Why C3.ai’s stock rose 14% in February

AI Basics


what happened

shares of C3.ai (AI -1.80%) Data from S&P Global Market Intelligence showed February was up 14% in volatile trading.

Software-as-a-service stocks focused on artificial intelligence (AI) have benefited from the subsequent rise in attention to AI. microsoft Announcing its own Bing search engine powered by ChatGPT, alphabet has revealed its own ChatGPT competitor, Bard AI.

As one of the few pure AI stocks, C3.ai got a boost from the hype around AI, but investors also seemed to question its share price as it fell after a surge on Microsoft news. is.

As the chart shows, stocks were all over the map during February.

AI-chart

AI data by YCharts

so what

C3.ai surged on Feb. 2 after DA Davidson began reporting on the stock at a buy valuation, with analyst Gil Luria saying the company is a “really rare asset in a critical software space.” I was. He also called generative AI a “killer app” for artificial intelligence, and a stock price target he set at $30.

In anticipation of Microsoft’s and Alphabet’s announcements, artificial intelligence stocks continued to climb for days afterward, peaking at $30.92 a share on Feb. 6 before appearing to have let some of the air out of the hype bubble. rice field.

Later that month, C3.ai announced that it was expanding its strategic partnership with C3.ai. Amazon A web service where the C3.ai platform is jointly sold with AWS. Additionally, C3.ai’s suite of applications is now available on his AWS Marketplace.

so

C3.ai gained further momentum in early March after reporting better-than-expected results in its third quarter earnings report.

Revenue actually fell 4.4% to $66.7 million, but beat analyst estimates of $64.3 million. The final result improved from an adjusted loss of $0.07 to $0.06 per share, well above the consensus loss of $0.22 per share.

CEO Thomas Siebel said interest in the C3.ai solution is growing and overall business sentiment is improving.

Short seller Kerrisdale Capital said on March 6 that it was short seller C3.ai and said it was a misconception that the company was profiting from the excitement surrounding ChatGPT. It also notes C3.ai’s low customer traction, cash burn, customer concentration and weak revenue growth.

Yes, the stock is expensive, but it’s too early to write off C3.ai. The stock has a lot to prove with a price-to-sales ratio of around 15, and some of its recent gains are due to the ChatGPT-related hype. Having launched a suite, the company may be able to use it to its advantage.

Investors will want to pay attention to how the new product performs.

Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. Jeremy Bowman has no positions in any of the mentioned stocks. The Motley Fool invests in and recommends Alphabet and Microsoft. The Motley Fool recommends C3.ai. The Motley Fool’s U.S. headquarters has a disclosure policy.



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