Top 3 AI Stocks to Avoid by 2026
Investors looking to navigate the artificial intelligence (AI) stock market should exercise caution. With high valuations and economic uncertainty looming, some AI stocks present more risk than reward. Here are three AI stocks to consider avoiding by 2026.
1. Palantir Technologies (PLTR)
Palantir Technologies has made significant gains, increasing nearly 33 times since its low in 2022. The company’s Artificial Intelligence Platform (AIP) has provided substantial productivity boosts for its clients. However, the stock now appears to be trading in bubble territory.
- Current Price: $188.71
- Market Cap: $450 billion
- Trailing P/E Ratio: 450+
- Forward P/E Ratio: 270
- Price-to-Sales Ratio: 125+
Revenue in the first three quarters of 2025 rose by 51% year over year. Yet, the stock’s pricing seems overly optimistic. Investors may want to reconsider holding Palantir as the potential for near-term upside appears limited.
2. C3.ai (AI)
C3.ai has gained attention for its extensive suite of AI software applications. However, the company is struggling financially, evident in its declining revenue and leadership changes. Thomas Siebel, the founder and CEO, stepped down due to health issues, leaving new CEO Stephen Ehikian with a challenging task ahead.
- Current Price: $13.99
- Market Cap: $2 billion
- Revenue Guidance for Fiscal 2026: $290 million – $310 million
- Year-over-Year Revenue Decline: 20%
As operating expenses continue to outpace revenue, the company reported a loss of $221 million in the first two quarters of 2026, higher than the previous year’s loss. With deteriorating financial health, investors may find C3.ai too risky to hold.
3. Rigetti Computing (RGTI)
Competing in the quantum computing sector, Rigetti Computing shows promise but faces significant challenges. While it boasts a competitive edge in technology speed, accuracy issues could hamper its growth. Major tech companies like Alphabet and IBM are significant competitors, making it tough for smaller firms.
- Current Price: $22.38
- Market Cap: $7.4 billion
- Revenue for the First Three Quarters of 2025: $5.2 million
- Revenue Decline: 39% from 2024
- Net Loss: $198 million
As Rigetti’s stock trades nearly 60% below its October 2025 highs, the declining revenue and a price-to-book ratio of 22 suggest that it may carry more risk than potential reward for investors.
Conclusion
Investors should carefully evaluate the financial health and market conditions surrounding these AI stocks. Palantir, C3.ai, and Rigetti Computing may pose significant risks in the coming years, potentially leading to poor investment outcomes by 2026. Staying informed and cautious is key in this evolving market.
