On February 3, Bradley Tusk, Tusk Ventures founder and CEO, joined ‘The Exchange’ on CNBC to discuss a critical reality check facing the AI industry and the hyperscalers driving it. He argued that the initial excitement surrounding AI infrastructure is beginning to collide with economic and political obstacles. Tusk examined recent corporate activity, such as Oracle’s CapEx announcements, and noted that while building cloud capacity to meet customer demand is a sound business move, the entire model currently relies on the assumption that GenAI requires incredibly expensive and energy-intensive chips. He highlighted that this investment cycle depends on massive data centers that consume unprecedented amounts of energy, a trajectory that he believes is based on faulty assumptions regarding both economic necessity and the ability to execute.
On the economic front, Tusk contrasted the massive debt and infrastructure spending with the actual revenue being generated by leading AI firms. He noted that OpenAI and Claude are projected to earn a combined $30 billion to $35 billion this year, which he described as minuscule compared to the capital being deployed. While he acknowledged that venture capitalists typically invest early in economic transformations when numbers are small, he expressed skepticism about the quality of the products currently being sold to justify such heavy borrowing.
That being said, we’re here with a list of the 12 worst AI stocks to invest in according to Reddit.
Our Methodology
We sifted through Reddit threads to compile a list of AI stocks that users have shared bearish opinions on over the past 3 months. The stocks are ranked in descending order of the number of hedge funds that have stakes in them, as of Q3 2025. The hedge fund data was sourced from Insider Monkey’s database, which tracks the moves of over 1000 elite money managers.
Note: All data was sourced on February 6.
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 427.7% since May 2014, beating its benchmark by 264 percentage points (see more details here).
12 Worst AI Stocks to Invest In According to Reddit
12. Micron Technology Inc. (NASDAQ:MU)
Number of Hedge Fund Holders: 105
Micron Technology Inc. (NASDAQ:MU) is one of the worst AI stocks to invest in according to Reddit. On February 6, UBS analyst Timothy Arcuri raised the firm’s price target on Micron to $450 from $400 and kept a Buy rating on the shares.
On February 1, Phillip Securities analyst Yik Ban Chong initiated coverage of Micron with a Buy rating and a $500 price target, citing strong demand for the company’s high bandwidth memory products. The firm anticipates that Micron will be able to gain market share from SK Hynix as its HBM4 production scales following Q2.
Mizuho also raised its price target on the stock to $480 from $390 on January 27, while maintaining an Outperform rating. The firm expects improved revenues and margins for memory companies in 2026, driven by a projected 330% increase in NAND prices compared to the previous year and a further 50% rise in 2027. This valuation adjustment stems from anticipated price growth occurring while production remains largely flat.
Micron Technology Inc. (NASDAQ:MU) designs, develops, manufactures, and sells memory and storage products internationally. It operates through the Cloud Memory Business Unit, Core Data Center Business Unit, Mobile & Client Business Unit, and Automotive & Embedded Business Unit segments.
11. Fiserv Inc. (NASDAQ:FISV)
Number of Hedge Fund Holders: 83
Fiserv Inc. (NASDAQ:FISV) is one of the worst AI stocks to invest in according to Reddit. On February 2, Northcoast analyst Kartik Mehta downgraded Fiserv from Buy to Neutral.
In other news, on January 28, ServiceNow and Fiserv announced an expanded commitment to accelerate AI-driven transformation within financial services. Fiserv will scale its use of ServiceNow Now Assist for Financial Services Operations and IT Service Management to enhance operations across its IT and customer service environments. The partnership aims to make AI an operational advantage by embedding it directly into workflows, allowing teams to manage complexity with greater resilience, confidence, and proactive scale.
On January 16, Stephens lowered its price target on Fiserv Inc. (NASDAQ:FISV) to $75 from $80 with an Equal Weight rating as part of its 2026 outlook for the Financial Technology group. Following a difficult 2025, the firm informed investors that it expects sentiment toward the Payment and IT Services sectors to improve in the year ahead.
Fiserv Inc. (NASDAQ:FISV) is a fintech company that offers account processing, digital banking, payment services, e-commerce solutions, merchant services, and cloud-based point-of-sale systems.
10. Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 81
Palantir Technologies Inc. (NASDAQ:PLTR) is one of the worst AI stocks to invest in according to Reddit. On February 5, Cognizant Technology Solutions (NASDAQ:CTSH) announced a partnership with Palantir Technologies to accelerate AI-driven modernization across healthcare and enterprise operations. The collaboration will integrate Palantir Foundry and the Palantir AIP with Cognizant’s TriZetto healthcare business and business process operations to deliver secure, scalable AI transformations for clients across industries.
