Artificial Intelligence Is the New Stock Market Hype Machine- Morning Brief

It reported November earnings. Revenue had increased by 1.2%. Mindy Long, an ex-IBM executive, was appointed as CEO. She focused on cost containment and made a statement. BigBear predicted that revenue in 2022 would increase by 3% to 16.8% an extremely wide range.

Just a few months later in 2023, the shares have increased more than 700% due to the heated chatter about AI and the public enthusiasm around ChatGPT.

Artificial intelligence could be a game-changer. Cathie Wood, Ark Invest’s CEO, believes so.

This is not to disparage BigBear.

Another de-SPAC is SoundHound ( SOUN ), which has a voice-AI platform-maker SoundHound ( SOUN ). Its sales are up by about 90% this year, and down more than half since April 2022, when it began trading.

C3.ai is AI. All of these “dotai” suffixes remind me of the “doteth” craze which swept the cryptobro Twitter handles in the past few years. It was founded by Thomas Siebel, a software veteran, in 2009. It did not go public until December 2020 at $42 per share. Although it is trading at $27, its stock has nearly doubled since then, after the release of its ” Generative AI for Enterprise Search”

As my colleague Ines Ferre pointed out last week, the list is endless. Big tech is focusing on AI, as companies such as Meta, IBM and Alphabet have highlighted their AI investments during earnings calls. Yesterday Alphabet launched Bard its ChatGPT competitor.

Buzzfeed ( ZFD) suddenly became an AI stock after it stated that it would use bots to write some of its posts.

All of this is reminiscent of every hype cycle, from railroads in 1800s to dot-com crazes of the 1990s to cannabis and meme stocks. We still use railroads and the internet. However, the initial hype machine did not support all the new players.

Nina Schick, the author of The Era of Generative AI, was enthusiastic about her email to Yahoo Finance. “We’re at the cusp of an AI powered revolution that will redefine human intelligence and creativity…Unlike The Metaverse, which is an untested concept, AI has been integrated into existing systems as software. Within months, generative AI will be used by hundreds of millions of people. “The B2B market will explode!”

It is uncertain whether BigBear or SoundHound will succeed. Investors are currently buying first and asking questions afterward.