On August 25, Steve Levy, Wired editor-at-large, joined ‘Squawk Box’ on CNBC to discuss the state of AI valuations and whether we’re in an AI bubble or not. Levy described the current situation as an upward spiral that no one can stop, driven by the significant costs of running these businesses, which include computation, data, and talent, and the widespread belief that AI is the sector that will propel the entire tech world and beyond to new heights. Levy suggested that there will eventually be a reckoning because not all of these companies will be able to justify their valuations with future revenues. However, for now, the ride just keeps going on. Levy also agreed to the statement that a potential pop or correction in this AI-related bubble would be more painful for private market investors than for public market investors. He explained that while larger public companies are making significant capital expenditures on AI, they are still fully developed businesses. In contrast, the valuations of private companies are driven strictly by the desire of investors to get into the AI space and the hope that the company they back will be the next OpenAI. He concluded that private companies are much more vulnerable.
In reference to a McKinsey report that showed little to no return on investment/ROI for companies currently using AI, Levy explained that this is where the reckoning will come. He stated that it will take time for the genuine advances in AI to translate into actual revenue. He notes that while consumers are currently using AI features on platforms provided by the MAG7, they are not paying extra for it. The hope, he says, is that eventually, consumers will have an AI bill, similar to an electricity bill, and feel they are getting great value, which would justify the high valuations. He compares the current situation to the paradox of productivity from the early PC era, where it took years for the value of computers to become financially apparent. He predicts that it will take years, maybe even a better part of a decade, for AI to generate revenue from consumers.
That being said, we’re here with a list of the 11 worst AI stocks to invest in according to financial media.
Our Methodology
To compile our list, we sifted through rankings of AI stocks on different financial media websites to compile a list of AI stocks. We then selected the 11 stocks that were the least popular among elite hedge funds and that analysts were bearish on. The stocks are ranked in descending order of the number of hedge funds that have stakes in them, as of Q2 2025.
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).
11 Worst AI Stocks to Invest in According to Financial Media
11. SoFi Technologies Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 47
SoFi Technologies Inc. (NASDAQ:SOFI) is one of the worst AI stocks to invest in according to financial media. On September 4, SoFi announced a multi-year partnership with Buffalo Bills quarterback and 2024 AP NFL Most Valuable Player, Josh Allen. The collaboration aims to promote SoFi’s premium membership, SoFi Plus, by highlighting its features that help members achieve their financial goals.
The partnership will be featured in a marketing campaign starting at the beginning of the NFL season. The campaign will air on major streaming platforms and national cable networks, including NBC, ESPN, Amazon Prime Video, and YouTube. The goal is to show how SoFi’s services can empower users to “be the MVPs of their own finances.”
SoFi Plus is described as “America’s most rewarding financial membership” and offers over $1,000 in value. Its benefits include a high Annual Percentage Yield/APY of up to 3.80% on SoFi Bank savings and a 1% match on recurring deposits into SoFi Invest accounts. The campaign with Josh Allen, who is known for his hard work and determination, is meant to resonate with members who are also pursuing ambitious goals.
SoFi Technologies Inc. (NASDAQ:SOFI) provides various financial services in the US, Latin America, Canada, and Hong Kong. It has 3 segments: Lending, Technology Platform, and Financial Services.
10. Nebius Group (NASDAQ:NBIS)
Number of Hedge Fund Holders: 45
Nebius Group (NASDAQ:NBIS) is one of the worst AI stocks to invest in according to financial media. On September 8, Nebius Group announced a multi-year, multi-billion-dollar agreement with Microsoft Corp. (NASDAQ:MSFT). The deal is valued at $17.4 billion over five years, with an option for Microsoft to acquire additional services that could bring the total contract value to ~$19.4 billion.
Under the agreement, Nebius will provide Microsoft with dedicated AI infrastructure capacity from its new data center in Vineland, New Jersey, with deliveries starting later in 2025. Nebius plans to finance the capital expenditures for this contract using a combination of cash flow from the deal itself and issuing debt secured by the contract. The company also stated that this is its first long-term contract with a major tech company and that more are expected in the future.
