To The Moon

Investors wanting to play the hot trend of artificial intelligence are looking beyond the most obvious names, according to data from Stocktwits, a social platform for investors and traders.

While companies like Nvidia Corp. NVDA, +2.22%, Palantir Technologies Inc. PLTR, +3.91% and Microsoft Corp. MSFT, +3.98% have cemented themselves as AI players in the eyes of Wall Street, investors also are also eyeing AI-related microcaps.

Stocktwits examined the top 250 symbols on its platform based on total message volume in June. “When investors [and] traders conduct research for AI stocks, the first thing they usually do is type ‘AI’ in the search bar,” Tom Bruni, lead writer of Stocktwits’ Daily Rip & Markets newsletter, told MarketWatch. “As a result, businesses with AI in their symbol and name [are] easier to find, thus becoming more popular.”

This trend has helped thrust C3.ai Inc. AI, +4.85% into the spotlight in recent months, although Bruni also highlights investor interest in companies whose core businesses are closely linked to AI. “The second takeaway from the data is that businesses that deal directly with AI as a core facet of their bottom line are receiving more attention than those who only view AI as a supplement,” he said.

Microcap CXApp Inc. CXAI, -6.50% is a beneficiary of this trend, according to Stocktwits’ data, along with Nvidia and Palantir, which have all seen message-volume growth in 2023, peaking in the summer.

Fellow microcaps Artificial Intelligence Technology Solutions Inc. AITX, -2.05% and Guardforce AI Co. GFAI, -3.54% also feature on Stocktwits’ top-250 list. Shares of workplace-technology company CXApp have fallen 40.1% in the last three months, while Artificial Intelligence Technology Solutions is down 1.7% and Guardforce AI is down 80.4%.

The Invesco QQQ Trust Series I exchange-traded fund QQQ, +0.82% ranked No. 5 in terms of message volume, ahead of Nvidia, which is in sixth place, Palantir in 11th, C3.ai Inc. in 14th and Advanced Micro Devices Inc. AMD, -0.33% in 18th. Message volume on Stocktwits’ stream for C3.ai has consistently grown by 100% month over month since the beginning of this year and is still trending higher, according to Bruni.

ETFs are also grabbing attention. For June, the ProShares UltraPro Short QQQ ETF SQQQ, -2.46% was at No. 64, while the Direxion Daily Semiconductor Bear 3X Shares ETF SOXS, -0.47% came in at No. 135. The ProShares UltraPro QQQ TQQQ, +2.39%, the Direxion Daily Semiconductor Bull 3X Shares SOXL, +0.71% and the ARK Innovation ETF ARKK, +0.36% were also among the top 250. It’s not clear whether some of these ETFs are grabbing attention as potential bearish bets against the AI rally.

“There’s a significant appetite across market-cap segments, ranging from megacap tech to microcaps, and at the ETF level, both passive and actively managed ones,” Bruni told MarketWatch. “This makes sense because investors have different timeframes, objectives, risk tolerances, etc., so the way they’re playing the AI theme will all be different. But what’s clear is that they are playing it.”

Stocktwits also looked at the top 250 symbols on its platform based on the net number of people who added them to their watchlists in June. Nvidia ranked at No. 2, while AMD was in seventh place and C3.ai was in ninth. The Invesco QQQ Trust Series I was ranked at No. 29.

While ChatGPT helped bring AI into the public consciousness late in 2022, investors may be looking for the next Nvidia, which Bruni said was “the first company to come out and say, ‘This is going to have a material impact on our earnings.’” Nvidia’s stock is up 69.9% in the last three months.

I think the AI rally may soon stall. Will be cautious if I were you as the fundamentals do not align. 

@MillionaireTiger @TigerStars 

DYODD