Sensetime (HK: 0020) is the Hong Kong market's bellwether AI stock. Therefore we might expect, as AI becomes so markedly more fashionable, a certain effect upon the stock price. Which is what did indeed happen. Sensetime-W rose 10% merely on the idea that they might make an announcement about an AI product. We also said that sometimes it's better to buy the rumour and sell the fact - usually pretty good advice that. But what has actually happened is that, at least so far, there has been no act. So the Sensetime stock price has been drifting down to that starting point of only a couple of weeks ago.
Rather than no news being good news, no news is just boring and the excitement fades perhaps. This is also a reflection of the deep uncertainty here. We know that AI is going to be important. We know that it's going to change the world. But that's not enough - we need to know who is going to make money out of it. The more competition there is the less it's going to be those running the AI models themselves. And as far as anyone can see it's steam engine time. 5 years ago no one really knew how to make Large Language Models, LLMs. Now it seems that anyone with a large enough chequebook to buy the computer runtime can have one in any language. So, competition is going to be fierce. Owners of LLMs might therefore not be the people who are going to make money.
Sensetime share price from Hong Kong Stock Exchange
There's also another issue here - the volatility produced by any mention of AI. Our example is Marpai - OK, a tiny company and so most unlike Sensetime. But Marpai doubled when people realized it used AI in its health care insurance management business. Doubled for a few days at least. It took all of four days for folk to realize that, actually, Marpai wasn't that interesting and the stock went back to its starting point. Febrile markets, new fashions, just do produce these sorts of share price moves.
Until Sensetime actually announces something - even, actually does something - that's probably the best way of viewing current price moves. For it's back to where it was before the AI talk started.
