AI Stocks Tumble After What Experts Found

Stocks related to artificial intelligence fell sharply on Wednesday of this week, following an allegation made by a short seller that Inc – a retail darling – is having accounting issues. 

Shares of that company dropped 10% during early trading. Other firms that dropped considerably on the same day include Guardforce AI, a security firm from Thailand that dropped 14%;, a data analytics company that lost 7%; and SoundHound AI, a conversation intelligence business that dropped 4%., a social media platform that’s investor focused, had as one of the stocks that was trending before this news broke.

On Tuesday alone, that company lost one-quarter of its total value, with the market valuation for the company dropping down to $2.8 billion. That happened after Kerrisdale Capital accused the firm of having “serious accounting and disclosure issues.”

That comment was sent as part of a letter that Kerrisdale Capital sent to Deloitte & Touche LLP, its auditor. 

Last month, Kerrisdale disclosed that it had a short position on It levied allegations about the company regarding its “poor customer traction, failing sales partnerships and financial pressures.”

Investors seemed to be spooked by the allegations, and that translated to the other AI-related firms losing a lot of value this week, in addition to Yet, there are some financial analysts who don’t believe that it’s anything investors should be worried about on a grand scale.

As Kingsley Crane, an analyst for Canaccord Genuity, commented:

“There is no evidence of any real wrongdoing or fraud in the short-seller report, but it raises some concerns and investors could benefit from more clarity on a few items. It is not necessarily a systemic risk and should not affect other AI stocks near-term. These stocks are traded on (AI) excitement.”

Company officials for didn’t respond to a comment request that was sent to them from Reuters.

While certainly experienced a big drop in value this week, that comes after the company’s shares have soared in value in recent months. Thanks to investor interest being spiked in AI-related companies due to the amazing success of ChatGPT – OpenAI’s new platform – experienced a doubling in its value in recent months.

In that same time period, the benchmark S&P 500 index only increased in value by 6.8%. That’s an impressive number, for sure, but doesn’t nearly measure up with that of

Investor interest in AI has waned a bit recently, though, thanks to rising concerns about how AI is being used, and whether it’s going too far. Some countries are also moving to regulate AI applications, which could cap the overall potential of companies in the industry.

Earlier this week, in fact, President Joe Biden commented that it has yet to be seen whether artificial intelligence is actually dangerous. He also said it was up to the technology companies that produce AI tools to ensure the products they are creating are safe before they release them to the public.