10 Most Popular AI Stocks to Avoid Now

4. Recursion Pharmaceuticals Inc. (NASDAQ:RXRX)

Year to Date Loss as of May 13: -36.55%

S&P 500 Year to Date Performance as of May 13: 4.92%

Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) is a biotechnology company that utilizes artificial intelligence to speed up the discovery and development of novel therapies. Initially, the stock exploded amid expectations that its technology would revolutionize the drug development process while cutting costs. Fast forward, the company has yet to make significant progress in the AI drug development process.

Consequently, the stock’s sentiments have taken a hit, going by the 36% year-to-date slide, underperforming the S&P 500 that’s up by 4.92% over the same period. While Needham maintains a Strong Buy on the stock, it has cut its price target to $8 from $11. The price cut comes on Recursion Pharmaceuticals Inc. (NASDAQ:RXRX), announcing it is streamlining its pipeline to focus on fewer candidates and deprioritizing others. The announcement is a clear indication that it is abandoning some investigational therapies.

Recursion Pharmaceuticals Inc. (NASDAQ:RXRX) does not have at least one product in phase 3 clinical trials, raising concerns about whether its AI-based algorithm is effective. The Trump administration’s cutting of federal funding that often trickles down to clinical-stage biotech is another negative that affects its long-term prospects.