C3.ai Stock Performance Analysis

C3.ai shares are on the rise following the company’s release of better-than-expected results for the January quarter.

Impressive Growth

• The stock jumped 21% in Thursday morning trading, reaching $36.01.
• Over the past year, shares are up by 64%, although they remain under the IPO price from December 2020.
• The surge is possibly driven by a short-squeeze due to high levels of short interest in the stock.

Strong Financial Performance

• In the fiscal third quarter, C3.ai exceeded its revenue and operational expectations.
• Revenue for the quarter stood at $78.4 million, marking an 18% increase from the previous year.
• Adjusted loss from operations came in at $25 million, narrower than the estimated loss range.

Diversification and Expansion

• CEO Tom Siebel highlighted the company’s broadening customer base, catering to both corporate and government clients.
• Significant investments have been made in generative AI, with a shift towards a more diversified portfolio of offerings.
• The company specializes in AI-driven applications for enterprise solutions including demand forecasting, inventory optimization, and anti-money laundering efforts.

Optimistic Outlook

• Revenue growth has shown consistent acceleration over the last five quarters.
• C3.ai has surpassed revenue guidance in each quarter since going public.
• Siebel remains bullish on the potential for growth in the enterprise AI sector, seeing C3.ai as a key player in this space.

In conclusion, C3.ai’s strong performance and strategic direction position the company for sustained growth and success in the competitive AI market.

Analyst Skepticism on Wall Street

There is skepticism among Wall Street analysts about the company, as indicated by only three out of 14 analysts covering the company rating the stock as Buy. According to FactSet, there are seven Hold ratings and the equivalent of four Sells.

Siebel Unfazed by Analysts

Despite the skepticism from analysts, Siebel seems unfazed. He questions the relevance of sell-side analysts, noting their limited time and lack of interaction with customers or companies, suggesting that banks may not be investing in sell-side research like before.

C3.ai’s Valuation

Siebel believes that C3.ai is fairly valued, hinting at the company’s potential to become “one of the world’s great companies” if it fulfills its promise.

Analyst Views on Latest Quarter

While sell-side analysts harbor doubts about the stock, they generally appreciated the company’s performance in the latest quarter.

• Morgan Stanley analyst Sanjit Singh, who rates the stock at Underweight with a $21 price target, commended C3.ai for having “a clean quarter” despite expressing concerns about its valuation.
• Wedbush analyst Dan Ives reiterated his Outperform rating and increased his target price, citing the positive direction C3 is headed due to the strong demand for its AI platform.