The partnership uses Cognizant’s industry expertise and global engineering scale alongside Palantir’s advanced data analytics and ontology-driven AI capabilities. By embedding AI into core workflows, the companies intend to optimize TriZetto’s healthcare platforms and BPaaS operations, particularly in highly regulated and labor-intensive environments.
This focus is designed to enhance innovation, accelerate product development, and ensure a governed foundation for future AI capabilities while maintaining strict compliance and auditability standards. Beyond healthcare, Cognizant and Palantir Technologies Inc. (NASDAQ:PLTR) plan to pursue broader enterprise AI transformation opportunities across multiple industries jointly to reinforce Cognizant’s strategy to build a composable ecosystem of AI platforms for both internal and client-facing innovation.
Palantir Technologies Inc. (NASDAQ:PLTR) builds and deploys software platforms for the intelligence community to assist in counterterrorism investigations and operations in the US, the UK, and internationally.
9. Nebius Group (NASDAQ:NBIS)
Number of Hedge Fund Holders: 65
Nebius Group (NASDAQ:NBIS) is one of the worst AI stocks to invest in according to Reddit. On February 2, Freedom Capital initiated coverage of Nebius with a Buy rating and a $108 price target. The firm characterized the company as a vertically integrated cloud platform designed specifically for artificial intelligence workloads.
The firm noted that Nebius provides cost-efficient, high-performance computing for AI-native companies and suggested that its ongoing investments in infrastructure and product development will drive rapid revenue growth within a large, expanding addressable market.
Earlier on January 15, Morgan Stanley initiated coverage of Nebius Group (NASDAQ:NBIS) with an Equal Weight rating and a $126 price target and noted that the company’s vertically integrated AI cloud received strong external validation and key reference customers. However, the firm informed investors that near-term targets appear aggressive due to the substantial net new bookings required, leading the analyst to conclude that the stock is fully valued at current levels.
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.
8. Iren Limited (NASDAQ:IREN)
Number of Hedge Fund Holders: 52
Iren Limited (NASDAQ:IREN) is one of the worst AI stocks to invest in according to Reddit. On February 6, Macquarie analyst Paul Golding lowered the firm’s price target for Iren from $95 to $70 while keeping an Outperform rating.
On the same day, B. Riley raised its price target for Iren to $83 from $74 with a Buy rating, despite the company’s Q2 adjusted EBITDA of $75.3 million falling short of internal and consensus estimates. The firm highlighted significant milestones, including $3.6 billion in GPU financing, 1.6 GW of new power capacity in Oklahoma, and progress at its Texas sites.
Additionally, Cantor Fitzgerald lowered its price target on Iren to $82 from $136 while keeping an Overweight rating. The adjustment follows a sequential decline in revenue and adjusted EBITDA, which the firm attributed to lower Bitcoin prices and a reduced operating hash rate as the company shifts capacity toward AI compute. Despite these results, the firm noted that the transition was expected and views the subsequent after-hours share price decline as a buying opportunity for investors.
Iren Limited (NASDAQ:IREN) operates in the vertically integrated data center business in Australia and Canada. It owns and operates computing hardware, as well as electrical infrastructure and data centers.
7. Snap Inc. (NYSE:SNAP)
Number of Hedge Fund Holders: 50
Snap Inc. (NYSE:SNAP) is one of the worst AI stocks to invest in according to Reddit. On February 6, following the company’s Q4 2025 earnings report, Barclays lowered its price target for Snap from $16 to $15 and kept an Overweight rating. The firm described the company’s outlook as being in flux with some call options, and noted that the core advertising business is currently lagging. Additionally, the firm highlighted that Snap faces regulatory overhangs across multiple regions.
A day before that, Stifel lowered its price target for Snap to $5.50 from $7 while maintaining a Sell rating. The firm explained that Snap’s Q1 2026 revenue guidance missed expectations, largely because management did not include potential contributions from the recently announced Perplexity deal, which has yet to fully materialize.
Evercore ISI also lowered the firm’s price target for Snap, on the same day, to $9 from $13 with an In Line rating. The firm noted that the company’s Q4 results presented mixed signals, highlighted by challenges in user growth and lingering uncertainties regarding the Perplexity deal. These factors have created significant valuation concerns and continue to cast a shadow over the stock’s performance outlook.
