TCEHY - Sizing up the AI playing field: All stocks may not be equal

2023-06-01 06:38:00 ET

What goes up must come down... unless you have diamond hands. Some cracks are beginning to appear in the recent AI stock rally, with C3.ai ( AI ) plunging 22% AH on Wednesday after giving a disappointing outlook during its Q1 results . On an earnings call , CEO Tom Siebel added that the company wasn't "inclined to change expectations" surrounding its guidance, compared to the major boost that Nvidia's ( NASDAQ: NVDA ) stock received following its " draw dropping guidance " posted last week.

Snapshot: Other AI players and chipmakers also pulled back yesterday following some impressive runups, but the latest movement might suggest that all companies are not equal when it comes to "AI supercycle." Investors will have some deeper learning to do after being consumed by everything AI this year, especially as they sort through the growing list of companies talking up how they've been AI plays all along. The real thing to consider is how much a firm will successfully capitalize and monetize their artificial intelligence offerings after the meme rallies settle down and huge price swings come to a halt.

"The euphoria is rooted in a very promising underlying technology," noted Robert Schein of Blanke Schein Wealth Management. "Even with the recent market euphoria driven by artificial intelligence, the market is sending a clear signal that artificial intelligence is here to stay, as this technology has the potential to overhaul how companies do business, which has major implications for corporate earnings."

Do your homework: As an example, the overwhelming majority of Wall Street experts believe that Nvidia ( NVDA ) remains a clear Buy . Seeking Alpha's Quant Ratings system views NVDA with a little more skepticism, labeling the stock as a Hold (valuation represents the key headwind, according to the system of grading quantitative measures). SA analysts have also been sizing up the stock in a series of recent articles. See 11 Billion Reasons To Buy Nvidia, And 2.2 Trillion Reasons To Sell , Bulls Are Way Overestimating AI GPU Demand and Unleashing The Power Of Parallel Computing For AI Dominance .

Recent SA headlines from other AI players

• The World Is Sleeping On Palantir's AI Prospects
• Marvell Technology: Explosive Surge On AI Narrative
• A Data Scientist Explains Large Language Models And Implications For Businesses
• AMD: Strong AI Read Off Nvidia Earnings
• Tencent Vs. Baidu: Bet Big On AI
• IBM: Enterprise AI Prospects Not Priced In
• Oracle's Unique Positioning In AI Arena
• Adobe: Attractively Priced, Looking Towards AI To Boost Growth
• Broadcom Q2 Earnings Preview: A Beat Incoming - Focus On AI And Apple

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