(Reuters) – Artificial intelligence stocks fell on Wednesday after a short seller alleged accounting problems at retail retailer C3.ai Inc (AI.N), dampening investor interest in the group of small companies that has vastly outperformed the market. this year.
C3.ai fell more than 2% in early trade, while Thai security firm Guardforce AI (GFAI.O) fell more than 3%, data analytics firm BigBear.ai (BBAI.N) lost 7% and conversational intelligence firm SoundHound AI ( SOUN.O) slipped slightly.
C3.ai shed a quarter of its value on Tuesday, cutting its market value to $2.80 billion, after Kerrisdale Capital said the company had “serious accounting and disclosure problems” in a letter to auditor Deloitte & Touche LLP.
Kerrisdale ran short on C3.ai last month and accused the company of “poor customer acquisition, failed sales partnerships and financial pressures”.
“There is no evidence of any real wrongdoing or fraud in the short sale report, but it raises some concerns and investors could benefit from more clarity on some items,” said Kingsley Crane, analyst at Canaccord Genetty.
“It is not necessarily a systemic risk and should not affect other AI stocks in the near term. These stocks are trading with excitement (AI).”
C3.ai did not immediately respond to a request for comment.
Despite Tuesday’s falter, the stock’s value has more than doubled thanks to a surge of investor interest in AI-related companies following the viral success of OpenAI subsidiary ChatGPT. That compares to a 6.8% rise in the S&P 500 (.SPX).
The rise has slowed somewhat in recent days as concerns grow about the use of artificial intelligence and countries move to regulate its applications.
On Tuesday, US President Joe Biden said it was not yet clear whether artificial intelligence was dangerous, but stressed that technology companies had a responsibility to ensure the safety of their products before announcing them.
Additional reporting by Tyachi Datta and Yuvraj Malik in Bengaluru; Editing by Shailesh Cooper
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