AI stocks stumble after short seller attack on

(Reuters) – Artificial intelligence stocks fell on Wednesday after a short seller alleged accounting problems at retail retailer Inc (AI.N), dampening investor interest in the group of small companies that has vastly outperformed the market. this year.

Shares of fell 10% in early trade, while shares of Thai security company Guardforce AI (GFAI.O) fell more than 14%. Data analytics firm (BBAI.N) lost 7% and conversational intelligence firm SoundHound AI (SOUN.O) fell 4%. was a stock traded on investor-focused social media platform

The company 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 issues” in a letter to its auditor, Deloitte & Touche LLP.

Kerrisdale ran short on 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 does raise some concerns, and investors could benefit from more clarity on some items,” said Kingsley Crane, an 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).” did not immediately respond to a request for comment.

The company’s stock value has more than doubled thanks to increased investor interest in AI-related companies following the viral success of OpenAI’s ChatGPT. That compares to a 6.8% rise in the S&P 500 (.SPX).

However, the rise has slowed 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 and Anil D’Silva

Our standards: Thomson Reuters Trust Principles.

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