Zinger Key Points
- C3.ai reports earnings that beat across the board and issued guidance above analyst expectations.
- Is the company just another meme stock? Several analysts at prominent firms weigh in.
The overarching stock story of 2023 — while still early into the year — has been focused on artificial intelligence, namely OpenAI’s sophisticated chatbot ChatGPT.
ChatGPT is a large-language chatbot driven by AI tech that allows users to have human-like conversations and interactions with the model. Read more…
Publicly traded companies have clearly been swept up in the AI fervor, with references to AI and related terms on earnings calls increasing a staggering 77% year over year.
Perhaps at the helm of the AI bonanza is C3.ai Inc AI.
C3.ai — currently morphing into a meme stock — is an enterprise AI software provider for building enterprise-scale AI applications and accelerating digital transformation.
The company reported its highly anticipated earnings on Thursday, which beat across the board.
By The Numbers: C3.ai reported a quarterly loss of 6 cents per share, ahead of the expected 22-cent loss on revenues of $66.7 million, which beat consensus estimates of $64.25 million, according to Benzinga Pro.
The company said subscription revenue for the quarter was $57 million, constituting 85.6% of total revenues.
C3.ai guided for full-year 2023 revenue of between $264 million and $266 million, ahead of the $261.3-million consensus estimate. Read more...
Seems Fine, Right? Investors are now wondering if this is just a meme stock, or if it is a company with real chops — here’s what the analysts have to say.
The Wedbush Analyst: Dan Ives maintained a Neutral rating on the stock, but raised the price target to $24, reflecting the company's AI momentum and potential for future growth.
Ives said that with increased demand for its AI products, C3.ai was experiencing tailwinds in the market. The company’s partnerships with Google Cloud, Amazon Web Services and Azure, as well as its expanded pipeline and partner ecosystem, have contributed to its success.
The Piper Sandler Analyst: Arvind Ramnani maintained a Neutral rating on the stock and raised its price target from $13 to $23.
Ramnani said C3.ai’s consumption-based pricing model and improved demand for its solutions drove revenue growth for the quarter and said C3.ai made progress towards profitability, with a narrower operating loss range for full year 2023 and plans to become cash positive and non-GAAP profitable by the end of full year 2024.
The JMP Analyst: Patrick Walravens maintained a Market Outperform rating on the stock and raised its price target from $19 to $27.
Walravens said that while many investors were understandably skeptical of C3.ai’s story given the ChatGPT affinity, JMP believed the company is an attractive opportunity for capital appreciation as its leadership team is experienced in navigating difficult macro environments, as well as its recent shift to its consumption-based model tha has made it easier for its current customers to pilot the applications and for them to pay for the products using CSP marketplace credits.
JMP spoke with a partner at one of the cloud service providers who said this: “I am bullish. That is a space where people want to invest... there are a lot of reporting tools but there has not been a ton of investment in AI/ML. That is where [our customers] are all going next... that is where they will get a competitive advantage and some cost savings... I think it is a good space to be in."
The Needham Analyst: Mike Cikos issued a Hold rating on the stock and removed its price target.
Cikos said the recent rise in the company’s stock price can be attributed to short covering and meme stock trends.
C3.ai reported 17 consumption pilots, but none have converted yet, and its transition is still in its early stages.
To Needham’s point, well-known short seller Spruce Point Capital said any analysts who are “pumping up their price tgts on $AI,” via analyst notes aren't worth the paper they are written on.
The short-seller said C3.ai is facing multiple headwinds, and even called out its CEO Thomas Siebel for “lying” in a Thursday CNBC interview where he said the company is showing its new generative AI tech to "about 400 customers" in Boca Raton next week — though according to its most recent earnings report, the C3.ai has exactly 236 customers, with 291 “identified” enterprise opportunities.
Price action: Shares of C3.ai are trading 28.95% higher to $27.48, according to data from Benzinga Pro.
Photo: Below the Sky via Shutterstock
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