In this article, we will explore the 10 Stocks That Will Collapse Because of AI.
The tug-of-war between sentiment and fundamentals is unlikely to recede, given the way global politics is shifting. 2026 could well be dominated by fearful retail investors struggling to find opportunities in the negativity. Artificial Intelligence continues to dominate retail investors’ interest, and it is exactly here that strong fundamentals and sentiment, both positive and negative, continue to wrestle for attention.
That said, markets continue to rise on strong fundamentals. Earnings growth estimates for the S&P 500 companies now stand at 17%, up from the prior 15%. This is exactly what JPMorgan Asset Management Global’s Meera Pandit pointed out while talking to CNBC a couple of weeks ago:
“If you look at the fundamentals within the economy, you see earnings estimates for the S&P 500 going from 15% coming into the year to now 17%…”
She also rightly points out that AI is now moving from the infrastructure layer to applications, which is what’s causing some of the negative sentiment. Many industries are trying to come to terms with the fact that modern AI models are leaving most of their workforce redundant. Some stocks, especially those in the software industry, have already taken a beating, while others are slowly coming to the same realization. This is why we decided to compile a list of stocks that will collapse because of AI.
Photo by NeONBRAND on Unsplash
Our Methodology
To come up with our list of 10 stocks that will collapse because of AI, we looked at industries that are most at risk from the emergence of artificial intelligence technologies. These are usually companies that rely on commoditized data, which AI can now offer for free, whose business model collapses because their customers can now do most of their work using AI, or firms that simply cannot afford to build the capital-intensive AI infrastructure and may thus be left behind. Once we had a list of such stocks, we selected the 10 companies that had lost the most value so far this year, mainly due to fears of AI disruption.
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 498.7% since May 2014, beating its benchmark by 303 percentage points (see more details here).
Note: All share price data in the article is as per market close on April 21.
10. Okta, Inc. (NASDAQ:OKTA)
On April 15, Raymond James analyst Adam Tindle upgraded Okta, Inc. (NASDAQ:OKTA) from Market Perform to Outperform and set a price target of $85. The firm’s price target implies a further 17% upside from the current levels. The firm noted that the stock has fallen sharply, from around $200 in fiscal 2023 to $72 today. This drop has been driven by a slowdown in net revenue retention, which decreased from over 120% to 106%, mainly due ot smaller renewals from customers that have overprovisioned during the COVID period. However, the analyst expects this pressure to ease over time, as the company’s average contract duration is just under three years.
Raymond James also said its analysis of key metrics points to a favorable “forward waterfall,” which could support a recovery in growth. Moreover, the firm sees AI as a potential long-term driver, with the ability to expand OKTA’s total addressable market as AI agents become more widely used in the workforce.
On the same day, KeyBanc analyst Eric Heath cut the firm’s price target on Okta, Inc. (NASDAQ:OKTA) from $100 to $95 while maintaining an Overweight rating. The firm said its first-quarter channel checks were mixed due to AI disruptions, geopolitical uncertainty, and higher costs. It also pointed to a weaker 2026 budget outlook and softer U.S. demand. The firm noted that nearly 20% of partners are shifting spending toward AI-native solutions, adding pressure on future software demand. The mixed views from the analysts highlight a divided outlook on Okta, Inc. (NASDAQ:OKTA).
Okta, Inc. (NASDAQ:OKTA) is an identity partner operating in the United States and around the world. The company offers Single Sign-on, Adaptive MFA, API Access Management, Access Gateway, Okta Device Access, and Universal Directory. It was founded in 2009 and is based in San Francisco, California.
9. Shopify Inc. (NASDAQ:SHOP)
On April 6, Wells Fargo cut its price target on Shopify Inc. (NASDAQ:SHOP) from $191 to $166 while reaffirming an Overweight rating on the shares. The firm’s downward-adjusted price target implies a further 26% upside from the current levels. This is the second time this year that the firm has lowered its price target on the stock. Earlier in February, it had already cut its price target on the shares from $198 to $191, reflecting growing caution.
According to the firm, the rise of agentic commerce may not develop as quickly or smoothly as expected, suggesting earlier assumptions on adoption were slightly optimistic. However, it remains confident that Agentic commerce will gain traction over time, with Shopify Inc. (NASDAQ:SHOP) positioned as a key beneficiary.
Although AI-related concerns remain, Shopify Inc. (NASDAQ:SHOP) is working to address them by turning AI into an opportunity. On March 24, the company launched a new feature that allows merchants to sell products directly through ChatGPT using its Agentic Storefront. This move is part of the company’s wider strategy to connect with AI platforms, expanding product discovery across tools like Microsoft Copilot and Google Gemini.
Commerce Product Lead at OpenAI, Neel Ajjarapu, commented:
This is a major step forward as we make ChatGPT the best personal shopping super assistant, while ensuring merchants remain in control of their customer experience.
Shopify Inc. (NASDAQ:SHOP) operates as an e-commerce technology company across the United States, Asia-Pacific, Canada, the Middle East, Europe, Africa, and Latin America. The company offers tools to run, scale, market, and start online businesses of different sizes.