Nebius views this deal as a catalyst for its business. It is expected to accelerate the growth of Nebius’s AI cloud business in 2026 and beyond. The company also has other business ventures, including Avride (autonomous driving technology) and TripleTen (an edtech company), and holds equity stakes in businesses like ClickHouse and Toloka.
Nebius Group (NASDAQ:NBIS) is a technology company that builds full-stack infrastructure to service the global AI industry in the Netherlands, Europe, North America, and Israel.
9. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 42
UiPath Inc. (NYSE:PATH) is one of the worst AI stocks to invest in according to financial media. On August 25, UiPath announced the appointment of Michael Atalla as its new Chief Marketing Officer. In this role, Atalla will be responsible for leading all aspects of the company’s global marketing strategy, including brand, performance, demand generation, and communications.
Atalla’s primary focus will be to enhance UiPath’s position in agentic AI and orchestration. He brings over 20 years of marketing leadership experience to UiPath. He most recently spent 4 years as the senior vice president and head of Worldwide Marketing at F5, which is an application security and delivery company. Before F5, he founded and led The MJJM Group, which is a company that helped early-stage founders secure funding and achieve growth.
Additionally, Atalla worked at Microsoft for nearly 15 years in various marketing leadership positions, where he was instrumental in the evolution of Microsoft Office into Office 365. UiPath’s Founder and CEO, Daniel Dines, stated that Atalla’s deep expertise and technical credibility make him the ideal leader to help the company’s customers achieve better outcomes and solidify its leadership in the agentic AI category.
UiPath Inc. (NYSE:PATH) provides an end-to-end automation platform that offers a range of robotic process automation/RPA solutions primarily in the US, Romania, the UK, the Netherlands, and internationally.
8. C3.ai Inc. (NYSE:AI)
Number of Hedge Fund Holders: 30
C3.ai Inc. (NYSE:AI) is one of the worst AI stocks to invest in according to financial media. On September 1, C3.ai announced the appointment of Stephen Ehikian as its new Chief Executive Officer. Ehikian, who is recognized as an innovator in the enterprise software industry, will assume the role while former CEO, Thomas M. Siebel, will continue to serve as Executive Chairman.
Ehikian brings a wealth of experience in building and scaling AI companies. He previously founded and successfully led RelateIQ and Airkit.ai, both of which were acquired by Salesforce. RelateIQ’s technology became the foundation for Salesforce Einstein, while Airkit.ai is now a core component of Salesforce Agentforce.
In addition to his private sector experience, Ehikian served as President Trump’s appointee for Acting Administrator of the US General Services Administration/GSA. During his time in this role, he was responsible for strengthening the GSA’s technology infrastructure, implementing the President’s AI Action Plan, and modernizing the federal procurement process.
C3.ai Inc. (NYSE:AI) operates as an enterprise AI application software company in North America, Europe, the Middle East, Africa, the Asia Pacific, and internationally.
7. IonQ Inc. (NYSE:IONQ)
Number of Hedge Fund Holders: 30
IonQ Inc. (NYSE:IONQ) is one of the worst AI stocks to invest in according to financial media. On September 4, IonQ announced a technological breakthrough in collaboration with Element Six, which is a De Beers Group company that specializes in synthetic diamond materials. They have successfully developed high-quality, quantum-grade diamond films that are compatible with standard semiconductor manufacturing techniques.
The innovation is crucial because synthetic diamonds are essential for building quantum memory systems and the photonic interconnects that link individual quantum computers, both of which are key to building scalable quantum networks and clustered compute. The advancement overcomes a major barrier in the production of quantum hardware.
Previously, creating micro- and nano-structured devices from diamonds required bespoke, R&D-scale techniques that were not suitable for reliable, at-scale production. IonQ’s new method allows for the bonding of quantum-grade diamond films onto common substrates like silicon and silicon nitride. This provides two major benefits: foundry compatibility for the mass production of diamond-based quantum devices using the same tools as the $1 trillion semiconductor industry, and heterogeneous integration for the creation of hybrid on-chip systems that combine quantum materials with classical ones.
