Having Loser AI Stocks Like Ouster Inc. (OUST) In Your Portfolio is … Good?

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Quick Read

• Recently several speculative, smaller-cap companies in Eric’s portfolio such as Power Solutions, experienced sharp, often exaggerated sell-offs after earnings.

• Eric emphasizes that these positions are intentionally small parts of a broader portfolio designed for long-term exposure.

• Eric and Austin both believe that if you aren’t seeing losers in your portfolio, it could be a sign that you’re playing things too conservatively and not taking enough big swings.

• If you’re thinking about retiring or know someone who is, there are three quick questions causing many Americans to realize they can retire earlier than expected. take 5 minutes to learn more here

Summary:

Can having losers in your AI portfolio be a good thing? Two of our 24/7 Wall St. Analysts believe it is.

During a recent discussion on The AI Investor Podcast, Eric Bleeker and Austin Smith talked about several stocks that performed poorly after earnings, highlighting that not every position in a portfolio will be a winner. Austin specifically noted that Power Solutions suffered a large drop, prompting Eric to explain the dramatic intraday swings the stock experienced.

Eric explains that many recent recommendations in the portfolio appear weak because they were intentionally smaller, high-risk positions aimed at capturing long-term opportunities. These smaller companies, such as Applied Optoelectronics and Power Solutions, tend to suffer exaggerated sell-offs during periods of indiscriminate market pessimism. Eric emphasizes that the underlying thesis for many of these companies have not fundamentally changed; rather, the market is currently punishing speculative names broadly.

"We've started out with some of these areas that I see having big stories in 2026," Eric explains. "And I've been going for smaller, speculative plays to get some leverage on them. If you're coming to the portfolio and buying only the most recent stuff, you're not going to get the broad exposure across ideas."

Eric also notes that lower-quality management teams can worsen these declines through unclear guidance or poor communication. Despite this, however, Eric believes some companies, like Ouster, still have strong long-term prospects even if they are caught in unfavorable market narratives.

Austin reinforces the idea that volatility affects both gains and losses, and no portfolio can or should have only winners. Eric agrees and adds by that having some losing positions is essential, because a portfolio without losers indicates that an investor avoided taking the necessary risks to capture major future opportunities, especially in areas like AI.

Transcript:

Austin: It's not all sunshine and rainbows. There are some pretty big losers after earnings, right? So we talked about, you know, Amazon maybe beating to the upside, but let's look at the other side of the ledger, right? We gotta keep ourselves honest here. This is why we have a portfolio. Not every stock does well.

What are some of the losers that got got shellacked in earnings, justified or otherwise, right? You know, maybe we're seeing some premature bearishness, or maybe there's actually, you know, some real thesis cracking going on. I see, what was the one that sold off really well?

Power Solutions. Right? They were off close to, what, 15%? Do I have that right?

Eric Bleeker: Yeah, and they're down now 36% from when we announced the recommendation.

Austin: But, but after earnings, they were down a material amount. Right?

Eric Bleeker: So yeah, the day after earnings, initially it was up 7% from announcing earnings. When I looked after hours, it was down 15. when the market opened, it was down 45%. I had someone text me and say, “This seems like the kind of sell off you only see an accounting scandal.” I said, “Yeah, it seems like exaggeration.” They said, “I'm gonna buy.”

They were up 40% by the end of the day, because from the bottom it rose 40%. It's still down. You know, the thing is, Austin, recently in the portfolio, if someone looked at, they would be like, “Oh, these, these recent buys are, are not very good.”

We've, we've got a number of stocks down that we had made recent, you know, buy announcements on. The reason is because we've started out with some of these areas that I see having kind of big stories in 2026, and I've been going for smaller speculative plays to get some leverage on them. So like if you are new to the portfolio, you might have seen Applied Optoelectronics, which is AAOI. We have that as a small $5,000 position. The reason we have that as a $5,000 position is because we have larger bets on Coherent. We have larger bets on Lumentum. We have larger bets on Fabrinet. If you're coming to the portfolio and only buying the most recent stuff, you're not going to get the broad exposure across ideas, right? So when you have these indiscriminate sell-offs, these small and speculative companies, we'll often sell off the worst. So like for Power Solutions, it might be a bad recommendation. We'll need to give time to see. But the idea was, I like the overall market. I didn't think this company necessarily had anything special, but they were trading at what I saw as a fairly reasonable valuation still, they're going to have just demand by essence of the market. Now, what investors got whacked by was it's small and speculative, and the management team might not be as good as management teams who have been through this rodeo before. They issued weird guidance and they didn't have an earnings call, and when they finally had an earnings call, they tried explaining it.

It seems relatively explainable, but you're just getting a lower quality company for the promise of upside. You know, if you want stability in that market, you are looking at a Caterpillar or a Generac, right? And we might go through and recommend those stocks later, but you know, I did wanna talk about some of, right now, if someone's looking at kind of investment ideas, if you're small and speculative, you're gonna getting hammered in this market no matter what. That's just the type of market it is. I don't necessarily think that. I think Ouster, which just got hammered with pretty good earnings, be a very solid company and it could be the kind of stock that's getting sold off indiscriminately. Even though they have a great long-term opportunity, they're just in the wrong narrative for the market right now.

So, I would encourage everyone who's looking at some of these ideas that are selling off to kind of take a deep breath. Remember that if you're buying them, they are supposed to be positioned small relative to the rest of the portfolio know that often there's nothing that's been thesis changing on these ideas. They’re just the wrong stocks for the wrong moment, right?

Austin: Volatility cuts both ways as we say. And no portfolio has a hundred percent winners--

Eric Bleeker: You don't want a hundred percent winners either.

Austin: Because you're being too conservative, right?

Eric Bleeker: You are not taking enough risks. If you believe that AI is as large as it is and you're not taking some swings that miss, you’re doing it wrong, you're doing it wrong. You want losers. I know that sounds crazy, but you want losers. That’s part of the game.

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