Why C3.ai’s stock price exceeded earnings

AI Basics


what happened

Artificial intelligence (AI) stocks on a basically flat day for the stock market Tuesday. C3.ai (AI -1.80%) It was up 3.2% as of 10:30am ET. And according to StreetInsider market watchers, he has only one reason why C3 stock is doing well today.

Stock option traders are now 4.5 times more likely to buy calls than they are buying puts. In other words, they’re betting big that his C3.ai stock price will rise and not fall after the earnings release.

but why?

so what

Just days after the close of trading on Thursday, March 2, C3.ai shares will report its third quarter 2023 results. Judging by the options trader’s behavior, they feel pretty optimistic that his C3.ai will beat expectations on Thursday.

they may be right.

After all, Wall Street analysts didn’t set the bar high for C3’s performance this quarter. According to Yahoo! Financial estimates show C3.ai’s revenue for the third quarter was just $64.2 million, 8% less than he did a year ago. On the other hand, an unprofitable AI company will have a “revenue” below zero. In fact, with a projected loss of $0.22 per share, C3’s loss appears to be set to triple year-over-year.

So

In other words, analysts are predicting a trainwreck quarter for C3.ai stock.And since it is Be expectedanything better than a disastrous disaster could beat estimates and set the stage for this stock to surge. would consider it good news.

In fact, even with C3.ai reporting poor results, there may still be good news in Thursday’s report. Because in addition to telling investors how much they lost in the third quarter, C3.ai will probably give them guidance on how much to expect to gain. Earn in the future. In that regard, the hype surrounding artificial intelligence continues unabated, with Axios reporting yesterday that companies are “rushing” to incorporate AI into their technology, and Business Insider reporting: increase. meta platform In particular, it will incorporate AI capabilities into WhatsApp, Facebook Messenger, and Instagram.

Indeed, there is no guarantee that C3.ai’s products will be selected to facilitate the addition of AI to technology companies’ products. On the contrary, most analysts warn that C3.ai’s stock will not even make a pro forma profit until 2026 at the earliest.

But just the hope that C3.ai will find a way to profit from the AI ​​revolution could be enough to keep the momentum going in this booming stock.

Randy Zuckerberg, former director of market development and spokeswoman for Facebook and sister of Meta Platform CEO Mark Zuckerberg, is a member of the Motley Fool’s board of directors. Rich Smith holds a position on his Meta Platform. The Motley Fool has a position on and endorses the Meta Platform. The Motley Fool recommends C3.ai. The Motley Fool’s U.S. headquarters has a disclosure policy.



Source link

Leave a Reply

Your email address will not be published. Required fields are marked *