What happened
Stocks with ties to artificial intelligence (AI) are having another fantastic week. Here's how a few AI stocks have fared recently, according to data from S&P Global Market Intelligence. As you will see, they have enjoyed impressive gains all year. In keeping with the trend of recent months, these stocks posted this week's double-digit percentage gains with limited support from company-specific news.
Stock | Business Focus | Gain Since Last Friday's Closing | Gain Year-to-date |
|---|---|---|---|
SoundHound AI(NASDAQ: SOUN) | AI-powered voice control software | 23.0% | 154.2% |
Unity Software(NYSE: U) | Powerful and easy-to-use platforms for game development and film production, including many AI functions | 16.6% | 52.8% |
Aurora Innovation(NASDAQ: AUR) | Self-driving vehicle software built around AI systems | 16.4% | 128.9% |
Data was collected from S&P Global Market Intelligence and Finviz.com after the market close on Thursday, June 29, 2023. AI = artificial intelligence.
So what
Let's start with the bare-bones supply of specific company news.
SoundHound gained membership in the Russell 2000 and Russell 3000 market indexes on Monday. The Russell indexes rebalance their ticker lists once a year. The updates are followed by a rush of trades in index-tracker stock funds, often resulting in one of the highest trading volumes of the year.
However, inclusion in these ticker lists doesn't always inspire a big jump. In fact, the standard response is a shrug and a yawn, with barely a bump on the stock chart. After all, the additions were pre-announced in May, and the market had plenty of time to bake this honor into each new Russell selection's stock price ahead of the actual update. Either way, that was SoundHound's biggest news this week.
Aurora Innovation also joined the Russell 3000 index on Monday. However, the autonomous driving expert's shares actually fell that day. Its gains arrived later in the week despite complete radio silence in terms of business news, conference presentations, or management's blog posts. The only exception was a handful of bog-standard regulatory filings related to the company's stock-based compensation policies.
Unity broke the mold with a richer news flow than usual. On Tuesday morning, the company released a new version of its game development platform that included brand-new generative AI features. Unity Muse helps developers write their code, and Unity Sentis adds neural networks to the development platform's feature list. Furthermore, the company also added AI plug-ins to its digital assets store. Unity's stock rose sharply on the news, which was all about AI.
The rest of this week's big jumps rested on broader market trends -- mostly of the AI-based variety. For example, Tesla released a new version of its self-driving software, reminding investors that Aurora is working on similar solutions. The same event also lifted SoundHound, whose largest revenue stream these days is found in voice controls for the infotainment systems in modern cars.
AI is on every investor's mind this year, with a steady flow of reminders that the future will be computer-controlled in a myriad of new ways. The stocks listed here are part of that transformative sea change.
Now what
These AI experts are skyrocketing nowadays, but don't forget that they all suffered heavy price cuts last year. Aurora, Unity, and SoundHound are all down by more than 40% since the end of 2021, including the soaring charts of 2023.
So it's a little early to declare a golden age for any of these companies or their investors. For savvy investors who are aware of the market's unpredictable nature and believe in AI's long-term potential, this could be an excellent time to take a closer look at these three stocks. After all, one investor's pain can be another's wide-open buying window.
10 stocks we like better than Unity Software
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*
They just revealed what they believe are the ten best stocks for investors to buy right now... and Unity Software wasn't one of them! That's right -- they think these 10 stocks are even better buys.
*Stock Advisor returns as of June 26, 2023
Anders Bylund has positions in Tesla. The Motley Fool has positions in and recommends Tesla and Unity Software. The Motley Fool has a disclosure policy.
