It’s Time! 3 Overhyped AI Stocks to Sell in February

Stocks to sell

Artificial Intelligence can make you a millionaire if you pick the right stocks to invest in. Had you invested in Nvidia Corporation (NASDAQ:NVDA) based on my recommendation in 2021, you would be sitting on huge gains today. However the competition is rising. Not every tech company will be able to be a leader in the AI industry. If you have been investing in AI stocks, it is time to reevaluate your options. After that, sell the stocks that do not show an upside potential. A few stocks simply rally due to the AI hype and do not have the potential to deliver. It is best to get rid of them while you can. Here are the three overhyped AI stocks to sell this month.

C3.ai (AI)

Source: Piotr Swat / Shutterstock.com

An emerging leader in the Artificial Intelligence space, C3.ai (NYSE:AI)  has grown significantly in 2023. It hit a high of $46 in June 2023 but has been on a downward spree since then. The stock was at an all-time high of $161 in Dec 2020. However, it hasn’t been able to see those days again.

While I do believe in the company’s ability to build AI applications for businesses, I am worried about the rising competition in the industry. I do not think the company has the scalability to withstand competition and achieve profitability anytime soon. It is reporting double-digit revenue growth, but it isn’t profitable yet.

The stock is down 9% over the past six months. The management has been promising profitability for a while now. Earlier, the company was aiming for a profit in 2024, but it is now expecting to report a profit in the second half of 2025. I will only believe it when I see it. The competition is intense, and the industry is rewarding AI stocks, but not all the stocks are going to win.

On the other hand, C3.ai has been growing losses. Its guidance for full-year operating loss is expected between $115 million to $135 million. This is more than the loss of the same period prior year. C3.ai may have the right products, but fundamentally, the company doesn’t look in good shape. It is best to sell the stock while you can make some money out of it. While C3.ai does have something to offer, it might not be the best AI stock right now. You can see why it made our list of AI stocks to sell.

Baidu (BIDU)

Chinese tech giant Baidu (NYSE:BIDU) stock is down 23% in the year and 7% year to date. Trading at $107 today, the stock is down from the highs of $339 it enjoyed in 2021. The company owns the largest online search engine in China and makes most of its revenue from the online marketing business.

With a cooldown in China’s market, Baidu saw a drop in online marketing revenue and it continued to spend money on AI-related investments. Still, its cloud business hasn’t been able to achieve much over the past few years and has a very small market share.

The company is unprofitable, and its losses are mounting. For the past six months, the stock has been trading in the range of $100 to $146, and I do not think it will rally anytime soon. The company is growing at a very slow pace, and by the time it achieves the AI goals, it could be too late. Investors shouldn’t bet on this company until they see the numbers improve.

It hasn’t been able to convince the businesses of its AI power over the past two years, and with the United States ban on exports of chips to China, it could become a tough ride for the company to survive. Without the necessary chips, it might not be possible to run the AI models or applications and this could put a break in Baidu’s growth story. Sell the stock before it dips below $100.

Arm Holdings (ARM)

Source: Poetra.RH / Shutterstock.com

Arm Holdings (NASDAQ:ARM) has been seeing major ups and downs over the past few weeks. The inflation report took the stock down even though the company reported impressive quarterly results, it later went from $77 to $$113 in just one day. The swings in ARM stock do not sit well with me and it reminds me of the meme stocks which were solely driven by the AI hype.

The company has recently gone public, and its strong financials with a highly optimistic outlook about the demand for microchips has led to a surge in the stock price. However, I am uncertain of how sustainable the company’s growth is.

Also, the 180-day post-IPO lockup period will end next month and this is when insiders could sell their shares to take profits. It could lead to a strong dip in the price. Due to the lockup, only 9.5% of the shares are currently traded and the remaining will become eligible for trading in March.

For a newly listed company, such a rally in stock price could mean a red flag. Selling ARM stock while it is at its peak could be a smart move. The company is genuine, but the stock is selling at a premium, and if you want to invest, wait for a dip before you make the move. If you already own the stock, sell it and make the most of the recent upside. After that, make sure you also dropped the other AI stocks to sell we mentioned.

On the date of publication, Vandita Jadeja did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

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