In this article, we will take a look at the 10 Most Popular AI Stocks to Avoid Now.
Over the last two years, artificial intelligence has been the central theme driving equities to record highs amid expectations that its technological innovations will change how the world works. Companies exposed to the game-changing technology generated outstanding earnings, with some posting triple-digit percentage gains over the two years.
Fast forward to 2025, the artificial intelligence-driven run has slowed. Artificial Intelligence-linked stocks lost about $1 trillion in market value at the start of the year as it emerged that Chinese artificial intelligence firms led by DeepSeek might have leapfrogged US dominance on AI development. Major US indices pulled back from record highs, with some plunging into bear territories amid concerns that AI stocks had run ahead of fundamentals.
Semiconductor stocks were the hardest hit amid growing concerns that they will not attract significant budgets and spending, as DeepSeek showed it’s possible to develop powerful AI models at the least cost. After shedding more than 20% in market value, some AI stocks have struggled to regain the losses, even on the DeepSeek engineered selloff cooling off.
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While there were concerns that spending on the cloud and artificial intelligence infrastructure would slow following the DeepSeek development, that has not been the case, Earnings results from big tech giants and top AI stocks suggest that the bust might have been over even before it started.
“We continue to see accelerated scaling of AI deployments across the data center market, with strong demand signals reinforcing both our near- and long-term growth,” said Giordano Albertazzi, CEO of Ohio-based data center supplier Vertiv.
US tech giants asserting that the data center market remains strong and affirming they will continue spending on building AI infrastructure underscore long-term prospects of the burgeoning sector. According to John Carrafiell, co-CEO of BGO, a global real estate investment manager, the most significant players are not pulling back but plan to spend over $300 billion in Capex this year on AI infrastructure.
“Rather than a bust, this is a reshuffling of the deck in an environment where power in particular, along with fiber, water, and land, is scarce and strategic,” Carrafiell said. “Long-term enterprise adoption will drive AI and data center demand for the next decade. We aren’t even in the first inning yet,” he said.
The sentiments underscore why AI stocks with solid underlying fundamentals should have recouped the losses accrued early in the year and edged higher once the selloff dust settled. However, that has not been the case as some of the most popular AI stocks are still languishing and face an uncertain future, with double-digit percentage losses in the market year to date.
A scientist at a computer station, surrounded by a neural network of artificial intelligence code.
Our Methodology
We sifted through Finviz and internet lists to compile a list of the 10 most popular AI stocks. We then selected the 10 stocks that are down by more than 10% (as of May 13) and have underperformed the S&P 500, that’s up by about 4.92% year to date. We analyzed why the stocks are under pressure and the factors contributing to the significant losses year to date. Finally, we ranked the stocks in ascending order based on their year-to-date loss.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Most Popular AI Stocks to Avoid Now
10. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Year to Date Loss as of May 13: -10.12%
S&P 500 Year to Date Performance as of May 13: 4.92%
Advanced Micro Devices, Inc. (NASDAQ:AMD) is a semiconductor company that designs and manufactures processors, graphics processors, and other computer components. It is known for its CPUs and GPUs, which are used in various devices, from consumer PCs to high-performance servers. However, the stock has been under pressure, given the 10.12% year-to-date slide, underperforming the S&P 500 that’s up by about 4.92%.
Analysts at KeyBanc downgraded Advanced Micro Devices, Inc. (NASDAQ:AMD) to a “Sector Weight” from “Overweight”, citing increasing concerns regarding the sustainability of the company’s China artificial intelligence business. With the US and China entangled in a fierce trade war, there are growing concerns that Advanced Micro Devices will pay a hefty price.
Likewise, the US’s limiting the sale of advanced chips for artificial intelligence to Chinese customers has also rattled the stock’s sentiments. KeyBanc has already reiterated that Advanced Micro Devices, Inc. (NASDAQ:AMD) could struggle to win additional market share and that its margin could be pressured in the highly competitive semiconductor sector. Additionally, analysts at Jefferies have raised concerns about AMD’s M1300x chips, which they believe are unlikely to take on Nvidia’s H200 GPUs. There are also concerns that AMD is facing mounting competition from Intel in the PC and data markets, as the latter has a significant advantage on this front.
9. Adobe Inc. (NASDAQ:ADBE)
Year to Date Loss as of May 13: -10.45%
S&P 500 Year to Date Performance as of May 13: 4.92%
Adobe Inc. (NASDAQ:ADBE) is a technology company that offers products and services that enable individuals, teams, and enterprises to create, publish, and promote content. Its flagship product is Creative Cloud, a subscription service that allows subscribers to use its creative products and applications (apps) integrated with cloud-delivered services across various surfaces and platforms. The stock was down by about 24% in 2024 and is already down by about 10.45% on concerns that it is falling behind and losing its edge in generative AI.
The underperformance comes from analysts and investors questioning the company’s growth metrics and the role of artificial intelligence. Analysts have also cut their price targets of the stock on examining the role of AI solution Firefly on earnings. There is growing concern about whether Adobe Inc. (NASDAQ:ADBE) will succeed in monetizing AI amid stiff competition.
Rapid adoption of AI in digital media and other enterprises also threatens to trigger massive layoffs, which could lead to reduced demand for Adobe Inc.’s (NASDAQ:ADBE) technology. The stock slid by about 14% in March amid investors’ jitters over the software maker’s AI intelligence monetization strategy, despite the company delivering better-than-expected results for Q1 2025. Earnings came in at $5.08 a share against $4.97 expected, as revenues totaled $5.71 billion against $5.66 billion expected.