IonQ Inc. (NYSE:IONQ) develops quantum computers and networks in the US. It sells access to quantum computers of various qubit capacities.
6. Tempus AI Inc. (NASDAQ:TEM)
Number of Hedge Fund Holders: 27
Tempus AI Inc. (NASDAQ:TEM) is one of the worst AI stocks to invest in according to financial media. On September 4, Northwestern Medicine and Tempus AI announced an expanded collaboration, making Northwestern Medicine the first health system to integrate David, Tempus’ generative AI-enabled clinical assistant, into its electronic health record/EHR platform.
The partnership will use data and AI to advance patient care to mark a new chapter in a collaboration that began a decade ago. The integration of David will empower Northwestern Medicine’s clinical teams with real-time and AI-enabled insights directly within the EHR.
By adopting core parts of Tempus’ AI infrastructure, Northwestern Medicine will be able to underpin its AI applications with a multimodal patient record. This will allow for the co-development, deployment, and real-time monitoring of new AI algorithms and agents within the David experience. It will enable clinical teams to perform several functions like building custom AI agents, querying patient data using NL, and automating pre-appointment preparation with AI-generated summaries and histories.
Tempus AI Inc. (NASDAQ:TEM) is a healthcare technology company that provides next-gen sequencing diagnostics, polymerase chain reaction profiling, molecular genotyping, and other anatomic and molecular pathology testing.
5. SoundHound AI Inc. (NASDAQ:SOUN)
Number of Hedge Fund Holders: 19
SoundHound AI Inc. (NASDAQ:SOUN) is one of the worst AI stocks to invest in according to financial media. On August 8, SoundHound AI announced the launch of Vision AI. The new technology is an advanced visual understanding engine that is natively integrated with SoundHound’s voice-first platform.
Vision AI combines voice and visual capabilities into a single intelligent platform. It allows the technology to listen, see, and interpret its surroundings to help businesses create empathetic and context-aware interactions.
The technology works by uniting camera-enabled visual perception with SoundHound’s existing technologies, such as Polaris automatic speech recognition, natural language understanding, agent orchestration, and text-to-speech. By fusing visual cues with live audio and language understanding in real-time, the system enables new applications like hands-free equipment troubleshooting, AI-powered retail inventory intelligence, in-car discovery agents, and personalized drive-thru experiences.
SoundHound AI Inc. (NASDAQ:SOUN) develops independent voice AI solutions that enable businesses across automotive, TV, and IoT, and customer service industries to deliver high-quality conversational experiences to their customers.
4. Cerence Inc. (NASDAQ:CRNC)
Number of Hedge Fund Holders: 16
Cerence Inc. (NASDAQ:CRNC) is one of the worst AI stocks to invest in according to financial media. On September 8, during IAA Mobility 2025 in Munich, Germany, Cerence Inc., also known as Cerence AI, announced that it is developing a new mobile work AI agent in collaboration with Microsoft. The AI agent, which will run on Cerence xUI, is designed to enable hands-free, voice-first mobile work by integrating with Microsoft 365 Copilot, Teams, Outlook, and OneNote.
The goal is to allow people to work more safely and securely while in their cars. The new AI agent is being developed to address the rise of mobile work and the associated risks of distracted driving. It aims to minimize driver distraction through context-aware functionality that adjusts depending on whether the user is driving, parked, or riding in an autonomous vehicle.
The agent can seamlessly and proactively orchestrate between Microsoft 365 Copilot and other car domains, such as navigation, to provide a cohesive experience. For example, it can offer proactive navigation suggestions based on a user’s work calendar. The agent will also allow users to draft messages, build meeting agendas, and turn notes into documents using only their voice. It will be able to provide daily debriefs and manage calendars, and will also learn user preferences over time.
Cerence Inc. (NASDAQ:CRNC) provides AI-powered virtual assistants for the mobility/transportation market. It offers edge software components, cloud-connected components, virtual assistant coexistence, and professional services. It also provides conversational AI-based solutions.
