3 AI Stocks That Google Will Stomp Out
Artificial intelligence has become one of the hottest stories of the decade, creating big opportunities for AI stocks. In fact, ever since the release of the AI chatbot ChatGPT, interest in the AI story has only gotten hotter, with top tech companies racing for a bigger piece of the AI pie. What makes the story even more attractive is Statista’s estimates the AI market could grow nearly 20-fold to $2 trillion by 2030. In short, it’s a transformational opportunity that could add billions to the bottom line. Better, its impact can already be seen just about everywhere: supply chains, law enforcement, medical care, finance, information technology, data security, education, transportation, governments, etc. But that’s just the start.
According to Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) CEO Sundar Pichai, “society will need to prepare for rapid advancements in artificial intelligence” that will “affect every product across every company” in the near future, as reported by the New York Times. Some of the top AI stocks to avoid that are already being adversely impacted include:
AI Stocks to Avoid: Chegg (CHGG)
Look at Chegg (NYSE:CHGG), for example. Just days ago, the student-first interconnected learning platform was cut in half. All after CEO Dan Rosensweig said ChatGPT is “having an impact on our new customer growth rate.”
“In the first part of the year, we saw no noticeable impact from ChatGPT on our new account growth and we were meeting expectations on new sign-ups,” Rosensweig added, as quoted by CNBC. “However, since March we saw a significant spike in student interest in ChatGPT. We now believe it’s having an impact on our new customer growth rate.”
Unfortunately, the situation could get far worse for Chegg. For one, it just acknowledged its customers are trying ChatGPT, which could weigh heavily on future revenue. Two, it just said revenue would come in between $175 million and $178 million, which is far below expectations for $193.6 million. Three, with declining financials, there are concerns about its long-term ability to survive at all against ChatGPT and other AI industry 800 lb. gorillas, like Google.
Uber Technologies (UBER)
Or look at Uber (NYSE:UBER), which uses AI to power many of its technologies and services. It’s another one of the AI stocks to avoid, being impacted by interest from Google.
Earlier this year, the company inked a seven-year cloud deal with Google to move to the cloud. All as it looks to cut costs, refocus engineering efforts, and reimagine the Uber customer experience. Along the way, the two will also transform mobility, delivery, and advertising. They may expand the collaboration even more to deploy cloud infrastructure, Artificial Intelligence, data analytics, and edge networking solutions.
Taking AI a step further, Uber just filed for a patent application on a system that would leverage AI and machine learning to match potential riders and drivers based on predictions of customer actions. In fact, according to the patent application, Uber wants to patent the ability to predict when users need a ride based on profile data. Then, Uber could match a driver and notify the customer where they need to be, as noted by Business Insider.
Whatever you may think of the idea, it could make Uber a lot of money.
With the artificial intelligence excitement in 2023, however, BigBear.AI (NYSE:BBAI) exploded in popularity this year. However, with Google’s dominance, BBAI could eventually get stomped out, making it one of the top AI stocks to avoid. Part of the problem here is profitability. While the company does have a steady stream of revenue, it’s still losing a good deal of money.
Also, as InvestorPlace contributor Ian Bezek recently noted, “Predictive analytics just isn’t a fast-moving category that can support the sort of high valuations traders are assigning to AI stocks today. Throw in a shaky balance sheet and BigBear.ai is not a worthy AI industry selection.”
On the date of publication, Ian Cooper did not have (either directly or indirectly) any positions in the securities mentioned. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.