Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) artificial intelligence-powered search engine, Google is under scrutiny for potentially devastating media outlets. All on speculation its AI Overviews could significantly reduce visibility and traffic to other websites. This forms the catalyst of my list of AI stocks to sell.
A study estimates that websites might lose up to 64% of their organic traffic due to these AI Overviews. Additionally, Google faces accusations of scraping copyrighted news articles without credit or compensation.
Not only is this bad news for Alphabet, but it also sparks a broader discussion about the ethical implications and competitive practices in the AI industry. If this accusation goes to court and ends up in a ruling against Alphabet, I think it could unleash a floodgate of similar lawsuits against other AI companies. All of which could potentially throw a spanner in the works to its long-term commercialization.
With that being said, here are three AI stocks to sell.
C3.ai Faces Uncertainty Amid AI Industry Turbulence
Source: shutterstock.com/Below the Sky
C3.ai (NYSE:AI) provides enterprise AI software solutions to accelerate digital transformation. The company has a range of AI applications for different industries. C3.ai’s heavy reliance on a few major clients and its aggressive growth strategy makes it vulnerable. In addition, doubt in the legal arena around AI’s use case could further complicate matters.
On the bright side, AI stock reported a smaller-than-expected fiscal fourth-quarter loss while revenue topped estimates. Full-year fiscal 2025 guidance for C3.ai stock came in above expectations amid strength in its federal government business.
Before the earnings announcement, nearly 30% of C3.ai’s shares were shorted. The better-than-expected results led to a short squeeze, pushing the stock higher.
However, AI’s valuation has now become inflated, trading at around 12-times sales. This is a far cry from its pandemic highs, but it still may be overvalued, especially with anti-trust headwinds on the horizon.
SoundHound AI Struggles Amidst AI Competitive Landscape
Source: rafapress / Shutterstock.com
SoundHound AI (NASDAQ:SOUN), a company specializing in voice AI technology, provides voice-enabled solutions across various industries.
In its recent first-quarter report, SoundHound posted an adjusted loss of 7 cents per share on sales of $11.6 million, better than the expected 9 cents per share loss on $10.1 million in revenue. This performance marked a significant improvement from the previous year’s 8 cents per share loss on $6.7 million in sales.
However, there is still a dark cloud hanging over SOUN’s outlook from a short seller report that was published in March. The report claimed that SoundHound’s speech recognition technology is a “commodity service,” competing with similar products from companies like Alphabet. It also stated that SoundHound’s closest competitor, Cerence, invests significantly more in research and development and has been capturing SoundHound’s customers.
This AI uncertainty may be the last thing that SOUN needs right now, and it could be enough speculation for investors to give up investing in the company.
Meta Platforms: Navigating the AI Regulatory Storm
The Regulatory Storm Brewing for Meta Platforms
Data Harvesting and Regulatory Scrutiny
Meta Platforms (NASDAQ: META) operates in a realm akin to a digital farmer, meticulously harvesting vast swathes of data from user interactions. Posts, likes, comments, and messages are the ripe cornfields from which META reaps its crop.
Antitrust Battles Looming
Ah, the dance of regulators and tech titans. In the month of April, META found itself in the bulls-eye of the US Federal Trade Commission’s (FTC) antitrust crossbow. A lawsuit, resembling the sword of Damocles, hangs ominously over META, seeking to cleave the company by undoing its union with Instagram and WhatsApp.
But wait, there’s more! India, inspired by the European Union’s stringent antitrust regulations, is crafting its own competition bill. This bill, the “Digital Competition Bill,” takes aim at what it deems as “systemically significant digital” behemoths. The target? The swirling maelstrom of market power consolidation which tilts the scales of the digital economy.
The Storm Clouds Gather
Picture META as a ship steadily sailing through turbulent seas. Regulatory squalls buffet its hull, while the weight of user data threatens to capsize it. With the FTC’s legal tempest brewing and India’s bill looming over the horizon like a dark thunderhead, META finds itself navigating treacherous waters.
Will this be the siren song that heralds the downfall of META? Could these regulatory gales turn META into one of those AI stocks marked for the bargain bin?
