Oh God. Oh God. Oh God – not again.
I saw the headline and had to click on the link.
‘The Three Best Aussie AI Companies to Watch’.
I could tell this link was clickbait and guessed the three stocks that would be mentioned.
The webpage opened: surprise, surprise!
There they were again – the same three ‘AI’ stocks for Australia that every other clickbait article mentions: NextDC, Appen and BrainChip.
Hmm. What did this particular piece say about Appen, for example?
‘Despite recent challenges, Appen remains a key player, providing data tools and services to global market players.
‘The company’s new products are focused on generative AI applications, and with the share price trading at an all-time low, I believe the potential upside for investors in this stock is astronomical if Appen can get things right.’
Mmm. Indeed.
What I see from the quote above is a few assertions, zero evidence and a sweeping assessment.
Let’s look at the Appen share price lately…
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| Source: Market Index |
It’s obvious from this that professional money in the market doesn’t give a sh*t for Appen’s generative-AI applications.
This is part of what can be so tiresome about the market sometimes.
Occasionally, a theme like AI cuts through the market noise to dominate the conversation.
But the air is filled immediately with as much drivel as there is reasonable comment or genuine insight.
And those stock opportunities? If everybody points to the same three already, surely that’s in the price by now?
I’ve loosely followed BrainChip for years, too.
It may have whizz bang tech, but one thing I can assure you it doesn’t do is make a profit.
Do you really fancy tipping in your hard-earned savings into a firm that lost US$28 million in 2023?
Look, I could be being too grouchy here. Maybe the herd DOES stampede into these three based off nothing but AI hype and hysteria.
What am I getting at?
Artificial intelligence is a genuine disruptive force sweeping the world. The stock chart of Nvidia is proof of that.
However, I doubt you’re going to mint a fortune following the same articles multiplying across the web like a weed that everyone else reads.
I’ve seen these hype cycles come and go for years. It was only last year that “investors” were still paying $1 per share for Core Lithium [ASX:CXO].
You know…EVS…batteries…lithium…yeah man, it’s the future!
Did they stop to think that mining – any commodity – is cyclical, unpredictable and fraught with risk?
I hope so because CXO is now a suspended operation and trades for 25 cents per share. It’s down 85% from its 2022 high.
I’m not saying that will happen to Appen, BrainChip or NextDC from here.
What I’m suggesting is here at Fat Tail, we want to approach the genuinely exciting topic of AI with care, insight and diligence.
If I see Appen trotted out on our website in the same unthinking way, I’ll grab the writer by the short and curlies.
No, I want to bring you an in depth, considered look at what’s going on in AI, and how it’s colliding with industries as diverse as banking, blockchain and beet farming.
I specialise in small cap stocks, and have done so for 12 years.
In fact, we’re already making gains on the shares I’ve identified to benefit from AI.
I think there’s plenty more coming up. That’s why this week and next we going to unpick what’s happening here.
I’ve had a little project on the potboil for the last three months.
It’s called Collide. Lock. Build. Explode.
It’s my angle on AI investing. It’s likely very different to anything you see in your regular newsfeed.
And I’m releasing it here at Fat Tail Daily next week.
If you’ve been ‘AI Curious’ when it comes to actually backing specific stocks…and want some solid ideas on what to do that aren’t just the bland names you see plastered everywhere…you’ll like what I’m cooking up for you.
Watch this space…
Best,
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Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator
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