Key Points
Since the end of the 2022 bear market, several artificial intelligence (AI) stocks have delivered massive returns for investors as they transform the technology landscape. Not surprisingly, one of the top stocks in this category is Nvidia, which delivered returns of over 1,640% since its low in mid-October 2022.
Unfortunately, such success has not made every AI stock an automatic buy. In fact, given the state of the stock or the company, it may be time to part ways with some of the stocks, and these three names probably belong at the top of such a list.
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Palantir Technologies
Admittedly, Palantir Technologies (NASDAQ: PLTR) may seem like a strange choice for a “stocks to sell” list. It is up nearly 33-fold from its 2022 low, and its Artificial Intelligence Platform (AIP) has brought eye-popping productivity gains to several of its clients.
However, its success has arguably taken its stock into bubble territory. The problem with bubbles is that they can take stocks to such high levels that it may take years or possibly decades to recover.
Even though bubbles are typically identified after the fact, the valuation metrics look like a bubble in the making. Palantir’s trailing P/E ratio is just above 450. While investors could dismiss that, its forward P/E of around 270 and the price-to-sales (P/S) ratio above 125 prove the trailing earnings multiple is not a fluke. Also, considering that investors often balk at sales multiples that are one-fourth of Palantir’s P/S ratio, it is likely a sign that investors should turn cautious.
Indeed, revenue for the first nine months of 2025 rose by 51% year over year. Amid that performance, Palantir stock certainly deserves to trade at a premium. Nonetheless, with the market pricing the stock beyond perfection, one has to question whether the stock has any near-term upside left.
C3.ai
C3.ai (NYSE: AI) stock has often drawn investor interest in recent years. The company has developed over 130 software applications to help organizations adopt AI quickly, and companies from a variety of industries use its tools.
Unfortunately, the company has faced considerable struggles, the latest of which is the news this summer that the company’s founder and CEO, Thomas Siebel, would step down. He departed in September due to health issues, and the current CEO, Stephen Ehikian, faces a daunting turnaround task.
One issue to tackle is C3.ai’s falling revenue. After issuing fiscal 2026 guidance between $448 million and $485 million six months earlier, it reduced that guidance to between $290 million and $310 million at the end of the second quarter of fiscal 2026 (ended Oct. 31).
Amid that adjustment, revenue is down 20% year over year in the first half of fiscal 2026. Also, operating expenses continue to far outpace revenue, and its $221 million loss in the first two quarters of 2026 was higher than its $129 million loss in the same year-ago period.
Consequently, the stock trades down over 60% from one year ago. That decline took its P/S ratio to 5, a two-year low and a level that could attract some investors. Still, with deteriorating financials and an uncertain direction for the company under new management, one has to wonder whether C3.ai stock is worth the risk of owning.
Rigetti Computing
Rigetti Computing (NASDAQ: RGTI) competes in the burgeoning quantum computing field, which is on track to become a player in next-generation AI.
Rigetti has a competitive advantage in developing faster technology. Unfortunately, this does not necessarily lead to the highest accuracy, a factor that could lead to Rigetti losing out to competitors.
Moreover, it is not only smaller companies like IonQ that compete in this field. Alphabet and IBM are among the mega-techs investing in quantum computing, and they generate sufficient free cash flows to invest in the necessary research and development.
This is not the case with Rigetti, which has to issue shares periodically simply to fund its continued existence. Additionally, it may be losing out to competitors, as its revenue in the first nine months of 2025 was just $5.2 million, a 39% decline from the same period in 2024.
That drop and a $149 million change in fair value of derivative warrant liabilities led to a net loss in the first three quarters of the year of $198 million. In comparison, the company lost $48 million over the same timeframe in 2024.
Furthermore, Rigetti had benefited from a rising stock price, but the stock now trades down nearly 60% from its October 2025 high. Considering the falling sales and the price-to-book ratio of 22, this stock seems to offer more risk than reward to its investors.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, International Business Machines, IonQ, Nvidia, and Palantir Technologies. The Motley Fool recommends C3.ai. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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