Title: 3 AI Stocks That Could Plunge Up to 80%, According to Wall Street
Intro
Artificial intelligence (AI) is the hottest topic on Wall Street. Companies in the space have seen share prices sprint higher as investors clamor to get in on the next big thing. But soaring valuations often come with steep risks. A handful of AI-focused stocks have exploded in value this year, only to draw warnings from analysts that their prices may be set up for major declines.
We dug into reports from leading firms to highlight three names analysts believe could fall between 71% and 80% if the market cools or growth disappoints. If you own any of these stocks—or are thinking of buying—now is a good time to take stock of the potential downsides.
Stock 1: Upstart Holdings (UPST)
Upstart is an online lender that uses AI to assess borrower risk and price loans. Its novel approach helped the stock surge more than 400% over the last year. Investors cheered strong revenue growth and eye-catching profits as loan originations climbed.
But RBC Capital Markets recently cut its price target, warning that rising interest rates and a tougher credit backdrop could slam Upstart’s business model. The analyst sees shares tumbling as much as 71% from current levels if default rates edge higher or customer acquisition costs inflate further. Key risks include:
• A pullback in consumer borrowing if loans become too expensive.
• Intensifying competition from traditional banks and other fintechs.
• Regulatory headwinds if lending algorithms draw closer scrutiny.
Stock 2: SoundHound AI (SOUN)
SoundHound AI develops voice-recognition software that lets devices understand and respond to spoken commands. Its technology powers everything from smart speakers to in-car infotainment systems. The stock rocketed over 300% this year on partnerships and new product rollouts.
Wedbush Securities analyst Dan Ives argues that SoundHound’s shares trade at nosebleed multiples, roughly 15 times expected 2025 sales. If the company stumbles on user adoption or fails to expand beyond early clients, Ives warns an 80% collapse could follow. Drivers of downside include:
• Delayed rollouts of major products.
• Higher costs as the firm scales its cloud-based services.
• Competition from tech giants with deeper pockets.
Stock 3: C3.ai (AI)
C3.ai bills itself as an end-to-end AI platform for enterprises. It works with clients in oil and gas, manufacturing, and financial services to deploy machine-learning applications. Early wins sent C3.ai’s shares vaulting more than 250% in the past six months.
Despite the pop, Morgan Stanley’s team says the stock is overdue for a sharp mean reversion. They peg a realistic downside of roughly 75% if new contracts miss lofty projections or if macro pressures stunt IT spending. Watch for:
• A slowdown in enterprise budgets amid economic uncertainty.
• Extended sales cycles in large corporations.
• Profit margins squeezed by rising infrastructure costs.
3 Key Takeaways
• Hot AI stories can carry hidden downside risk. Valuations often outpace real-world revenue.
• Rising interest rates and economic slowdowns hit growth-oriented tech names hard.
• Competition and execution bumps can turn optimism into a rapid sell-off.
3-Question FAQ
1. Why do analysts foresee such steep declines?
Analysts use a mix of valuation metrics, growth forecasts, and industry comparisons. When a stock trades at many times expected sales or earnings, even a small miss can trigger big share-price drops.
2. Should I sell these stocks now?
That depends on your time horizon and risk tolerance. If you’re uncomfortable with high volatility or potential losses, you might scale back. Long-term investors who believe in the companies’ fundamentals may choose to hold through the ups and downs.
3. Are there safer ways to play AI?
Yes. You can target larger, more established firms with diversified businesses. Or consider broad technology ETFs that spread risk across dozens of high-growth names. That way, a stumble by one company has less impact on your overall returns.
Call to Action
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