Snap Inc. (NYSE:SNAP) operates as a technology company in North America, Europe, and internationally. The company offers Snapchat, which is a visual messaging application with various tabs, such as camera, visual messaging, snap map, stories, and spotlight.
6. UiPath Inc. (NYSE:PATH)
Number of Hedge Fund Holders: 48
UiPath Inc. (NYSE:PATH) is one of the worst AI stocks to invest in according to Reddit. On February 6, UiPath announced the acquisition of WorkFusion, which is a pioneer in AI agents specialized in financial crime compliance. This move strengthens UiPath’s portfolio of agentic AI solutions for the banking and financial services sectors, specifically targeting anti-money-laundering and know-your-customer operations. The transaction closed in UiPath’s FQ1 2027, though the financial terms were not disclosed.
By integrating WorkFusion’s pre-built AI agents with its own automation and orchestration platform, UiPath Inc. (NYSE:PATH) enables financial institutions to automate labor-intensive tasks such as customer screening and investigations. The combined solution is designed to analyze complex patterns and prioritize cases for human expertise while maintaining necessary security and regulatory controls.
This initiative focuses on reducing operational costs and improving compliance effectiveness through the modernization of mission-critical workflows. Leadership from both companies emphasized that the acquisition provides the scale necessary to accelerate the delivery of purpose-built AI agents in highly regulated environments.
UiPath Inc. (NYSE:PATH) provides an end-to-end automation platform that offers a range of RPA (robotic process automation) solutions primarily in the US, Romania, the UK, the Netherlands, and internationally.
5. SoFi Technologies Inc. (NASDAQ:SOFI)
Number of Hedge Fund Holders: 44
SoFi Technologies Inc. (NASDAQ:SOFI) is one of the worst AI stocks to invest in according to Reddit. On February 2, UBS lowered its price target for SoFi Technologies from $27.50 to $24.50 with a Neutral rating. The firm noted that SoFi’s adjusted net revenue and EBITDA modestly exceeded expectations, fueled by strong performance in Financial Services and a significant beat in Technology Platform profitability. Additionally, the firm highlighted that capital-light, fee-based revenue reached a record high during the period.
On the same day, TD Cowen lowered the price target for SoFi Technologies to $24 from $25 while maintaining a Hold rating. The firm attributed SoFi’s Q4 2025 earnings beat to increased loan platform originations and a higher take rate, noting that the company’s 2026 guidance outperformed consensus expectations.
Needham also cut its price target for SoFi Technologies Inc. (NASDAQ:SOFI) to $33 from $36 with a Buy rating on the shares. The firm noted that its Q4 results exceeded Street estimates for both revenue and earnings, supported by a core on-balance-sheet lending segment that continues to perform well.
SoFi Technologies Inc. (NASDAQ:SOFI) provides various financial services in the US, Latin America, Canada, and Hong Kong. It operates through three segments: Lending, Technology Platform, and Financial Services.
4. Applied Digital Corporation (NASDAQ:APLD)
Number of Hedge Fund Holders: 38
Applied Digital Corporation (NASDAQ:APLD) is one of the worst AI stocks to invest in according to Reddit. On January 28, Northland analyst Mike Grondahl raised the firm’s price target for Applied Digital to $56 from $40 with an Outperform rating. The upgrade follows management’s commentary during the FQ2 earnings call, which revealed that the company is in advanced negotiations with a new investment-grade hyperscaler. These discussions involve three potential sites and a total capacity of 900 MW, signaling significant expansion opportunities for the firm’s data center infrastructure.
On January 20, Texas Capital analyst Derrick Whitfield initiated coverage of Applied Digital Corporation (NASDAQ:APLD) with a Buy rating and a $42 price target. Whitfield noted that the company’s expertise in hyperscale development, combined with its proprietary waterless cooling and rapid deployment capabilities, positions it well within the industry.
Following recent announcements from the industry and the Trump Administration regarding AI infrastructure and energy, Whitfield believes Applied Digital is strategically situated to secure leases for a significant portion of its land and power portfolio, which reaches up to 4.3 gigawatts.
Applied Digital Corporation (NASDAQ:APLD) designs, develops, and operates digital infrastructure solutions to HPC and AI industries in North America. It operates through: Data Center Hosting Business, and HPC Hosting Business.
