We recently published a list of the 10 Most Popular AI Stocks to Avoid Now. In this article, we are going to take a look at where Recursion Pharmaceuticals, Inc. (NASDAQ:RXRX) stands against other 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.
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).
A pharmacist in a hospital pharmacy stands next to a row of various drug containers.
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.
Overall, RXRX ranks 4th on our list of most popular AI stocks to avoid now. While we acknowledge the potential of RXRX 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 RXRX but that trades at less than 5 times its earnings check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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