Stock Market

Opinions are definitely mixed on Wall Street when it comes to enterprise artificial intelligence company (NYSE:AI). Sure, AI stock will give you direct exposure to the fast-growing machine-learning industry.

On the other hand, there are issues with that eager traders should consider before over-investing in the company.

Earlier this summer, traders were furiously bidding up the share price. Yet, there were some skeptical voices on Wall Street. For instance, Canaccord Genuity analyst Kingsley Crane complained, “There’s little fundamental reason to explain the recent rally.”

I’ll admit, has been a consistently unprofitable company. Still, there are bullish and bearish factors to consider with So, let’s see what a prominent bull has to say before moving on to the bear case.

Tap Into the ‘AI Gold Rush’ With AI Stock

Some commentators weren’t super impressed with’s recent investor day presentation.

Deutsche Bank’s Brad Zelnick, in particular, felt that’s presentation “left a lot to be desired as there were no details on financials, limited operational updates and investors for the most part didn’t attend.”

However, Wedbush’s Daniel Ives was more upbeat about He sees an “$800 billion opportunity over the next decade” with AI. Furthermore, Ives considers to be “at the center of the AI gold rush taking place.”

In defense of this claim, Ives cited’s “strong product portfolio and expanding partner ecosystem,” which will allow the company to “take market share in this accelerating market.”

On top of all that, Ives pointed to’s “increased sales activity, [a] growing pipeline [and] encouraging business prospects.”

Those are fair points, but Ives is an outlier with his $50 price target on AI stock. Overall, analysts on Wall Street only expect the stock to reach $26.16.

A Question of Honesty With

I’ve already mentioned Crane’s concern about’s fundamentals versus the company’s share price. Plus, I’ve covered Zelnick’s complaint about’s lack of transparency during the company’s investor-day presentation.

To that, I’ll add the commentary of  Spruce Point Capital founder Ben Axler, who sees “a lot of puffery going on” with Axler seemed to question’s transparency and/or veracity in certain respects.

“I think there’s a lot of exaggeration about… the addressable market, about how much money’s been, invested, and, ultimately, about the prospects for the business,” Axler claimed. Yet, that wasn’t his only concern.

In addition, Axler pointed to’s rate of cash burn., Axler claimed, “has done nothing but burn through $150 million, almost $200 million of cash since we first outlined our concerns about the company.”

Axler expressed concerns about’s share count. The company, Axler alleges, “is highly dependent on issuing its stock to employees.” Additionally,’s “share counts continue to balloon,” and with that in mind, Axler raised the alarming topic of “dilution.”

Verdict on AI Stock: Take It Slow and Steady

Overall, I like as a company and feel that the machine-learning industry is set to expand in the coming years.

Still, I concur with the assessment of Principal Asset Management Chief Global Strategist Seema Shah, who feels that “there’s maybe a little bit of froth” and expects that “you could see a little bit of a pullback” in stocks related to AI.

The point is that there’s validity to both the bull and bear cases pertaining to My verdict is that AI stock should grow over the long term, but it’s likely to cool off in the short term. Therefore, a small share position in is appropriate and there’s no need to go all-in right now.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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