On Wednesday, July 12, Bobby Molavi, a trader at Goldman Sachs, specifically discussed artificial intelligence in his weekly U.S. stock analysis article. He mentioned the rising trend of decreased interest and diminishing headlines concerning AI, indicating a return to normalcy for related concept stocks.
According to data from Similarweb, the web traffic for ChatGPT decreased by 9.7% from May to June, marking the first monthly decrease since it gained wide attention in November of the previous year. Visitor engagement on ChatGPT is also on the decline. While data for June is not yet available, Similarweb reported a month-over-month drop of 8.5% in May.
Analysts at Similarweb commented that after months of astonishing growth, ChatGPT's traffic and engagement started to decrease in June. Notably, the chatbot had added 100 million users within its initial months of operation.
Gary Marcus, an Emeritus Professor of Psychology and Neuroscience at New York University, believes it was just a matter of time before users realized that current generative AI is not as intelligent as it's often perceived. He expressed that the intelligence level of AI is often exaggerated, and while the ultimate goal is achievable, it's still far from being reached. Marcus further warned of a subtle shift of massive power towards a handful of companies controlling AI, a shift we may not yet fully perceive.
Retail investors seem to be catching on to the over-hyped AI trend. According to a recent weekly report by Vanda Research, which focuses on strategy and macro research, retail investors continue to actively pursue a broader uptrend in U.S. stocks, investing through ETFs. This suggests their bullish outlook extends beyond specific themes and covers the overall U.S. market. Additionally, there are signs of shifting focus from AI stocks towards others, such as electric vehicle (EV) stocks.
Based on Vanda's statistics, the average daily net inflow into the U.S. stock market is currently $1.4 billion, nearing the historic record of $1.5 billion set in March last year. Vanda pointed out that retail investors often rotate sectors in the short term, and recent better-than-expected delivery volumes by electric vehicle companies like Tesla have catalyzed this trend. The less popular electric vehicle stocks like Rivian have also started to rebound, partly due to rotation out of hot AI stocks, which have been on the rise for several weeks and might now seem less appealing.
The demand for AI concept stocks themselves is also slowing down. For example, retail investors' demand for AMD, a non-AI chip stock, is increasing, unlike for Nvidia. Vanda predicts that as long as institutional investors do not aggressively short sell the chip manufacturer, its performance could potentially outperform its peers due to higher retail demand in the future.
Meanwhile, Vanda has noted a decrease in retail investors' demand for popular AI products like C3.ai. The firm cautioned that if the uptrend of these kinds of stocks stagnates for a considerable time, institutional investors may aggressively short sell these or similar AI companies, triggering a rapid and severe sell-off.
