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.
8. Salesforce, Inc. (NYSE:CRM)
Year to Date Loss as of May 13: -12.98%
S&P 500 Year to Date Performance as of May 13: 4.92%
Salesforce Inc (NYSE:CRM) is a technology company that provides a Customer Relationship Management (CRM) platform that helps businesses manage and improve customer relationships across various departments. It offers a range of tools and features, including AI-powered agents and a unified platform, to help companies streamline operations, personalize customer experiences, and drive growth. The stock has underperformed the overall market, with a 12.98% year-to-date slide, while the S&P 500 is up by about 4.92%.
Consequently, analysts at DA Davidson have already downgraded Salesforce Inc (NYSE:CRM) to an underperform from neutral, and the price target to $200 from $250. The downgrade comes amid concerns that the company’s focus on artificial intelligence is neglecting the core business. Salesforce sentiments have taken a hit on disappointing 2024 results and 2025 guidance.
While revenues in the fourth quarter fiscal 2025 were up 7.5% to $9.99 billion, they missed estimates. In addition, Salesforce Inc (NYSE:CRM) rattled the market on issuing first-quarter and full-year 2026 guidance that affirmed slow growth. Salesforce expects revenue to grow by 6% to 8% in 2026, much lower than the double-digit growth experienced in fiscal 2025. The expected slow growth comes as enterprise customers increasingly tighten their IT budgets due to economic uncertainty.
7. Riot Platforms, Inc. (NASDAQ:RIOT)
Year to Date Loss as of May 13: -15.64%
S&P 500 Year to Date Performance as of May 13: 4.92%
Riot Platforms, Inc. (NASDAQ:RIOT) is exploring the use of its existing infrastructure for AI and high-performance computing (HPC). It is repurposing its Bitcoin mining facilities for AI/HPC applications, especially at its Corsicana facility. Amid the restructuring drive, the company remains susceptible to the volatility in the cryptocurrency sector, which remains its core business. The stock is already down by about 14% year-to-date, while the S&P 500 has gained 4.92%
Cantor Fitzgerald cut its stock price target to $18 from $21 while maintaining an Overweight rating. The cut comes from the backdrop of Riot Platforms, Inc. (NASDAQ:RIOT) delivering a wider-than-expected loss, even on revenues increasing significantly. Revenue in Q1 2025 more than doubled to $161.4 million compared to $79.3 million the same quarter last year.
Riot Platforms, Inc. (NASDAQ:RIOT) posted a net loss of $296.4 million; a significant underperformance considering it delivered a profit of $211.8 million the same quarter last year. The wider-than-expected net loss comes as the company invests in its transition into artificial intelligence and high-performance workloads. Its push for opportunities to provide computing infrastructure used in AI and HPC faces stiff competition.
6. BigBear.ai Holdings, Inc. (NYSE:BBAI)
Year to Date Loss as of May 13: -17.87%
S&P 500 Year to Date Performance as of May 13: 4.92%
BigBear.ai Holdings, Inc. (NYSE:BBAI) is a technology company that provides artificial intelligence-powered decision intelligence solutions. The company offers national security, supply chain management, digital identity, and biometrics solutions. The stock is again on the receiving end, going by the 17.87% year-to-date slide. The slump comes amid growing concerns about its financial results.
When BigBear.ai Holdings, Inc. (NYSE:BBAI) went public in 2021, it projected revenues to grow from $182 million in 2021 to $550 million in 2024. Its target is yet to come to fruition as revenues totaled $158 million in 2024, raising serious concerns about the AI Company’s growth prospects. Likewise, the company is yet to become profitable. Its net loss more than doubled in 2024 to $257 million, affirming why it is one of the most popular AI stocks to avoid.
Macroeconomic challenges, fierce competition from bigger AI firms, and the 2023 bankruptcy of its largest client, Virgin Orbit, are some of the difficulties BigBear.ai Holdings, Inc. (NYSE:BBAI) has had to contend with. Additionally, since going public, the corporation has had three CEOs. To increase sales, it also purchased Pangiam, an AI vision startup, a year ago. To grow the young company may need to make other acquisitions. However, that might not be easy to accomplish without significantly diluting its current investors or taking on much more debt.
5. C3.ai Inc. (NYSE:AI)
Year to Date Loss as of May 13: -30.52%
S&P 500 Year to Date Performance as of May 13: 4.92%
C3.ai Inc. (NYSE:AI) is an enterprise artificial intelligence (AI) software company that provides the C3 AI platform, an application development and runtime environment that enables customers to design, develop, and deploy enterprise AI applications. It has also made a name by offering software for classified work in the US military and large corporations. Nevertheless, the stock is down by 30.52% year to date, underperforming the overall sector, which is why it is one of the most popular AI stocks to avoid.
DA Davidson has already reaffirmed a Neutral stance on the stock with an $18 price target. The Neutral stance stems from growing concerns over an increase in C3.ai Inc.’s (NYSE:AI) nonrecurring revenue, prevailing macroeconomic uncertainty, and increased cuts in government expenditure. Given that a good chunk of the company’s clientele includes government entities, it raises serious concerns about future revenues and earnings on heightened cuts in spending.
