Are you wondering when to start trimming winning investments? If you have significant stakes in AI stocks, you’re likely pondering this now, as well as when to skim AI stocks for profit.
Every company linked to artificial intelligence seems to enjoy a market-approved valuation boost. AI mentions in earnings calls have surged, matching the growing interest in business integration of these job-eliminating technologies.
The AI stocks listed below have all benefitted from this recent boom. Despite their solid long-term potential, they now seem expensive from a short-term viewpoint. Therefore, skimming off some profits may be a smart move. After all, cashing in gains never hurt anyone. This wisdom seems especially fitting for the latest rally. If you’ve been on this profitable journey, you might want to consider it.
C3.ai (AI)
Despite exceeding expectations for its fiscal fourth quarter, C3.ai’s (NYSE:AI) experienced an 18% decline in its shares. Additionally, the AI technology company projected revenue for the fiscal first quarter falls short of Wall Street’s optimistic estimates. Nonetheless, the stock has surged over 250% this year, reflecting the market’s strong interest in AI. This strong surge also means it’s one of those AI stocks for profit taking.
C3.ai, a leading artificial intelligence software developer, exceeded expectations in its fourth-quarter performance but provided a forecast that fell short of Wall Street’s expectations. The company reported first quarter revenues of $72.4 million, surpassing the anticipated $71 million.
C3.ai is widening its C3 Generative AI product’s reach. It first landed on Google’s Cloud Marketplace and now, it’s also on Amazon’s AWS marketplace. This software aids various industries such as transport, healthcare, and manufacturing.
Being an AI firm, C3.ai’s expansion matches its market stand. Similar actions by bigger companies have sparked notable market responses. The company’s next earnings report must impress, matching market hopes and showing positive responses to its Amazon and Alphabet’s cloud integrations. If it falls short, a sell-off might occur.
Unlike ChatGPT-like generative AI platforms, C3.ai’s AI platform targets enterprises. It grants users a natural language interface to tap into corporate data, safeguarding data security by blocking unintentional external sharing. This gives me hope that it could rise as a leading AI stock in the future.
Upstart (UPST)
Upstart (NASDAQ:UPST) is an AI-powered lending platform that experienced significant growth during the 2021 boom. However, as the Federal Reserve raises interest rates and banks face uncertainties, many banks are hesitant to use the platform for lending. This is primarily due to banks tightening their lending policies and prioritizing risk reduction.
Investors may be encouraged by Upstart’s second-quarter guidance, which shows improved revenue and reduced losses compared to the previous quarter. The company aims to generate around $135 million in revenue with a net loss of approximately $40 million. Upstart has been successful in cutting costs, particularly in sales and marketing, resulting in a 15% year-over-year decrease in total operating expenses. This means it’s one of those AI stocks for profit taking.
Upstart’s credit scoring model surpasses traditional models like FICO in evaluating borrower risk, making it an attractive option for lenders aiming to minimize risk. Despite any setbacks, Upstart’s performance is influenced more by the banking sector’s challenges rather than its own capabilities.
Nvidia (NVDA)
Despite Nvidia’s (NASDAQ:NVDA) quarterly results surpassing expectations, they were still lackluster. While revenue experienced a 19% year-over-year growth, adjusted earnings per share declined by 20%. The decline can be attributed to the struggling gaming segment, impacted by the economic downturn. With inflation and rising interest rates, consumers have reduced spending to cope with financial pressures.
Nvidia has been on fire thanks to the AI boom. With a staggering year-to-date increase of 170%, the tech stock has become a trillion-dollar company.
As AI remains in the spotlight, the potential for NVDA stock to soar is uncertain. Bank of America (NYSE:BAC) raised its price target on Nvidia to $450 per share, joining other analysts in revising their targets upward.
Achieving a $2 trillion valuation by 2030 would require Nvidia to maintain a 20% compound annual growth rate (CAGR) and trade at 21 times trailing sales by that time. While not impossible, it relies on Nvidia’s ability to sustain its premium valuation, making it a best-case scenario.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
