Bullish stocks tied to the latest market craze can be a good investment or a fear of missing out. That debate, which revolved around several boom-to-bust cycles in some corners of the market, was revived after companies linked to artificial intelligence saw their stocks skyrocket. when tech giants like Microsoft Corp. announced major investments in the industry.
The frenzy brings back memories of the crypto and cannabis craze and even the dot-com bubble of the late 1990s, where investors flocked to stocks and questioned afterward. After Friday’s close, a handful of companies have added about $5.2 billion in market value despite announcements that look more like half-baked plans.
“Buyers should absolutely be careful unless you know what you are doing and manage risk accordingly,” said Matthew Tuttle, CEO of Tuttle Capital Management. “You can’t go in and buy any company that says they’re doing AI.”
Creative AI, a label is used to describe artificial intelligence technology that can create things like art or text, and ChatGPT — a popular tool owned by OpenAI. Microsoft just invested $10 billion in — was mentioned in more than 165 earnings calls and press releases this year, more than mentioned in all of 2022.
The citations come with good reason. According to UBS analysts led by Lloyd Walmsley, the market for artificial intelligence could be “incredibly large”, easily “beyond a trillion dollars”. Opportunities are enticing investors and highlighting the thin line between companies that follow trends in the hope of a quick profit and those whose aim is to use technological advancements to drive growth. drive growth and make billions of dollars.
BuzzFeed Inc., a struggling media company, skyrocketed 307% in two frantic days in January thanks to its covered AI plans. Likewise, after introducing its AI plans in a software company claims, shares of C3.ai Inc. has more than doubled this year with $48 million bought from retail traders, according to data from Vanda Research. Meanwhile, semiconductor manufacturers Nvidia Corp., was touted by Wall Street Analysts, as beneficiaries of a larger investment in AI, posted their best month in nearly six years, with its shares up 34% in January.
But investors should proceed with caution as some companies have begun to falter. Shares of BuzzFeed have lost more than 40% of their value from their intraday high of the year last week, and video game software maker Versus Systems Inc. is trading back under $1 a share after selling 2.5 million shares to capitalize on its rally.
Currently, despite signs of a speculative bubble, AI has not yet reached its peak blockchain crazy when companies like Long Island Iced Tea Corp. renamed Long Blockchain Corp. to avoid delisting.
According to Tuttle, tech heavyweights looking to use AI to increase revenue could be the best place for investors to put their money in.
There are certainly plenty of opportunities out there. Meta . Platform CEO Inc. Mark Zuckerberg, for example, recently said one of his main goals is to be a leader in synthetic AI. Alphabet CEO Sundar Pichai has cited Google as a leader in AI development, noting that during the company’s earnings call this week that he talked about Google being the company. first on AI more than six years ago. While Snap Inc. CEO Evan Spiegel sees generalized AI as a “huge opportunity that they” have “invested a lot” in.
Tuttle said that the return of market liquidity as speculative corners of the investment world soar is another signal that investors should be cautious. Many of the riskiest corners of the stock market have recovered at the start of the year. Cathie Wood’s ARK Innovation ETF is up 37% and a basket of stocks known as memes – a group that’s completely detached from fundamentals – is 22% higher, while the world’s largest cryptocurrency is based on market value. Bitcoin market is up about 40%.
“Financial conditions are loose and it’s the perfect environment for anything new and AI is the new kid on the block right now,” he said. “If you know what you’re doing, great, do it. If you’re a FOMO person, stay away until this settles down a bit.”
