Despite a downward spiral in the stock market on Thursday and mixed quarterly results, analysts are still optimistic about C3.ai’s future.
C3.ai, the enterprise artificial intelligence software developer, left Wall Street underwhelmed with its recent guidance, released on Wednesday evening. However, according to D.A. Davidson analyst Gil Luria, management is fully aware of the potential opportunities and plans to invest in various aspects of the business, such as application development, model engineering, lead generation, market awareness, and customer success. These investments are aimed at securing a larger market share but are not expected to lead to immediate growth as outlined in their FY24 revenue guide.
Luria believes that while the stock adequately reflects the demand for generative AI as the company accelerates its revenue growth, the declining profitability may put pressure on the shares. Oppenheimer maintains a Neutral rating on the stock and has lowered the target price to $28 from $30. As of Wednesday’s close, C3.ai stock was valued at $29.16.
Nevertheless, Luria remains positive about C3.ai’s potential, stating that there is still a significant opportunity ahead. This view is shared by others within the industry.
The Power of AI: C3.ai Leading the Way
The Future is Now
In a recent note by Oppenheimer analyst Timothy Horan, he highlighted the undeniable impact of artificial intelligence (AI) and its long-lasting potential. Horan specifically mentioned C3.ai as the sole player in the market, equipped with a powerful platform that enables enterprises to leverage generative AI quickly and securely. While acknowledging the challenges, Horan emphasized the enormous benefits that await those who venture into this transformative technology.
A Favorable Outlook
Maintaining his Outperform rating on C3.ai stock, Horan also provided a price target of $40. Despite short-term financial metrics looking weak, Horan revealed that the company possesses unparalleled capabilities for growth, particularly in sectors critical to our economy. He assured investors that any concerns regarding security, compliance, and governance have been mitigated, and C3.ai is now well-equipped to navigate these obstacles.
A Momentary Setback
Following the release of its financial results on Wednesday, C3.ai experienced a 10% decline in premarket trading on Thursday. While the earnings surpassed analysts’ expectations, sales fell slightly short. Moreover, the company’s guidance for the January quarter indicated lower revenue compared to Wall Street’s consensus estimate. Additionally, there was a notable disparity between C3.ai’s projection for non-GAAP operating loss in the January quarter and analysts’ projections.
Although the recent setback might be disheartening for some, it is essential to remember the vast potential that lies within C3.ai. The company’s commitment to innovation, combined with its unique capabilities and accelerating growth, positions it as a key player in the AI landscape. While short-term fluctuations are expected, it is prudent to keep a long-term perspective in order to fully appreciate the trajectory of C3.ai.