Why speculative AI stocks like and are seeing monster volatility

There are three things investors could have bet on over the past five trading sessions: The stock market would open at 9:30 a.m., the stock market would close at 4 p.m., and speculative AI stocks would see huge levels of volatility.

And who said there was nothing definite about investing?!

Yahoo Finance zooms in on shares of speculative and bullish AI names, Inc. ( AI ), SoundHound ( SOUN ), and ( BBAI ), all of which have seen big moves in the past five trading sessions. SoundHound stock is up 26%, is up 11%, and is down 24% (partially due to another short seller attack).

All three names are practically pinned to Yahoo Finance̵[ads1]7;s “Trending Ticker” page as well.

In comparison, the more established and fundamentally stronger AI plays such as Microsoft ( MSFT ) and Nvidia ( NVDA ) have declined only slightly over the past five trading days. Alphabet’s (GOOG, GOOGL) stock is actually up little during this period.

So what’s with the dizzying action in the aforementioned speculative AI names (which are underpinned by companies that don’t make a profit)?

Traders point to a few factors.

“In my view, it is the excess liquidity that has been injected by the Fed and other global central banks during the banking crisis. When excess liquidity is pushed into the markets, it tends to initially go into a narrow number of assets … the stocks and assets that have most momentum That’s what happened in 2010/11 … and after the liquidity boosts in 2020, Miller Tabak market strategist Matt Maley tells me via email.

Points taken.

Founder of Sevens Report Research, Tom Essaye, tells me the fierce moves have been ignited by fears of industry regulation raining down on a topic that exploded in the minds of investors in March amid the hype surrounding ChatGPT.

Why speculative AI stocks like and are seeing monster volatility

The ChatGPT logo is seen in this illustration taken on March 31, 2023. REUTERS/Dado Ruvic/Illustration

“Basically, I think there are some regulatory concerns, not so much in the government sense yet, but maybe industry regulations. It’s just injecting some fundamental uncertainty into the whole space, and given the valuation and popularity of the AI ​​names, it results in some wild swings !” Essay says.

The past week alone has put the spotlight on Essaye’s view.

“Tech companies, in my view, have a responsibility to make sure their products are safe before they go public,” President Joe Biden said at a science and technology conference Wednesday.

“It remains to be seen. It could be,” the president replied when asked if AI was dangerous.

Meanwhile, Tesla CEO Elon Musk and more than 1,000 tech leaders recently signed a letter calling for a six-month hiatus from developing powerful AI platforms. This came just days after Microsoft founder Bill Gates waxed poetic about the future potential of AI.

While the development of next-generation AI is in full swing and the wide range of sector plays is likely to be of interest to investors, Miller Tabak’s Maley reminds everyone that speculative names are just that – speculative and fraught with risk.

So proceed with caution to names like, SoundHound and

The rally “certainly may have legs, but at some point valuations matter. Therefore, these stocks will be subject to some very serious falls as we move through 2023,” Maley said.

Brian Sozzi is Yahoo Finance’s managing editor. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn. Tips about the banking crisis or something else? Email

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