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C3.ai (AI - Free Report) rallied 23% Monday, on news of preliminary Q4 results that were better than expected.
AI is the hottest new trend in investing, but it’s likely more than just a fad. Everyone from Stanley Druckenmiller to Warren Buffett has opined on the topic, and according to them it’s clearly a game changer.
Although the topic of AI has become extremely hot in the last year, C3.ai has been utilizing the technology since 2009, when the company was founded.
Preliminary Results
Total revenue for the quarter was $72.1 million - $72.4 million, exceeding company guidance.
Net cash provided by operating activities was $28.1 million - $29.5 million. Positive free cash flow was $18.0 million - $19.4 million.
GAAP loss from operations of ($75.9) million - ($77.1) million.
Non-GAAP loss from operations of ($23.7) million - ($23.9) million, exceeding guidance.
Company Information
C3.ai is an enterprise AI application software company. It has built and deployed a portfolio of industry specific AI enabled SAAS products that enable organizations to take advantage of the new technology. C3.ai customers include Baker Hughes (BKR - Free Report) , Koch Industries, Bank of America (BAC - Free Report) , Consolidated Edison (ED - Free Report) , the US Air Force, and a number of other heavy hitters.
While some investors might think C3.ai is just a perfect stock ticker (AI - Free Report) amid a fad, it really is much more than that.
So, what exactly does C3.ai do? AI has developed dozens of different software applications used throughout industries. They range from supply chain production schedule management to property appraisals, and energy management. By collaborating with companies, and organizing their data, these SAAS products provide insights that may previously go unnoticed.
More than anything, they’re tools that enable analysts, investigators, and executives to be better at their jobs. The anti-money laundering application is a good example to understand what C3.ai applications do.
Financial crime and compliance investigators are required to sift through humongous data sets to identify suspicious activity. Dashboards built by C3.ai allow them to parse that information more easily, and most importantly identify when to follow a data anomaly, and when not to.
Utilizing the anti-money laundering software, false positives have been reduced by as much as 85%, freeing up considerable time for investigators to follow up actual fraud. Additionally, the software has increased suspicious activity identification by as much as 200%. The machine learning technology implemented by C3.ai is critical to these systems, and because of its self-learning nature, doesn’t have to adhere to rigid, rules-based algorithms.
Image Source: C3.ai
Founder
The founder of C3.ai is not new to business and startups either. Tom Siebel is a Silicon Valley veteran who was formerly the founder and CEO of Siebel systems. Founded in 1993, Siebel Systems became a leader in enterprise software with more than 8,000 employees and annual revenue of more than $2 billion.
Short Interest
Part of the reason for AI’s massive one day rally is the tremendous short interest in the stock. A reported 32% of the float is sold short against the stock. Often, stocks with large short positions like this can make huge moves very quickly because of short covering rallies.
Valuation
C3.ai trades at a premium valuation because of the industry it’s in, however it has come down significantly over the last year. AI is currently trading at a one-year forward sales multiple of 7x, which is above the market average of 4x, and below its two-year median of 10x.
Image Source: Zacks Investment Research
AI’s valuation came down so much because of the precipitous fall in the stock’s price. C3.ai went public at the height of the 2021 mania, so 2022 was not kind to the stock. During last year the stock dropped -95% from its former all-time high, but is making a strong comeback this year, more than doubling off the low.
Image Source: Zacks Investment Research
Bottom Line
AI technology may be the next biggest innovation since the internet, so investors must stay up to date with the ongoing developments. There are several ways to get exposure to the industry, however C3.ai may be the best pure play in the market. It isn’t without risk though, as competition in the industry will only become fiercer as time goes on.
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Is C3.ai The Best AI Stock in the Market?
C3.ai (AI - Free Report) rallied 23% Monday, on news of preliminary Q4 results that were better than expected.
AI is the hottest new trend in investing, but it’s likely more than just a fad. Everyone from Stanley Druckenmiller to Warren Buffett has opined on the topic, and according to them it’s clearly a game changer.
Although the topic of AI has become extremely hot in the last year, C3.ai has been utilizing the technology since 2009, when the company was founded.
Preliminary Results
Company Information
C3.ai is an enterprise AI application software company. It has built and deployed a portfolio of industry specific AI enabled SAAS products that enable organizations to take advantage of the new technology. C3.ai customers include Baker Hughes (BKR - Free Report) , Koch Industries, Bank of America (BAC - Free Report) , Consolidated Edison (ED - Free Report) , the US Air Force, and a number of other heavy hitters.
While some investors might think C3.ai is just a perfect stock ticker (AI - Free Report) amid a fad, it really is much more than that.
So, what exactly does C3.ai do? AI has developed dozens of different software applications used throughout industries. They range from supply chain production schedule management to property appraisals, and energy management. By collaborating with companies, and organizing their data, these SAAS products provide insights that may previously go unnoticed.
More than anything, they’re tools that enable analysts, investigators, and executives to be better at their jobs. The anti-money laundering application is a good example to understand what C3.ai applications do.
Financial crime and compliance investigators are required to sift through humongous data sets to identify suspicious activity. Dashboards built by C3.ai allow them to parse that information more easily, and most importantly identify when to follow a data anomaly, and when not to.
Utilizing the anti-money laundering software, false positives have been reduced by as much as 85%, freeing up considerable time for investigators to follow up actual fraud. Additionally, the software has increased suspicious activity identification by as much as 200%. The machine learning technology implemented by C3.ai is critical to these systems, and because of its self-learning nature, doesn’t have to adhere to rigid, rules-based algorithms.
Image Source: C3.ai
Founder
The founder of C3.ai is not new to business and startups either. Tom Siebel is a Silicon Valley veteran who was formerly the founder and CEO of Siebel systems. Founded in 1993, Siebel Systems became a leader in enterprise software with more than 8,000 employees and annual revenue of more than $2 billion.
Short Interest
Part of the reason for AI’s massive one day rally is the tremendous short interest in the stock. A reported 32% of the float is sold short against the stock. Often, stocks with large short positions like this can make huge moves very quickly because of short covering rallies.
Valuation
C3.ai trades at a premium valuation because of the industry it’s in, however it has come down significantly over the last year. AI is currently trading at a one-year forward sales multiple of 7x, which is above the market average of 4x, and below its two-year median of 10x.
Image Source: Zacks Investment Research
AI’s valuation came down so much because of the precipitous fall in the stock’s price. C3.ai went public at the height of the 2021 mania, so 2022 was not kind to the stock. During last year the stock dropped -95% from its former all-time high, but is making a strong comeback this year, more than doubling off the low.
Image Source: Zacks Investment Research
Bottom Line
AI technology may be the next biggest innovation since the internet, so investors must stay up to date with the ongoing developments. There are several ways to get exposure to the industry, however C3.ai may be the best pure play in the market. It isn’t without risk though, as competition in the industry will only become fiercer as time goes on.