Although the interest is high in the artificial intelligence sector, there still are plenty of AI stocks to sell before they tank further.

After stock markets fell last year, speculators tried to jumpstart 2023 with the hype around AI. Markets understand only half of the prospects in this emerging technology.

AI will disrupt industries and bring about change. AI needs heavy investments in training models, computing, power and hardware. Costs are more likely to grow faster than the revenue potential in AI.

Past fads like automation and machine learning are an extension of the AI hype train. After nearly a decade, neither of the former promises resulted in the promised growth.

Investors should sell the most overrated AI stocks in March.

C3.ai (AI)

C3.ai (NYSE:AI) shows a troubling bearish “triple top” on its chart. The stock traded above $25 three times, only to fall each time. Last trading at around $21.30, it is among the AI stocks to sell after the government may introduce regulations. In the 14-page report, business lobbying groups voiced their concern about AI’s impact on national security and privacy.

C3.ai may need to spend more to appease the U.S. Chamber of Commerce.

The company will need to rely on its current offering to show growth. It will post stronger service revenue. To support its gross revenue, it needs to keep its highly skilled workforce. However, investors may speculate that C3.ai would divert its professional services staff to answer to regulators.

In the last quarter, the company counted on a large service contribution from customers like Baker Hughes (NASDAQ:BKR).

It might increase its reliance on incremental bookings with Baker Hughes. C3.ai needs to broaden its customer base to report sustainable growth.

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) sells AI operating systems that consume data to learn, trade, validate and for inference. The company convinced the market that it is the AI solution that will bring more machine learning efficiency at a great price.

Customers will buy Nvidia AI to train its model. Once completed, they may not need as much computing power in the next training cycle.

Nvidia may face more competition from AI solutions providers. Companies that pay for Nvidia’s AI computing architecture may look for alternatives. Nvidia has at least 10 alternatives for deep learning Amazon Machine Image.

Nvidia designs the full stack of its GPU and networking solution. It may need more time to develop new components. The company works with leaders in the field to meet those computationally intense and expensive needs. If customers delay or slow their AI investments, Nvidia will take longer to recoup its costs.

Palantir Technologies (PLTR)

Palantir Technologies (NYSE:PLTR) touts its AI and machine learning models to provide insights for customers. However, its contract wins are rarely large in dollar size. It leaves its shareholders underwhelmed. Palantir is an AI stock to sell.

On Mar. 8, 2023, the Department of State announced a contract with Palantir worth $99.6 million over five years. The revenue of $20 million annually is not enough to offset its high costs. In the fourth quarter, Palantir earned only a penny a share. It disclosed a high total stock-based compensation of $129.4 million.

Palantir has some potential. It reported $508.6 million in revenue in Q4. This resulted in its first quarterly profit. The company expects to post a profit this year. Bears bet that the market will punish Palantir for its small profit. It stretches its stock to unfavorable valuation levels.

The stock market sentiment is getting worse. Last week, the S&P 500 (NYSE:SPY) lost 4.52% in value. These weak markets will probably pull PLTR stock multiples lower, hurting its share price.

On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.