C3.ai (AI) told its investor day attendees that it’s seen strong activity in several pilot runs with customers during the current quarter. The event kicked off Thursday at 1:30 p.m. ET in New York.
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AI stock fell 11% Friday afternoon, as the company tracked toward its fifth down day in a row. Deutsche Bank confirmed its sell rating on the stock after the investor day, citing a lack of details about its financials, Seeking Alpha reported.
On May 31, C3.ai reported sales of $72.4 million in the fiscal fourth quarter — in line with the higher end of its preliminary sales numbers. Sales growth was flat year over year.
Subscription revenue was 79% of sales, or $56.9 million. The company saw a loss of 13 cents per share, compared with a 21-cent loss a year ago. Free cash flow from business operations was $16.3 million during the quarter.
Shares broke out of a consolidation in March but almost immediately pulled back and slid below the 50-day moving average in April. The stock surged 33% ahead of earnings, reported on May 30. C3.ai then formed a cup base and is extended from the 34.68 buy point. The stock has reached its 20% profit target from that entry.
AI Stock Rises On Oracle’s Outlook
Shares of C3.ai rose after Oracle (ORCL) saw fiscal fourth-quarter sales surge on demand for cloud computing to meet generative AI demand. The enterprise software giant has invested in generative AI startup Cohere to take on competitors such as Amazon.com (AMZN). The company expects AI workload to continue to drive demand for cloud infrastructure.
For the fiscal year that also ended April 30, C3.ai had sales of $266.8 million, above earlier views of $264 million-$266 million.
The enterprise AI provider expects sustainable profitability by the end of fiscal 2024. Analysts polled by FactSet expect 19% sales growth for the year.
In May, C3.ai partnered with Google Cloud Marketplace and Amazon Marketplace.
AI Stock: Different Consumption Model
In December, AI stock changed its pricing model from subscription to consumption-based pricing.
The move brought the company in line with industry standards for software-as-a-service providers. The practice is common across Amazon.com‘s (AMZN) AWS, Google parent Alphabet‘s (GOOGL) Google Cloud and Microsoft‘s (MSFT) Azure, as well as smaller players.
Consumption pricing works like a utility bill; that is, the higher the consumption, the pricier the service. Since AI customers will benefit from having access to an AI enterprise platform with unlimited use and developer licenses, the switch to consumption pricing could drive revenue growth, but not immediately.
CEO Thomas Siebel indicated that C3.ai was using the economic downturn to complete the switch, with profitability expected to grow in 2024. The consumption pricing model will lower barriers to entry as companies do not have to be tied to long contracts.
Massive Artificial Intelligence Growth
Siebel sees AI applications revenue hitting $600 billion, driving a fast-growing space.
That is far less than Cathie Wood’s prediction.
Artificial Intelligence News And AI Stocks To Watch
The Ark Invest chief said in her firm’s “Big Ideas 2023” report that AI could add $200 trillion to the economy by 2030.
Generative AI will increase efficiency for professionals. AI stock has first-mover advantage, touting partnerships with Alphabet, Amazon, Microsoft, Accenture (ACN), Baker Hughes (BKR) and others. That is because generative AI helps computers apply machine learning and artificial intelligence to vast data sets, learn patterns and generate content based on those patterns. Enterprise AI makes this content specific to business needs.
Stock Surges On ChatGPT Success
AI stock skyrocketed in February when users successfully tapped OpenAI’s ChatGPT artificial intelligence app to generate answers, texts, emails and even books.
The ChatGPT app reached 100 million monthly active users in two months, beating popular apps like TikTok and Instagram. OpenAI’s partnership with Microsoft ChatGPT uses natural language to help users write emails, develop code and find answers for daily questions.
Redwood City, Calif.-based C3.ai makes AI-enabled software applications that can be configured for different purposes. The software can make networks more reliable, detecting fraud, balancing inventory and demand, solving supply chain issues and increasing energy efficiency. It can also help defend against money laundering.
AI Stock’s IPO
The enterprise software stock popped on the first day it started trading in Dec. 9, 2020, leaping from an IPO price of 42 to finish at 92.49, according to IBD MarketSmith.
The current Composite Rating of 85 is less than ideal. And the low 45 EPS Rating reflects the company’s many years of losses. The perfect 99 Relative Strength Rating indicates the stock’s superior performance compared to other stocks in the IBD database.
To find the best stocks, check out IBD Stock Lists and IBD Data Tables.
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