Protect Your Retirement: Avoid These 3 AI Stocks Right Now

Not all AI companies are going to succeed. Here are three of the riskiest.

By now,you’ve probably heard about the artificial intelligence (AI) “spending boom” that’s powering the stock market’s explosive growth.

The trouble is, while lots of businesses are investing heavily in AI, those investments alone aren’t enough to ensure lasting success. Three AI stocks in particular are looking very risky right now, and probably aren’t safe places for retirement savings.

Here are the three stocks investors might want to watch out for:

1. SoundHound AI: A small hound in a big pound

It’s been a rough year for voice-enabled AI chat platform SoundHound AI (SOUN 1.83%). News that AI giant nvidia sold its stake in the company caused share prices to plummet, and a third-quarter earnings report that showed a record generally accepted accounting principles (GAAP) net loss of $109.3 million despite record revenue of $42 million prompted further sell-offs.

Today’s Change

(-1.83%) $0.20

Current Price

$10.70

Key Data Points

market Cap

$4.6B

Day’s Range

$10.52 – $10.92

52wk Range

$6.52 – $24.98

Volume

18M

Avg Vol

37M

Gross Margin

30.02%

The company does seem to be growing revenue from its voice-enabled AI platform, but it’s still burning through cash at an alarming rate.Investors shoudl be very cautious.

If BigBear.ai were posting the kinds of margins that other AI companies have been able to manage — Palantir’s gross margin was 82.5% in Q3 — it could handle some slight revenue declines and still remain viable. But BigBear.ai’s gross margin is among the worst in the industry, at just 22.4% in Q3. That was down from 25% in Q2 and 25.9% in Q3 2024, meaning that not only are the company’s sales slipping, but it’s also making less money per sale.

There’s hardly a single metric moving in the right direction for bigbear.ai: Its backlog is shrinking, its share dilution is growing, its net losses have been widening, and its operating cash burn has been accelerating.Yet somehow, it’s still trading at a premium valuation of 14 times trailing sales. Even at a discount price, this stock would be a tough sell.At this valuation, it’s almost laughably overpriced.

3. Pony.ai: A new arrival

The third AI stock is one I’d