10 Worst AI Stocks to Buy According to Reddit

1. Luminar Technologies Inc. (NASDAQ:LAZR)

Short % of Shares Outstanding As of August 30: 19.02%

Number of Hedge Fund Holders: 8

Luminar Technologies Inc. (NASDAQ:LAZR) develops vision-based LiDAR and machine perception technologies, primarily for self-driving cars, one of the most significant applications of AI. Its LiDAR sensors utilize laser beams to create detailed 3D maps of the surrounding environment, enabling vehicles to perceive their surroundings accurately and safely.

The company made 16.45 million in revenue in Q2 2024, recording a 1.57% year-over-year growth. However, there was a 22% sequential decline, due to some ongoing contract renegotiations, and also a slowed-down production ramp for its first global production vehicle with standardized LiDAR, particularly for Volvo Cars.

The company’s collaboration with Polestar remains strong. Their first vehicle equipped with the company’s LiDAR, the Polestar 3, is scheduled for release next year, and they have plans to integrate Luminar technology into additional models in the future.

It also announced a significant restructuring of its debt, reducing it by approximately $148 million and extending maturities from 2026 to 2030. Additionally, it raised $100 million in new capital through non-convertible Senior Secured Notes due in 2028.

Management emphasized the focus on improving operational efficiency and cost management, which included a reduction in workforce by about 20% and efforts to streamline product development processes. These plans are aimed at positioning the company for future growth and profitability.

While we acknowledge the growth potential of Luminar Technologies Inc. (NASDAQ:LAZR), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LAZR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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