The AI rally has created a fresh class of millionaires but has repeatedly lured many people into the wrong names. Some stocks look irresistible on the surface with great businesses. But all that glitter isn’t gold, and your money is better off elsewhere. The stock market will not remain permanently bullish, so your focus should be on investing in the companies with the most potential for profitability in the future.
It’s a good idea to reconsider your investments in unsustainable AI companies that burn significant cash and do not have much backing. If the hype cools down, they can enter a cycle of dilution and reverse stock splits. This is a spiral that can turn thousands of dollars into pennies.
SoundHound AI (SOUN)
SoundHound AI (NASDAQ:SOUN) is a voice AI platform that can allow conversational interactions between users and devices. The voice platform can be used for various industries, with automotive being a core application.
However, this is a very contested space. Companies with far deeper pockets, like Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL), Amazon (NASDAQ:AMZN), Apple (NASDAQ:AAPL), and OpenAI, are aggressively developing their own voice AI platforms. In the meantime, SoundHound is burning through $20-30 million in cash per quarter. The cash buffer of $230 million is enough for around two years of operations. It can be extended with dilution, so it’s unlikely SoundHound AI will go bankrupt.
That said, I do not see SOUN stock trading this high once the euphoria wanes. It will be exceedingly difficult for SoundHound to fight against the big-cap companies.
You’re paying 44 times forward sales for SOUN stock. Profits are not expected in the foreseeable future, and revenue growth is expected to decelerate. Growth is expected to slow from 96% in 2025 to 29% next year. It’s a better bet to put your money somewhere else.
CoreWeave (CRWV)
CoreWeave (NASDAQ:CRWV) is one of the most popular AI stocks today, but the devil is in the details. The business model here is reliant on taking large sums of debt, buying GPUs, and then leasing those GPUs out to AI companies in exchange for long-term, “take-or-pay” contracts.
The company is basically subsidizing AI computing for hyperscalers, and it does not have much negotiating power. 62% of its revenue came from just Microsoft (NASDAQ:MSFT) last year. 15% came from another customer. On top of that, account for GPU depreciation and the double-digit interest rate on debt, and you have a company in a very precarious situation. The first Delayed Draw Term Loan (DDTL 1.0) totals $2.3 billion, fully drawn as of the S-1 filing, and carries a 14.11% annual interest rate. The second loan facility comes with at least 10.53% annual interest.
Per an analyst, “These mob-like terms suggest Blackstone and Magnetar (lenders) don’t necessarily trust CoreWeave to survive, and intend to rip out whatever guts are left if it doesn’t.”
Revenue growth came in at an explosive 206.75% in Q2 2025 at $1.21 billion, with net loss at $290.51 million. Wall Street is paying attention to the top line today, but will immediately shift to the losses once CoreWeave shows signs of a slowdown.
I’d buy Nebius (NASDAQ:NBIS) instead for a better attempt at playing the AI build-out.
AI Stock to Buy: Serve Robotics (SERV)
This is a very early-stage AI stock and is certainly risky. Nevertheless, the company looks very promising today and can get you far more upside with similar downside risk. Serve Robotics (NASDAQ:SERV) makes robots that use sidewalks to deliver food, groceries, and similar-sized items. These robots are already functional and operational.
It already has Uber (NYSE:UBER) as a partner and has also added DoorDash (NASDAQ:DASH) as a new partner earlier in October.
The robots being sold by this company today are expensive to build, with some suggesting a unit cost of around $30,000 each. Their pilot programs are rolling out smoothly, with the 1,000th robot being deployed in October of this year.
There are over a million delivery drivers in the U.S. Robots are unlikely to replace all of them. Manufacturing them at scale will bring down unit costs. This will make it likely for Uber and DoorDash to choose these delivery robots. Serve Robotics is the leading sidewalk delivery company in the U.S., and the market capitalization as of writing is below $1 billion. There’s still plenty of room for it to be a multibagger.
Top Gaining Stocks
Top Losing Stocks