The highlights from today’s Morning Brief suggest that as an investor, you could be stepping into an unpredictable situation as you delve into the world of AI stocks. Picture yourself in an ever-changing bubble that constantly expands or contracts based on external conditions. That could depict the future of the AI market, as investors begin examining hot AI stocks more closely.
The AI stock market isn’t always expanding. For instance, Hewlett Packard Enterprise’s CEO, Antonio Neri, spoke about a 14% fall in quarterly sales even with the company’s billions in AI-related backlog. The reasons? Companies struggle to implement the AI technology they acquire. The problems they face range from finding new power sources to secure spaces where they can keep their equipment. However, a major issue is the evident lack of supply in high-output AI chips, which directly impacts the ability to fulfill orders.
Such negative events have led investors to approach all AI stocks with caution, bringing about some deflationary instances in the AI bubble. On that note, the CEO of HP Inc. was careful not to consider strong demand for upcoming AI PCs in this year’s guidance due to these uncertainties. SoundHound AI, another hot AI stock, had its earnings fall below expectations and posted a net loss of $88 million last year.
Nevertheless, billionaire hedge fund manager Ray Dalio thinks there’s no full-on bubble, though valuations seem a tad expensive given current and projected earnings. As optimistic as his view sounds, he does maintain that there may be significant corrections if AI fails to meet the expectations set for it.
However, it’s not all gloom. There were some moments of expansion for the AI bubble as well. Examples include a 26% surge in Dell stocks due to bullish AI comments and AMD’s market cap hitting the $300 billion mark for the first time. Encouraging words from C3.ai’s CEO, Tom Siebel, about being early in the AI cycle also led to a 24% jump in its stocks.
In conclusion, the AI bubble experiences a rollercoaster of highs and lows. As we move into another week in the AI sphere, investors should remain alert and vigilant.
Vocabulary List:
- Unpredictable (Adjective): Not able to be predicted uncertain.
- Delve (Verb): To investigate or research in a thorough manner.
- Depict (Verb): To represent or show in a visual or vivid manner.
- Deflationary (Adjective): Relating to or causing a reduction in the general level of prices in an economy.
- Optimistic (Adjective): Having or showing hope for the future positive.
- Vigilant (Adjective): Watchful and alert to potential dangers or problems.
