Steer Clear of Hype and Find Real A.I. Profit Plays – Here’s How

Shah Gilani|October 6, 2023

Every investor knows A.I. (artificial intelligence) is hot. It’s the buzzword of 2023. It’s what launched stock market indexes higher this year. It’s what almost every listed company’s management now says they’re using.

And it’s what companies are touting loudest when they announce their IPOs, initial public offerings. Of course, Arm Holdings Plc (ARM) touted A.I. leading up to its September 14, 2023 IPO; they’re a semiconductor chip-maker.

Their loudly trumpeted focus on GPU chips, the not-so-secret sauce powering artificial intelligence applications, saw their IPO, initially priced at $51, open at $56.10, trade up to $66.28, and close on its first day at $63.59.

Instacart (CART), formally known as Maplebear Inc, also touted A.I. leading up to its September 19, 2023 IPO. And their first day as a public company was almost as explosive as ARM’s.

But it didn’t last.

Maybe that’s because CART’s A.I. infused hype was more about getting investors to buy into the IPO than it has to do with actually powering Instacart’s revenues or profits.

And therein lies a warning for investors. What’s real and what’s not real about A.I., who’s using it to hype up their stock price, and who’s actually using it to make money are often different things.

That’s why investors need a roadmap when it comes to companies touting A.I.

In May 2023, when rumors that Instacart was planning an IPO started making the rounds, the company launched its A.I.-powered charm offensive. Leading up to the IPO, Instacart announced several major updates to its Storefront platform, all A.I. driven.

CART’s platform powers storefronts for more than 550 retail brands, including Costco in the US and Canada. The updates, according to VentureBeat, included conversational search powered by OpenAI’s ChatGPT as well as proprietary AI models.”

They also announced AI upgrades to their smart carts, called Caper Carts, the checkout technology they acquired in 2021 when they bought startup Caper AI for $350 million.

It’s not that there’s anything wrong with touting A.I. when a company actually uses it; what’s wrong is advertising A.I. use or contemplated use to hype up a company’s stock price.

CART priced its IPO at $30 a share. The buzz around the IPO included how their new A.I. upgrades were powering sales and profits, which in fact they were. So it’s no surprise the stock opened its first day of trading at $42, 40% above its IPO price. It got up to $42.95 that day but closed at $33.70. Still a decent 12.3% above their initial price.

Then the A.I. hype, pushed by the IPO’s underwriters, faded as reality took hold. CART’s stock has fallen every day since its debut. The stock’s now trading below the IPO price at $25 and some change.

I was asked by Fox Business News hosts if I wanted to talk about CART and its AI prospects driving its profitability when they came to market. I told them I thought the hype was more about inflating the IPO and the stock than the company’s profitability, and that I couldn’t in good conscience recommend it. So, we talked about the Fed raising rates instead.

Investors have been taken in a lot lately by A.I. hype, and it’s going to wreck a lot of portfolios and retirement prospects.

Looking at CART in light of their competition from Door Dash, Uber, and of course Amazon, takes out the A.I. hype and focuses your analysis on actual numbers and not flighty narratives.

For example, Uber trades at 2.8 times revenue, Door Dash trades at 3.5 times revenue, and CART started trading at 4 times revenue. On that basis alone, it’s expensive, and I wouldn’t recommend it.

However, the A.I. hype aside, I would buy CART somewhere below $20 because it’s going there, and down there it’s worth buying for its growth potential, its profitability, and its AI tech.

That’s what I mean when I say you need a roadmap to navigate all the A.I. hype. There’s no doubt that every investor needs exposure to this space and its explosive growth potential, but if you’re not careful and just go chasing every ticker that has an A.I. narrative right now, you’re going to lose your shirt.

Fortunately, I’ve hand-picked what I think are the absolute best ways to profit from the A.I. boom right now, and I have a full report for you. You definitely want to get in on these trades before Wall Street catches on to where the real profit potential is in this space. Everything you need is at this link.