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 Lemonade, Inc. (NYSE:LMND) 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).

An elderly couple with their arms around each other, holding a frame of life insurance.

Lemonade, Inc. (NYSE:LMND)

Number of Hedge Fund Holders In Q4 2024: 25

Lemonade, Inc. (NYSE:LMND) is a digital insurance company that also uses artificial intelligence and behavioral economics in its operations.

The stock is down significantly so far in 2025 despite some positive events. For example, Lemonade’s revenue increased 29% year-over-year to $149 million and exceeded analyst expectations of $145 million.

However, California wildfires have had a very negative impact here. Lemonade faced significant claims from the California wildfires in late 2024. It is going to cost the company an estimated $20 million in EBITDA.

The guidance was also missed. Lemonade's guidance for Q1 2025 revenue ($143–$145 million) and full-year 2025 revenue ($655–$657 million) fell short of analyst estimates ($151.4 million for Q1 and $667.5 million for the year).

The consensus price target of $32.67 implies 3.92% upside.

Lemonade, Inc. (NYSE:LMND) is down 15.13% year-to-date.

Overall LMND ranks 12th on our list of the AI stocks that are plunging so far in 2025. While we acknowledge the potential of LMND 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 LMND 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.