Guardforce AI and AITX: is it wise to buy these AI stocks?

By:
on May 11, 2023
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  • Guardforce AI shares plunged after the company announced plans to raise capital.
  • AITX shares have also been in a strong downward trend.
  • AITX stock may have bottomed while Guardforce will continue falling.

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AITX and Guardforce AI (NASDAQ: GFAI) stock prices have come under intense pressure despite the ongoing artificial intelligence hype. Guardforce AI shares plunged to a low of $4.63 on Wednesday, which was over 86% below the highest point this year. Similarly, AITX shares were trading at $0.0067, ~45% below the highest point this year.

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AI stocks plunge

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AI has been one of the biggest themes in the market this year. Most companies talked about the AI strategies during the recent earnings season. On Thursday, Softbank became the latest company to announce its strategy to leverage the technology.

Early this year, most companies in the AI industry surged as investors positioned for the future. The most notable ones were companies like C3.ai, Artificial Intelligence Technology (AITX), and Guardforce AI. 

Recently, however, most of these companies have lost momentum, which is in line with what I predicted in this article. In most periods, companies in highly hyped industries tend to underperform in the stock market because of high expectations. 

The same situatio has happened in other industries like cannabis and electric vehicles. Cannabis stocks like Tilray and Aurora have all plunged despite weed being legal in most American states. Similarly, most EV stocks like Fisker, Mullen Automotive, and Lucid Motors have all retreated in the past few months.

Guardforce AI, which manufacturers spray, concierge, and air disinfection robots, plunged this week after the company announced a new share offering as it seeks to raise $12 million. In the past few years, the company’s outstanding shares have jumped from 438k in 2021 to 1.25 million. 

The same is true for AITX, which also manufactures robots. The number of outstanding shares rose to almost 5 billion in November last year from 50 milion in 2020. I expect that the two companies will continue diluting their shareholders going forward.

AITX stock forecast

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AITX shares have moved sideways in the past few months. In this period, the stock has found a strong support at $0.0054, where it has failed to move below since 2022. This is a sign that the stock has bottomed. 

Therefore, at this stage, I would recommend against shorting the stock since it may find buyers soon. Short-sellers should only consider placing orders once it moves below the support at $0.0054. If this happens, the shares will likely continue falling.

AITX stock price

Guardforce AI stock price forecast

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On the daily chart, we see that the GFAI stock price has been in a strong sell-off in the past few weeks. This sell-off intensified after the company announced plans to dilute shareholders. It settled to a low of $5, which was slightly above the key support level at $3.93, the lowest level on March 15. Therefore, I suspect that the shares will likely continue falling, with the next level to watch being at $4.

Guardforce AI stock

GFAI chart by TradingView

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