2 AI Stocks I'm Avoiding at All Costs
Artificial intelligence (AI) isn't going away. The technology has the potential to remake industries and create new ones, and every company is going to need an AI strategy. However, this doesn't mean that every AI stock will be a winner in the long run. Two AI stocks I'm staying away from are Upstart (NASDAQ: UPST) and C3.ai (NYSE: AI). Here's why.
Not even AI can overcome an economic environment marked by rising interest rates and elevated inflation. Upstart found success during the pandemic with its AI-powered lending marketplace, connecting borrowers with lenders while assessing risk with its AI models. Those models worked until they didn't. Loan performance tanked in 2021 as economic conditions changed, offering a reminder that an AI model is only as good as the data it's trained on.
Upstart has improved its AI models and erased this performance deficit, but what happens the next time the economy shifts in a way it never has before? Credit scores are far from perfect for assessing risk, but it's unclear at this point whether Upstart's AI models will provide lenders a consistent advantage. And there's little stopping lenders or credit reporting companies, some of which have troves of data, from developing their own AI models.
Source Fool.com
