Volatility Increases for Hyped AI Stocks

Several stocks that surged following the initial hype over artificial intelligence (AI) hype have come back to earth.  Other stocks caught up in the AI craze may also see an increase in volatility as the market shakes out winners and losers in the sector.  The volatility highlights the risks for stocks inflated by AI excitement, drawing the attention of retail traders and short sellers. 

At the beginning of August, Upstart Holdings (UPST) was one of the best performers in the Nasdaq 100 Stock Index ($IUXX) (QQQ), surging +445% amid the euphoria about AI. However, the stock price has fallen by half since then, underscoring the dangers for stocks swept up by AI fervor. Jeffries said, “AI is certainly a very popular innovation right now, but that doesn’t mean that everything AI doesn’t come with certain risks tied to it.”