The market buzz surrounding Artificial Intelligence (AI) is fueling a surge in C3.ai stock (AI:NYE), which has skyrocketed over 194% year-to-date. As investors eagerly anticipate the company’s Q4 financial results, the question on everyone’s mind is whether the remarkable rally will continue?
While AI fever has undoubtedly propelled the shares of C3.ai, industry analysts remain cautiously optimistic and express concerns about potential downside risks. However, it’s essential to recognize the influence of AI applications like OpenAI’s ChatGPT and generative AI in driving the market’s enthusiasm.
Earlier this month, C3.ai announced its preliminary financial results for Q4, exceeding its prior guidance. The company is scheduled to unveil its official Q4 financials on May 31, and preliminary data suggests that revenue will be in the range of $72.1 million to $72.4 million. Although this indicates relatively flat growth compared to the prior-year quarter’s total revenue of $72.3 million, it surpasses the Street’s expectations of $71.32 million.
In terms of adjusted operating loss, C3.ai anticipates reporting figures of $23.7 million to $23.9 million for Q4, a notable improvement from its previous guidance of a loss between $24 million and $28 million. Analysts predict a loss of $0.17 per share, compared to a loss of $0.21 in the same period last year.
C3.ai’s success in Q4 is attributed to the closure of 43 deals, signifying an acceleration in the application of predictive analytics to business processes. Additionally, C3 Generative AI has garnered increased interest from existing and new customers, resulting in the signing of three new Generative AI application agreements during the quarter.
Furthermore, C3.ai remains confident in its ability to achieve profitability (non-GAAP) by the end of Fiscal 2024, which concludes on April 30, 2024. The company’s positive outlook stems from a strategic shift in pricing strategy, transitioning from a subscription model to a consumption model. While this change is expected to benefit C3.ai in the long term, Needham analyst Mike Cikos acknowledges the challenges associated with executing such transitions, which could temporarily impact profitability.
C3 Ai Stock Forecast:
Considering the broader analyst sentiment, the consensus rating for AI stock is a Buy on Stock Target Advisor. This rating is based on three Buy, four Hold, and four Sell recommendations. With an average price target of $20.57, analysts foresee a potential downside of 37.77% from the current trading levels.
Conclusion:
In conclusion, the remarkable surge in C3.ai stock, fueled by AI fever, has captured market attention. As the company prepares to disclose its Q4 financial results, investors are eagerly watching to gauge the sustainability of this rally. While analysts express caution and highlight potential downside risks, C3.ai’s continued focus on AI applications and its long-term profitability goals suggest an intriguing journey lies ahead for the company and its investors.
