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Investors can't get enough of artificial intelligence (AI) stocks these days.

The technology has gripped the investing world following the exploding popularity of ChatGPT, and businesses in the tech sector and beyond are looking for ways to capitalize on generative AI and other forms of artificial intelligence.

Naturally, investors are also excited about the breakthrough technology, and their enthusiasm has pumped up a number of AI stocks in 2023. Bullishness around AI has lifted the Nasdaq to major gains this year -- the tech-centric index is up 31% year to date.

However, not all AI stocks are created equal. Keep reading to see one that could help you retire early and another that could sink your portfolio.

Image source: Getty Images.

If you're looking for AI stocks with multibagger potential, one great candidate is Upstart (UPST -5.85%).

Upstart is a loan originator and servicer that uses an AI-based system to screen would-be borrowers and determine their creditworthiness. The company says that its technology, which assesses 1,500 variables and more than 44 million data events, produces loans at higher approval rates and with fewer defaults than loans based on conventional FICO scores.

The disruptive potential of Upstart is considerable. The company, which currently offers consumer and auto loans, could eventually compete in a total lending market worth $4 trillion, including home loans and small business loans. Upstart plans to expand into the home equity line of credit (HELOC) market later this year, its first entry into the massive home lending market.

Upstart has demonstrated its ability to turn a profit as its profit margin reached a peak of 16% in 2021.

But the stock crashed in 2022 as interest rates spiked, credit markets tightened, and its lending partners pulled back on buying loans. Now, there are signs the company is turning the corner following the stock's 97% plunge from its all-time high.

Revenue in the second quarter is expected to increase sequentially by 31%, and interest rates seem to be plateauing after the Fed decided to pause rate hikes last week. That's a sign the worst of the credit tightening cycle is probably behind us. Meanwhile, the number of banking partners working with Upstart has jumped to 99 from just 10 at its IPO and 50 a year ago.

Investors also seem to be recognizing that turnaround potential -- the stock is up about 150% since the beginning of May. If revenue growth and profitability return, the stock could soar, especially if its AI technology continues to gain adoption.

Additionally, a short squeeze seems to have helped pump the stock up in recent weeks and could continue to do so, as 34% of the stock was sold short as of May 31. With those potential tailwinds, it wouldn't be surprising to see the stock continue its surge over the rest of the year and beyond.

Unfortunately, not every AI stock will be a one-way ticket to an early retirement.

C3.ai(NYSE: AI) has been one of the biggest winners on the market in 2023 -- the enterprise AI platform operator is up 250% this year. However, those gains were driven almost entirely by hype and CEO Thomas Siebel's own attempts to pump up the stock.

For instance, even as companies likeNvidia andOracle reported strong growth from AI, C3.ai posted flat revenue and wide losses in its most recent quarter. On a generally accepted accounting principles (GAAP) basis, the company lost $65.0 million on revenue of just $72.4 million in its fiscal 2023 fourth quarter, which ended April 30.

Management expects some improvement in its fiscal 2024, calling for revenue growth of around 15%, and it said it would exit the year with an adjusted profit.

While that seems to show the stock is building momentum after switching to a consumption-based billing model and as interest in AI spreads, C3.ai still looks unreasonably expensive for its growth rate, trading at a price-to-sales ratio of 16.

That means the stock could easily plunge if upcoming results don't live up to expectations, which seems likely given its track record.

If you're looking for AI stocks to buy, there are plenty of better options than C3.ai.

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1 AI Stock That Could Take You to Easy Street -- and 1 That Could ... - The Motley Fool