Bubble In Small Cap AI Stocks Continues To Deflate; Down 15% YTD

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Introduction

Investing in the artificial intelligence (AI) sector should generate fantastic returns over the next decade. But most investors focus on the more popular mega/large cap AI & related (AI&R) stocks that often trade for hundreds of dollars per share. Meanwhile, there are a number of less expensive, and potentially more explosive, small cap AI&R stocks flying under the radar, however, that warrant your attention and most such stocks trade for less than $10/share.

The ten stocks in the munKNEE Small Cap AI Stocks Index were in bubble mode in December going up 17.3%, on average, but the bubble began to deflate in January. The Index went down 1.9% last week and is now down 14.8% YTD. The performances of the 10 stocks in the Index are ranked below in descending order as to their performances last week, as well as in the last 7 weeks along with their market capitalizations and latest stock prices plus their latest news, commentary and/or analysis where available:

Applied Optoelectronics (AAOI): up 15.6% last week; down 24.0% YTD
- AAOI provides fiber-optic access network products for the cable broadband, internet data center, telecom, and fiber-to-the-home markets.
- Market Capitalization: $564M
- Latest Stock Price: $14.68
Digimarc Corporation (DMRC): up 2.3% last week; down 23.8% YTD
- DMRC software provides digital identifiers designed to address counterfeiting, product authenticity, recycling accuracy, and supply chain traceability.
- Market Capitalization: $585M
- Latest Stock Price: $27.51
Innodata (INOD): down 0.2% last week; down 22.7% YTD
- INOD provides AI-enabled software platforms and managed services for AI data annotation, AI digital transformation, and industry-specific business processes.
- Market Capitalization: $181M
- Latest Stock Price: $6.29
Evolv Technologies (EVLV): down 0.3% last week; down 25.0% YTD
- EVLV screens people for threats without sacrificing the visitor experience.
- Market Capitalization: $539M
- Latest Stock Price: $3.54
Rekor Systems (REKR): down 2.4% last week; down 39.6% YTD
- REKR leverages AI, machine learning, and holistic data to support the intelligent infrastructure for smart mobility.
- Market Capitalization: $170M
- Latest Stock Price: $2.01
D-Wave Quantum (QBTS): down 6.7% last week; up 120.5% YTD
- QBTS develops and delivers quantum computing systems, software, and services worldwide.
- Market Capitalization: $310M
- Latest Stock Price: $1.94
Verses AI (VRSSF): down 12.3% last week; down 7.0% YTD
- VRSSF offers a voice and text-based personal AI assistant designed to learn about its users in order to better organize, manage, and optimize their digital life.
- Market Capitalization: $162M
- Latest Stock Price: $1.07
Rigetti Computing: (RGTI): down 17.3% last week; up 239.6% YTD
- RGTI builds quantum computers and the superconducting quantum processors.
- Market Capitalization: $258M
- Latest Stock Price: $1.63
- Latest News, Commentary and/or Analysis:
  - Rigetti Computing Reports Fourth Quarter and Full Year 2023 Results
BigBear.ai (BBAI): down 18.0% last week; down 6.5% YTD
- BBAI provides AI and machine learning to assist customers in aggregating, interpreting, and synthesizing data to enable real-time decision-making capabilities.
- Market Capitalization: $485M
- Latest Stock Price: $2.00
SoundHoundAI (SOUN): down 31.1% last week; up 189.6% YTD
- SOUN offers voice AI solutions that let businesses offer conversational experiences to their customer in 25 different languages.
- Market Capitalization: $1.9B
- Latest Stock Price: $6.14
- Latest News, Commentary and/or Analysis:
  - Nvidia-Backed SoundHound AI Tumbled This Week on Short-Selling Report, Downgrade