year.
The company has undertaken two rounds of layoffs and other cost-cutting measures in recent months. PATH stock is a sell.