Why These 15 AI Stocks Are Plunging So Far in 2025

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.

A financial expert pointing to details of stocks while describing the weighted properties of the index.

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).

15. Rekor Systems Inc (NASDAQ:REKR)

Number of Hedge Fund Holders In Q4 2024: 5

Rekor Systems Inc (NASDAQ:REKR) is an AI-driven roadway intelligence company.

The stock is down significantly so far in 2025 as it posted disappointing quarterly results in late 2024. The company’s revenue fell short of expectations by 25% in its latest earnings report, with losses per share exceeding forecasts by 75%.

On top of that, Rekor announced an at-the-market issuance agreement to sell up to $25 million in common stock. Investors don’t like dilution, so many ended up selling REKR.

REKR is down 13.14% year-to-date.

14. TROOPS Inc (NASDAQ:TROO)

Number of Hedge Fund Holders In Q4 2024: N/A

TROOPS Inc (NASDAQ:TROO) is a company that does money lending in Hong Kong and Australia. It also does IT support for AI and cloud computing.

The stock is down significantly so far in 2025 as TROOPS continues to face significant profitability issues due to intense competition and economic challenges in Hong Kong.

TROOPS Inc reported a net loss of $2.04 million for the trailing twelve months and has a negative net profit margin of 46.89%.

There has also been some dilution here and the stock trades pretty expensively.

TROO is down 14.62% year-to-date.