Source: Caixin.

Everyone knows that Nvidia is currently very popular, but who has ever heard that the AI industry is also facing challenges.

This Tuesday,$NVIDIA (NVDA.US)$surpassing Apple, became the company with the highest global market cap, which further stimulated people's interest in the AI industry. However, what may be overlooked is that even in the hot US stock market this year, many AI concept stocks that were hyped up last year have fallen this year.$Microsoft (MSFT.US)$, $Apple (AAPL.US)$Citigroup strategist pointed out that although about 60% of stocks rose this year, more than half of the stocks in the AI Winners Basket index compiled by the bank have fallen this year.

This seems to indicate that investors are increasingly trying to distinguish the 'swimmers without clothes' from those companies that claim to benefit from the AI trend. If a company cannot prove that their previous 'big picture' is truly effective, and is only pretending to be involved in the industry, traders will snub it with practical actions.

Stuart Kaiser, the head of trading strategy for Citibank's US stock business, said, 'AI is still a big topic today, but if you can't prove your results, you will be hurt. Just repeating the word AI 15 times in your financial report conference won't work anymore.

More than half of AI concept stocks are falling?

This week,$S&P 500 Index (.SPX.US)$compared to tech companies that have not been able to truly deliver on their promises, there has been a significant drop in their market cap since their strong rise in 2023, even though their market cap is far less than that of Nvidia.

This index is based on the list of AI companies that caused the biggest sensation among Citibank's clients last year. In 2023, more than three-quarters of the companies in this AI basket index saw their stock prices rise.

Investment funds trying to choose a wide range of AI benefit stocks have encountered similar experiences this year.

BlackRock's robot and AI ETF, Invesco's AI and Next Generation Software Fund, and First Trust's NASDAQ AI and Robotics ETF all saw more than half of their stocks fall this year.

Mona Mahajan, senior investment strategist at Edward Jones, said that investors are currently more interested in the profitability of AI companies. The difference of companies like Nvidia is that they have achieved their performance goals and showed real data.

Only genuine goods allowed.

Nvidia's market value has more than doubled this year, and its market value has exceeded $3 trillion. However, considering the high demand for their AI GPU chips in the industry and based on its P/E ratio over the past 12 months, its valuation is actually cheaper than this time last year.

While 60% of stocks rose this year,$Salesforce (CRM.US)$, $Snowflake (SNOW.US)$, $Intel (INTC.US)$ and $Adobe (ADBE.US)$more than half of the stocks in the AI Winners Basket index compiled by Citigroup, a bank, have fallen this year, compared to tech companies that have not been able to truly deliver on their promises, which have experienced significant declines since their strong rise in 2023, even though their market cap is far less than that of Nvidia.

Kaiser of Citibank said, 'During the financial reporting season, technology stocks need to cross a high threshold. If you fail to meet your expected performance threshold, you will be hit hard.'

Citing Salesforce as an example, Kaiser said that the company suffered its biggest daily drop in 20 years last month after disappointing quarterly performance.

This has also sparked controversy in the industry about whether there is a bubble in a large number of AI stocks. Although some people view this transformation as a sign of rational return, Rob Arnott, chairman of Research Affiliates, an asset management company, said that the rising trend related to AI 'is still a classic bubble in my opinion.'

He pointed out, 'A characteristic of a typical bubble is that you actually see small companies go out of business before large companies start to fail.'

Arnott emphasized that he believes in the long-term impact of AI, but he said that many benefits actually take time to emerge, and the current market pricing is too urgent.

Editor/tolk