DA Davidson also raised concerns about the future of C3.ai Inc.’s (NYSE:AI) relationship with Baker Hughes (NASDAQ:BKR), the company’s biggest client. The nature of the relationship is unclear, which could affect C3.ai’s sources of income and the company’s stability.
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.
3. Astera Labs, Inc. (NASDAQ:ALAB)
Year to Date Loss as of May 13: -39.30%
S&P 500 Year to Date Performance as of May 13: 4.92%
Astera Labs, Inc. (NASDAQ:ALAB) is a technology company that designs, manufactures, and sells semiconductor-based connectivity solutions for cloud and AI infrastructure. It offers an intelligent connectivity platform comprising semiconductor-based, mixed-signal connectivity products that integrate a matrix of microcontrollers and sensors. The stock is down by about 39% year-to-date, underperforming the S&P 500, that’s up by about 4.92%.
The underperformance stems from growing concerns that a slowdown could hard hit the company in spending on cloud and AI infrastructure. In addition, the company has been under pressure ever since DeepSeek delivered a low-cost AI model, raising questions about spending billions of dollars on AI infrastructure. Nevertheless, Astera Labs, Inc. (NASDAQ:ALAB) delivered solid first-quarter 2025 results, with revenues up 13% year-over-year to $159.4 million.
The robust revenue growth came from Astera Labs seeing strong demand for PCle scale-up and Ethernet scale-out connectivity solutions in ASIC platforms. It also posted quarterly earnings of $0.33, better than the $0.28 a share expected. However, Astera Labs, Inc.’s (NASDAQ:ALAB) issuing second-quarter sales guidance of between $170 million and $175 million has not gone well with the markets. That’s partly because it represents a sequential growth of 8.5%, much lower than the 13% sequential growth in Q1. Also, management projecting a gross margin of 74% down from 74.9% in Q1 has rattled investors.
2. Marvell Technology, Inc. (NASDAQ:MRVL)
Year to Date Loss as of May 13: -42.13%
S&P 500 Year to Date Performance as of May 13: 4.92%
Marvell Technology, Inc. (NASDAQ:MRVL) is a technology company that provides data infrastructure semiconductor solutions, spanning the data center core to the network edge. It develops and sells system-on-a-chip architectures, integrating analog, mixed-signal, and digital signal processing functionality. It also creates and supplies semiconductor solutions for the data infrastructure that powers AI applications.
Marvell Technology, Inc. (NASDAQ:MRVL) has been under pressure, having slid 42% year-to-date while the S&P 500 has gained 4.92% over the same period. The slide comes on Marvell Technology, postponing a planned investor day, citing a dynamic environment. The company posted a 27% year-over-year revenue increase in Q4 FY2025 to $1.82 billion. Earnings came in at 60 cents a share, beating consensus estimates by 1.7%.
However, Marvell Technology, Inc. (NASDAQ:MRVL) projects Q1 2026 sales of $1.875 billion plus or minus 5%, barely meeting estimates, thus raising serious concerns over AI demand and lofty valuation. It is unclear if the company will continue benefiting from hyperscalers’ increasing reliance on custom silicon for AI workloads. Since Chinese AI Company DeepSeek introduced a chatbot this year that it claims costs a fraction of what ChatGPT does, spending on AI has come under scrutiny.
1. SoundHound AI, Inc. (NASDAQ:SOUN)
Year to Date Loss as of May 13: -45.04%
S&P 500 Year to Date Performance as of May 13: 4.92%
SoundHound AI, Inc. (NASDAQ:SOUN) is a software application company that develops independent voice artificial intelligence (AI) solutions leveraged by businesses across automotive, TV, and the Internet of Things. A once popular stock amid the AI boom, it has come tumbling down. The stock has lost about 45% in market value year-to-date while the S&P 500 has gained 4.92%. Likewise, H.C. Wainwright has cut its stock price target to $18 from $26.
The price cut comes against the backdrop of SoundHound AI, Inc. (NASDAQ:SOUN) delivering mixed first-quarter 2025 results. Revenue in the quarter totaled $29.1 million, missing consensus estimates of $30.2 million. While Q1 2025 revenue represented a 150% year-over-year increase, the stock is still being pounded as most of the growth is related to the company’s acquisitions last year.
Over-reliance on acquisitions for growth continues to raise serious concerns about organic growth. The fact that the company does not report growth rates also sends jitters in the investment community. Additionally, SoundHound AI, Inc. (NASDAQ:SOUN) is one of the most popular stocks to avoid now, as it has yet to generate a profit. The company initially set out to turn a profit in 2023 but has struggled to do so. It also faces an uncertain future amid stiff competition from Amazon, Google, Apple, and Microsoft in the voice AI market.
While we acknowledge the potential of SoundHound AI, Inc. (NASDAQ:SOUN) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than SOUN but that trades at less than 5 times its earnings check out our report about this cheapest AI stock.
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