Recent Investment Trends Include Small-Cap Artificial Intelligence Stocks
C3 AI, sometimes written C3.ai, is an artificial intelligence platform that provides services for companies to build large-scale AI applications. Its stock had the fifth highest traded shares among Fidelity’s retail investors on Monday (February 6). This included a record-breaking $31.4 million worth of shares traded among the broker’s individual self-directed traders. According to Reuters, “Retail investors are piling up on small-cap firms that employ artificial intelligence amid intensifying competition between tech titans.” The article points to Google and Microsoft as examples of companies that expect AI to be the next meaningful driver of growth.
Investors, for their part, are looking to get ahead of any acquisition spree that deep-pocketed companies may embark on, which could include buying the advanced technology by acquiring small-cap tech firms.
Focus Heightened by ChatGPT
The spotlight ChatGPT finds itself in, three months after its launch, is indicicative of the interest in this technology amongst investors and users. With applications as numerous than one can think up, the technology could outdate many services provided by tech companies like Alphabet (GOOGL), or Microsoft (MSFT) – big tech has catching up to do. This seems to have created a race by cash rich companies to not be disrupted and left behind.
Investor’s recent focus on small companies in this space prefer those that are concentrated in AI technology. One main reason is that small-cap or microcap firms in this space are likely to have AI as a more concentrated part of their business. The bet being that whether the small company continues to grow independently, or is acquired by a larger firm looking to instantly be par with current technology, doesn’t much matter, it is a win for the investor if either occurs.
And it is a win, C3 AI stock rallied 46% last week, and climbed another 6.5% on Monday. It is now up 146% year to date.
Other Companies Involved
SoundHound AI, provides a voice AI platform services, and Thailand-based security firm Guardforce AI have more than doubled so far this year, while analytics firm BigBear.AI has increased ninefold.
US-listed shares of Baidu Inc climbed after the Chinese search engine indicated it would complete an internal test of a ChatGPT-style project called “Ernie Bot” next month.
Shares of Microsoft, which supports ChatGPT parent OpenAI, had been ratcheting up over the past month. The company is expected to make an announcement on their AI gained 1.5% in premarket trading ahead of the AI plans this week.
Google-owner Alphabet Inc said this week it would launch Bard, a chatbot service for developers, alongside its search engine.
Take Away
Change in technology that leads to improvements in daily lives has always been a focus of investors betting on which companies will outlast the others with “the next big thing.” These companies start out as small growth companies as Apple (AAPL) did in 1976. Then, a number of paths lay ahead. They either grow on their own like the Jobs/Wozniak computer maker did, get acquired for an early payday for investors and other stakeholders, or they can be outcompeted leaving investors with a non-performing asset.
Channelchek is a platform that specializes in bringing data and research on small-cap companies, including many varieties of new technology, to the investors that insist on being informed before they place a trade. Discover more on the industries of tomorrow by signing up for notifications in your inbox from Channelchek by registering here.
Managing Editor, Channelchek
Sources
https://www.barrons.com/articles/c3-ai-stock-rally-bull-wall-street-51675441248?mod=Searchresults