3. Arm Holdings (NASDAQ:ARM)
Number of Hedge Fund Holders: 37
Arm Holdings (NASDAQ:ARM) is one of the worst AI stocks to invest in according to Reddit. On February 5, New Street analyst Pierre Ferragu upgraded Arm Holdings to Buy from Neutral.
However, on the same day, Jefferies lowered its price target for Arm Holdings to $170 from $205 with a Buy rating. Despite strong results and guidance, the firm noted that Arm’s shares faced pressure due to investor concerns that rising memory prices could reduce smartphone sales volumes. However, the firm clarified that while price hikes primarily affect the low-to-mid-end market, Arm’s growth is driven by high-end smartphone chips that utilize v9 and CSS architectures.
KeyBanc also lowered its price target for Arm Holdings (NASDAQ:ARM) to $170 from $200 and kept an Overweight rating, despite the company delivering strong Q3 2025 results and raising its Q4 guidance. The firm noted that Arm exceeded expectations in both royalties and licensing, but management acknowledged that rising memory prices and supply shortages are expected to dampen handset royalty growth.
Arm Holdings (NASDAQ:ARM) architects, develops, and licenses central processing unit products and related technologies for semiconductor companies and original equipment manufacturers.
2. Ondas Inc. (NASDAQ:ONDS)
Number of Hedge Fund Holders: 20
Ondas Inc. (NASDAQ:ONDS) is one of the worst AI stocks to invest in according to Reddit. On January 20, Northland analyst Michael Latimore raised the firm’s price target for Ondas from $10 to $16 with an Outperform rating. The increase followed an analyst event where management provided a strong fiscal year 2026 revenue guidance of $170 million to $180 million. The firm noted that this guidance likely excludes future acquisitions and suggested the company is evolving into a major force in autonomous aerial and ground systems.
Lake Street also raised its price target for Ondas Inc. (NASDAQ:ONDS) to $19 from $10 and kept a Buy rating, following the company’s virtual investor day. The firm cited significant upside to Ondas’ Q4 2025 results, 2026 outlook, and 2030 financial targets, which included a revised revenue goal of $1.5 billion. Based on confidence in the company’s long-term opportunities, the firm also raised revenue estimates for 2026 and 2027.
Additionally, Oppenheimer analyst Timothy Horan raised the firm’s price target for Ondas to $16 from $12, with an Outperform rating. Following the company’s investor day, the firm characterized the company’s updated 2026 and 2030 financial guidance as conservative. Horan highlighted the accelerating momentum and increased visibility as Ondas continues to develop its system of systems platform, signaling a strong outlook for the company’s integrated autonomous solutions.
Ondas Inc. (NASDAQ:ONDS) provides private wireless, drone, and automated data solutions in the US and internationally. It has two segments: Ondas Networks and Ondas Autonomous Systems.
1. Cerence Inc. (NASDAQ:CRNC)
Number of Hedge Fund Holders: 15
Cerence Inc. (NASDAQ:CRNC) is one of the worst AI stocks to invest in according to Reddit. On February 5, TD Cowen lowered its price target for Cerence to $12 from $13 and kept a Hold rating. The firm characterized the recent financial results as noisy and noted that while there was a significant EBITDA beat in the FQ1 2026 and management confirmed the 2026 guidance, the figures imply an EBITDA shortfall for the remainder of the year compared to consensus estimates.
A day before, Cerence announced that FQ1 2026 was highlighted by a 126% year-over-year revenue surge to $115.1 million, largely driven by a $49.5 million patent settlement with Samsung. This windfall contributed to a record quarterly free cash flow of $35.6 million and a significant gross margin expansion to 86%. Cerence Inc. (NASDAQ:CRNC) also reaffirmed its full-year guidance, projecting revenue between $300 and $320 million and targeting increased penetration through its next-generation XUI platform.
The company already secured five major XUI programs with both Western and Chinese automakers, all commanding higher price-per-unit values than previous averages. Additionally, Cerence is expanding its AI portfolio with new Microsoft-integrated work agents and tools for dealership automation. While ongoing IP litigation with Apple and Sony remains a multi-year strategy, the Samsung resolution has established a positive precedent for the company’s monetization efforts across the automotive and technology sectors.
Cerence Inc. (NASDAQ:CRNC) provides AI-powered assistants for the mobility/transportation market in the US, the rest of the Americas, Germany, the rest of Europe, the Middle East, Africa, Japan, and the rest of the Asia-Pacific.
While we acknowledge the potential of CRNC 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 CRNC and that has 100x upside potential, check out our report about this cheapest AI stock.
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