When traders are selecting stocks to purchase, they often opt for the easy way out. Rather than putting in the effort to make informed decisions on which stocks to invest in, they rely on shortcuts such as following stockbroker recommendations, acting on tips from friends, or simply reading online articles.
The landscape shifted with the introduction of OpenAI’s ChatGPT in November 2022. This marked a significant development as artificial intelligence (AI) has the capability to handle this task efficiently. AI can swiftly analyze vast amounts of data to generate a tailored list of companies that align with your requirements. The market now boasts a plethora of AI bots designed for this purpose.
Despite these advancements, I remain hesitant to depend on AI-generated stock predictions for my portfolio. The stakes are too high to entrust such crucial decisions to flawed and error-prone systems. It remains essential for investors to possess industry knowledge to narrow down the vast array of available companies effectively.
For instance, Google’s Bard AI is renowned for its adeptness in stock selection. I tasked it with identifying three stocks poised to surge by 1,000% within five years. While this aspiration may seem unrealistic, the three stocks recommended by Bard are even more fantastical. This reinforces my skepticism towards the accuracy of AI-driven forecasts.
Blink Activation (BLNK)
The surge in electric vehicle (EV) adoption is the primary driver behind Blink Charging’s (NASDAQ: BLNK) anticipated robust growth in the upcoming years. As the demand for EVs rises, the need for charging infrastructure escalates. Blink specializes in building and operating EV charging stations nationwide, with over 85,000 charging ports sold or installed since 2009. The projected revenue for 2023 indicates a 154% increase to $98 million. Despite these promising prospects, several challenges loom over Blink Charging.
One major hurdle is the competitive landscape. Blink faces stiff competition from a growing number of rivals, many of whom boast superior funding and larger networks. For example, ChargePoint (NYSE: CHPT) operates thousands of charging stations.
Furthermore, Blink Charging is experiencing escalating losses at a faster rate than its expanding revenues. In the second quarter, annual losses tripled to $84 million, coinciding with a slowdown in the EV industry. While sales saw a 42% uptick in November, this growth pales in comparison to the 74% surge recorded in October 2022. Manufacturers are slashing prices to clear the backlog of unsold vehicles, signaling challenging times ahead.
Despite a manageable debt load and reasonable valuation, Blink Charging may face headwinds in an EV market impacted by high inflation and interest rates. The expansion of charging infrastructure might not yield the same returns in such an environment, making a tenfold increase in Blink’s stock price within five years highly improbable.
Beyond Meat (BYND)
Beyond Meat (NASDAQ: BYND), a manufacturer of plant-based meat substitutes, faces an uphill battle in achieving a 1,000% growth target within five years. Recent financial data reflects a decline in sales, with a 9% drop to $75 million in the latest quarter and over 20% decline in the first nine weeks of 2023. While the company’s international segment shows promise, its U.S. business is on a downward trajectory.
Plant-based foods remain a niche market rather than a mainstream industry, with limited consumer appeal. Beyond Meat continues to trim its workforce to manage costs, indicating a challenging road ahead. With \(217 million in cash and over \)1.1 billion in debt, Beyond Meat’s financial position is precarious. Although it generated nearly $8 million in free cash flow in the second quarter, reduced capital expenditures raise concerns about its sustainability. The company’s outlook for maintaining positive free cash flow in the fourth quarter is bleak, underscoring its struggle to turn a profit.
Rocket Labs (RKLB)
Rocket Labs (NASDAQ: RKLB), a satellite launch company, stands out as a promising stock option in the space industry. Despite facing setbacks since its August 2021 IPO, including a significant drop in value, Rocket Labs rebounded with a 46% increase in 2023. A recent $515 million government contract propelled its stock price, highlighting its potential for growth.
While Rocket Labs has a strong track record of satellite launches and ambitious plans for the future, achieving a 1,000% surge in five years would necessitate substantial growth. Currently trading at 11 times revenue, Rocket Labs’ stock price would need to surpass $60 per share to achieve this target. Considering industry benchmarks and growth projections, a more conservative estimate aligns with Rocket Labs’ gradual expansion rather than meteoric growth.
In conclusion, while Rocket Labs shows promise for growth, the reality of achieving a 1,000% increase within five years remains a lofty goal. This underscores the limitations of relying solely on AI-generated stock predictions for making informed investment decisions.
