When AI Buzz Drowns Out the Fundamentals

Retail hears the narrative. Professionals test its weight. Here’s how to stay grounded.

AI Mentions Are Moving Micro-Caps—Fast, and Often Without Fundamentals

Last month, Rigetti Computing—a micro-cap quantum tech firm—saw a sharp intraday spike after announcing vague plans to expand its AI efforts.

There was no earnings beat. No major product update.

Just the right keyword at the right time—and that was enough to trigger a flurry of retail buying.

But the broader picture tells a different story.
The stock remains deep in negative territory for the year, with brief rallies fading as quickly as they arrive.

It’s a classic case of how sentiment can run far ahead of fundamentals when AI enters the conversation.

The Narrative Is Changing, and So Are the Players

AI is still the most powerful word in the market.

In Q1 2025, over 210 S&P 500 companies mentioned “AI” on their earnings calls—nearly double the five-year average.

But something’s shifting:
Rather than chasing Microsoft or Nvidia, many retail traders are now rotating into names like SoundHound AI, Applied Digital, and Rigetti.

These stocks aren’t profitable.
Some barely generate revenue.
But they all sound like they could be in AI—and that’s become the story investors are buying.

Institutions Aren’t Just Hearing AI—They’re Decoding It

Here’s what most retail investors miss:

Institutional investors aren’t reacting to AI mentions—they’re analyzing them at scale.

Using AI-powered models, funds parse earnings transcripts in real time—flagging shifts in tone, sentiment, and keyword density before most people finish reading the headline.

They’re not chasing the story.
They’re measuring the signal.

That’s the real divergence.
Retail hears the narrative.
Professionals test its weight.

How to Protect Your Portfolio From AI Story Stocks

• Watch for buzzword inflation.
  A spike in “AI” mentions doesn’t always mean real innovation. Look for context, not just keyword counts.
• Dig into business models, not headlines.
  What problem is the company solving? Does it have pricing power, or just PR?
• Look for proof—not just promise.
  Consider Super Micro Computer (SMCI)—a company often grouped into the AI trade.
  Unlike the microcap crowd, SMCI designs and ships high-performance AI servers, many built around Nvidia chips.
  Its FY 2023 revenue grew 37% year-over-year to $7.1 billion, and it commands a growing share of the AI server market.
  It’s not hype-free, but it’s grounded in actual delivery.
• Don’t confuse motion with meaning.
  Just because a stock moves doesn’t mean it’s moving in the right direction. Substance always outlasts story.

A Question to Sit With

Are you investing in a business—or just a narrative that sounds good in the moment?

Stay Grounded When Narratives Get Loud

Earnings season used to be about fundamentals.

Now it’s also about narratives—and how fast they travel.

You don’t need an algorithm to stay ahead.
You need perspective, patience, and the discipline to pause before acting.

Let others chase the flash.
You’re here to build something that lasts.

“Retail hears the narrative. Professionals test its weight.”

Strategies Worth Watching

Don’t Let AI Buzz Distract You From Real Returns

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Every second stock pitch mentions AI.
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