We recently compiled a list of the Why These 15 AI Stocks Are Plunging So Far in 2025. In this article, we are going to take a look at where Palladyne AI Corp. (NASDAQ:PDYN) stands against the other AI stocks.
Investors have been turning sour on the AI industry. Many have expected AI stocks to decline for the past two years, but that did not turn out to be the case and AI companies proved bears wrong in each of the past eight or so quarters.
Microsoft has canceled its data center contracts and Trump’s tariff plans are increasingly complicating the AI narrative, especially for semiconductor companies that derive a good portion of their revenue from China.
Perhaps AI could prove the bears wrong again, but considering even Nvidia’s recent earnings beat failed to overpower the cautiousness investors now have about AI, it is worth looking into some bearish arguments.
A good way to do that is by looking into AI stocks that have corrected the most so far this year. The AI industry is quite broad and you’ll be able to gain useful insight into some major AI sectors and their challengers if you look into why these stocks have been declining.
Methodology
For this article, I screened the worst-performing AI stocks year-to-date. Stocks that I have covered recently will be excluded from this list.
I will also mention the number of hedge fund investors in these stocks. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A scientist at a computer station, surrounded by a neural network of artificial intelligence code.
Palladyne AI Corp. (NASDAQ:PDYN)
Number of Hedge Fund Holders In Q4 2024: N/A
Palladyne AI Corp. (NASDAQ:PDYN) is an AI and machine learning company targeting the robotics industry.
The stock is down significantly so far in 2025 as there have been data security concerns, and of course, uncertainty surrounding the broader AI industry. There have been reports of critical data security flaws in Palladyne’s AI systems which caused the stock to drop.
Moreover, the CTO of the company sold $392,441 worth of shares recently. The company is also quite unprofitable and trades with a frothy valuation.
The consensus price target of $15 implies 131.84% upside.
Palladyne AI Corp. (NASDAQ:PDYN) is down 47.31% year-to-date.
Overall PDYN ranks 3rd on our list of the AI stocks that are plunging so far in 2025. While we acknowledge the potential of PDYN as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PDYN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks to Buy Now and Why These 15 E-Commerce Stocks Are Skyrocketing So Far In 2025
Disclosure: None. This article is originally published at Insider Monkey.
