Thinking about Big Data stocks to sell might not be the most popular move right now. Especially when we consider the impact of Big Data in artificial intelligence (AI), the thought of offloading Big Data stocks becomes doubly difficult.
However, the truth is that the AI hype train picked up quite a few unwanted passengers along the way. The slightest mention of AI led to rapid stock market activity last year but market experts expect things to change, predicting a broader market in the near future. Moreover, while some Big Data companies are genuinely leveraging AI effectively, others lag behind, diluting shareholder value in the face of intense competition. With that in mind, it becomes imperative for investors to filter out the noise and dump these stocks to sell offering little upside ahead.
MicroStrategy (MSTR)
MicroStrategy (NASDAQ:MSTR), traditionally a software company, has shifted its focus these days as a leading Bitcoin (BTC-USD) holding entity. CEO Michael Saylor has been a vocal advocate for the crypto bellwether, leveraging MSTR’s balance sheet by issuing debt to load up on more BTC. With BTC’s bull run in the past year or so, we’ve seen MSTR stock gain an eye-popping 492% in 2023. Moreover, it has kept up the momentum this year, with year-to-date (YTD) gains exceeding 167%.
Needless to say, MSTR is one of the most overheated stocks on the market, trading upwards of 60 times forward sales estimates. Its top brass has placed it in an incredibly precarious situation in the event of a major BTC pullback. This all-in approach may pay off remarkably when all is awesome with the crypto market. However, given the volatility in the crypto and blockchain space, it is perilous to be as recklessly courageous as MSTR’s management.
Veritone (VERI)
Veritone (NASDAQ:VERI) has been playing the AI game long before it became the hottest trend last year. It operates an AI-powered platform that helps businesses optimize their data for more effective decision-making. Like many of its peers, Veritone rode the AI wave, boasting a stellar YTD surge of over 69%. Most of those gains were achieved during March and April when its stock shot up from under $2 to $7.76 per share. My fellow InvestorPlace colleague Thomas Niel talked about the run-up in a recent article, pointing out that a short squeeze mainly drove the rally.
However, VERI stock hasn’t given its shareholders much to cheer about lately besides the short squeeze. Its business relies heavily on just one client, Amazon (NASDAQ:AMZN), which introduces a dangerous level of customer risk. Moreover, revenue growth has mostly been negative in recent quarters, with it making virtually zero progress in turning a profit. Hence, investors must tread carefully with the stock, especially with the potential for a massive sales decline if Amazon further reduces its engagement.
CommVault Systems (CVLT)
CommVault Systems (NASDAQ:CVLT) operates a robust data management platform catering to over 100,000 customers. It benefits from the growing cybersecurity threats and digital transformation, driving demand for powerful data protection solutions. Consequently, it has enjoyed a healthy run-up in value over the past few years, gaining more than 60% in the past year. It now trades at more than 24 times forward cash flow estimates, with many questioning whether the tailwinds propelling the stock are fully priced-in. Moreover, Wall-Street analysts expect an 18% downside in its stock from current levels.
Furthermore, the waters are getting choppier for the company with the competition nipping at its heels. Companies like Veeam and Rubrik could take away considerable market share as they gear up for IPOs that could inject new capital and strength into their businesses. Additionally, CommVault is heavily dependent on its partnership with Arrow, accounting for a significant 35% of its revenue base. Hence, with the cybersecurity landscape getting more crowded, price wars and the constant need for innovation could strain CommVault’s resources.
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