3. Lantronix Inc. (NASDAQ:LTRX)
Number of Hedge Fund Holders: 9
Lantronix Inc. (NASDAQ:LTRX) is one of the worst AI stocks to invest in according to financial media. On August 28, Lake Street raised the firm’s price target on Lantronix to $5 from $4, while keeping a Buy rating on the shares after the company reported revenue and EPS in line with estimates for FQ4 2025, through both steady growth as well as strategic wins, despite some financial pressures.
For Q4, Lantronix reported revenue of $28.8 million, which was slightly higher than Q3’s $28.5 million. However, the full-year revenue for FY2025 was $123 million, which showed a 41.23% year-over-year decline. Still, the non-GAAP EPS for Q4 was $0.01, which was within the company’s guidance range. Despite a non-GAAP net income of just under $40oK, the company experienced a GAAP net loss of $2.6 million, or $0.07 per share, compared to a GAAP net income of $400K in the same quarter a year ago.
Lantronix is expected to benefit from a multi-year growth cycle in the unmanned aerial systems market, with over $13 billion earmarked for unmanned platforms in 2026 defense funding. A key win was a contract with Red Cat’s Steel Drones to power Black Widow drones for the US Army’s short-range reconnaissance program.
Lantronix Inc. (NASDAQ:LTRX) develops, markets, and sells industrial and enterprise IoT products and services in the Americas, Europe, the Middle East, Africa, and the Asia Pacific Japan.
2. Vuzix Corporation (NASDAQ:VUZI)
Number of Hedge Fund Holders: 9
Vuzix Corporation (NASDAQ:VUZI) is one of the worst AI stocks to invest in according to financial media. On September 8, Vuzix Corporation announced the appointment of Dr. Chris Parkinson as President, Enterprise Solutions. Dr. Parkinson is a co-founder of RealWear, a key competitor of Vuzix, and is known for his work as both Chief Technology Officer and later CEO of the company.
His appointment is expected to accelerate Vuzix’s global growth and its presence in the enterprise market. Dr. Parkinson brings nearly three decades of experience in AR, AI, SaaS, and speech-driven interfaces. His past roles include guiding RealWear through fundraising, international expansion, and strategic acquisitions, as well as contributing to wearable and distributed computing platforms at Kopin Corporation, Alien Technology, and Pacific Northwest National Laboratory.
At RealWear, he oversaw the sale of nearly 100,000 enterprise smart glasses to over 5,000 customers and led the acquisition of Almer Technologies and RealWear’s recapitalization in November 2024. In his new role, Dr. Parkinson will oversee Vuzix’s enterprise product portfolio and go-to-market strategy, including sales, strategic partnerships, customer adoption, and global channel expansion.
Vuzix Corporation (NASDAQ:VUZI) designs, manufactures, and markets AI-powered smart glasses, waveguides, and AR technologies in North America, Europe, the Asia Pacific, and internationally.
1. Veritone Inc. (NASDAQ:VERI)
Number of Hedge Fund Holders: 4
Veritone Inc. (NASDAQ:VERI) is one of the worst AI stocks to invest in according to financial media. On August 21, Veritone announced a partnership with Newsmax, which is a prominent American news network. The collaboration will equip Newsmax with Veritone’s Digital Media Hub/DMH technology and its licensing expertise.
The goal is to modernize Newsmax’s production workflows and enable the network to monetize its extensive 20-year content archive. Veritone’s DMH application, which runs on its aiWARE platform, will make Newsmax’s vast content library fully searchable and usable. This is particularly important as Newsmax broadcasts 24/7 and has an ever-growing content collection.
The AI-powered solution will help the newsroom respond to the demands of viewers and business partners by making its material globally accessible.
Veritone Inc. (NASDAQ:VERI) provides AI computing solutions and services in the US, the UK, France, Australia, Israel, and India. It develops and operates aiWARE platform, which is an AI operating system that uses ML algorithms or AI models designed to mimic human cognitive functions.
While we acknowledge the potential of VERI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than VERI and that has 100x upside potential, check out our report about this cheapest AI stock.
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