Curious about my chances of being replaced by an artificial intelligence chatbot, I went ahead and asked ChatGPT 3.5, Microsoft Copilot, and Google Gemini to give me examples of stocks with poor ratings or sell signals. Both Gemini and ChatGPT gave me non-answers, explaining that I should do my research and what common pitfalls to look out for. Copilot, on the other hand, yielded some interesting examples. Thus, this article will focus on three AI stocks to sell according to AI analysis from Microsoft (NASDAQ:MSFT).
Whether or not that is a conflict of interest is unclear to me, however, judging by the AI’s results, I’m relieved I won’t lose my job too soon. That’s because the free version of Copilot only gave me a sentence to describe one issue with each of the following stocks. While that issue may be valid, it’s hardly enough evidence to back up a “sell” recommendation.
Appen (APXYY)
According to Copilot, the issue with Appen (OTCMKTS:APXYY) is: “Appen has been diluting shareholders, which can negatively impact stock value. Additionally, some analysts believe its business model may be outdated. Performance: Notable underperformance in recent times.”
Appen issued 16 million new shares in June 2023. The issue of diluting shares by releasing too many can be a tremendous signal for offloading a stock, but let’s look deeper into the underperformance claim. The company’s stated mission is that it aims to make AI a force for good. Appen also markets itself as a constantly learning group of people, just like an AI is.
Unfortunately, the reality for Appen is that its business model of selling custom datasets to large language model developers has not proven profitable. For example, Appen’s revenue dropped to $273 million in 2023, down 29.7% from $388 million in 2022. Ultimately, APXYY appears to be one of the AI stocks to sell according to AI probability calculations by Copilot.
BlackLine (BL)
According to Copilot, the pitfalls with BlackLine (NASDAQ:BL) are: “BlackLine faces strong competition and may be overvalued. A competitive moat is lacking, and sales growth has been a struggle. Performance: Investors should approach with caution.”
The company offers a suite of cloud-based software solutions designed to streamline financial processes and enhance efficiency for organizations. Furthermore, its Financial Close Management platform helps organizations automate and manage the entire financial closing process. This includes tasks such as reconciliations, journal entries, and variance analysis.
From a product standpoint, the company offers machine-learning solutions for custom integration with enterprise resource planning software. This business model has generous potential in a future where AI continues to improve and Blackline’s first-quarter financial results reflect healthy growth as a result, with revenue of $149.5 million up from $130.6 million a year ago.
As such, I do not agree with Copilot’s assertion that this stock is a sell. Rather, its outlook seems mixed and I believe it deserves a hold rating for now.
Veritone (VERI)
For Veritone (NASDAQ:VERI), Copilot offered a fairly vague warning: “Like other companies, Veritone lacks a competitive moat. Its struggle for sales growth has affected investor confidence. Performance: Veritone’s stock has faced challenges.” Interestingly, Copilot uses a term coined by Warren Buffett. However, I am curious about what qualifies as a competitive moat to an AI.
Veritone’s first-quarter financials seem subpar, keeping with its trend of underwhelming earnings-per-share for the last four quarters. Revenue was $31.6 million, down 7.6% from the prior quarter but up 5% from a year ago. Net losses came in at $25.1 million, which represented a 7% increase from last year.
From the perspective of competitive edge, the relatively nascent nature of AI products and custom machine-learning software means that it’s hard to tell where Veritone stands among its peers. However, its current pricing around $2.80 is a fair valuation when considering the current oversaturation of AI products. As such, VERI may not be the best value for money as far as investments go.
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On the date of publication, Viktor Zarev 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.
