We recently compiled a list of 13 AI news and reviews on Wall Street Radar. In this article, we’ll take a look at how Riskified Ltd. (NYSE:RSKD) stands compared to other AI stocks that are gaining Wall Street’s attention.
In a recent memo titled “About Bubble Watch,” Howard Marks, co-founder and co-chairman of Oaktree Capital, wrote about high valuations that could lead to lower long-term or short-term returns. , highlighted some dangerous signs in the stock market. I refuse. He didn’t call it a bubble, but pointed to rising S&P 500 price-earnings ratios, which have historically correlated with lower returns. Marks also expressed concern about the over-enthusiasm and overconfidence of AI investors in Magnificent Seven Technology stocks, which have contributed significantly to the recent rally in the S&P 500. Marks also writes:
“…if a stock rises too quickly, it will be out of proportion to the underlying company’s earnings growth, and it is unlikely that the stock will continue to rise. Michael Cembalest has another graph that illustrates this point. This Until two years ago, the S&P 500 index had returned more than 20% for two consecutive years only four times in its history (just a sample, mind you). for) , the index declined in the following two years (with the exception of 1995-1998, when a strong TMT bubble postponed the decline until 2000, when the index fell by almost 40% in three years). )
Optimism spreading in the market from the second half of 2022,
the fact that the S&P 500 has an above-average valuation and that stocks in most industry groups sell at higher multiples than stocks in other industries worldwide;
The enthusiasm surrounding the novelty of AI, and perhaps the extension of its positive psychology to other high-tech fields;
the implicit assumption that the top seven companies will continue to be successful;
Some of the S&P’s rise can be attributed to automatic purchases by index investors that ignore the intrinsic value of these stocks. ”
Related articles: 15 AI stocks that skyrocketed in the fourth quarter and 14 AI stocks that made waves on Wall Street.
The current valuation gap between the largest AI companies (Mag7) and the rest of the S&P 500 is unlikely to last, according to JPMorgan’s report, “AI Investments: Bigger than a Bubble.” These companies currently account for a significant portion of the S&P 500’s market capitalization and have driven a significant portion of its revenue since 2023. The AI industry is expected to power the next technological revolution, but a key question for investors is whether market expectations are realistic.
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Currently, companies involved in AI hardware and hyperscalers dominate, but future growth is likely to come from other sectors such as AI developers and integrators. Many large tech companies have strong fundamentals, but high valuations may be unsustainable if the broader market does not fully adopt AI technology. Investors should focus on opportunities across the AI value chain, especially where valuations are not as high.
In this article, we selected AI stocks by reviewing news articles, stock analysis, and press releases. Stocks ranked by hedge fund sentiment from Insider Monkey’s database of 900 hedge funds.
Why are we interested in stocks that hedge funds invest in? The reason is simple. Our research shows that by mimicking the top stock picks of the best hedge funds, you can outperform the market. Our quarterly newsletter strategy selects 14 small- and large-cap stocks each quarter and has returned 275% since May 2014, outperforming the benchmark by 150 percentage points (Learn more ).
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Number of hedge fund holders: 18 people
Riskified Ltd. (NYSE:RSKD) provides an e-commerce risk management platform that uses machine learning to protect merchants from fraud, policy abuse, and chargebacks. The company’s AI-powered solutions include Policy Protect, Account Secure, and PSD2 Optimize to improve security and streamline online transactions.
Riskified Ltd. (NYSE:RSKD) and IXOPAY have entered into a strategic partnership to improve payment security and reduce fraud in e-commerce. By combining IXOPAY’s payment orchestration and tokenization with Riskified’s AI-powered fraud detection, the partnership aims to improve transaction efficiency, minimize chargebacks, and increase sales conversion rates. .
This collaboration allows businesses to streamline payment processes, optimize customer experience, and protect revenue. This integrated solution also supports compliance, real-time threat response, and improved payment routing by increasing fraud prevention and reducing operational costs. Companies like Super.com are already benefiting from this partnership to protect their transactions while maintaining PCI compliance.
Overall, RSKD ranks 11th on Wall Street’s list of hottest AI stocks. While we recognize RSKD’s potential as an investment, we believe AI stocks are more likely to deliver higher returns and achieve them in a shorter time frame. If you’re looking for AI stocks with better prospects than RSKD, but trading at less than 5x earnings, check out our report on the cheapest AI stocks.
Read next: BlackRock’s 8 Best Widemot Stocks to Buy Now and 30 Most Important AI Stocks.
Disclosure: None. This article was originally published on Insider Monkey.
